When the going gets tough
Customer Marketing to the Rescue!
We all know these are tough economic times. That message was reinforced for me again yesterday when I got a call out of the blue from a marketing analyst at a company not on my radar screen. She was charged by her VP with setting marketing priorities for next year. Specifically, she was asked to make marketing recommendations to help her company survive during this recession. The analyst was casting a broad net and found me.
After a short discussion, I found that her company’s revenues were excessively skewed more to new customer revenue compared to revenue from existing customers, so a sure answer to her question is to ramp up existing customer marketing. The justification for that effort is clear: you know who the customers are, you can figure out what they are likely to buy next (and make the applicable product recommendations to them), and making that sale is a lot less costly than acquiring a new customer. There is definitely gold in your customer transaction data.
But product recommendations to current customers can be difficult if you are addicted to revenue from new customers. One consequence of such an addiction is relative neglect of your existing customers. You may not be jealously guarding and enriching your customer transaction data. You may not be doing useful customer analytics. You may not even be thanking your customers for their patronage. Ultimately, it is an unsustainable way to build a business.
So how do you kick the habit?
It doesn’t require going to a twelve-step meeting, but neither does it happen overnight. The first step is to establish some benchmarks that accurately describe the state of your business. Next, implement a systematic testing plan. You should be regularly testing your offers, your segmentations, and your targeting.
Third, create custom segmentations of your customer population. Four to seven segments work well, plus you need a marketing plan for each segment. Then build an early warning system to reduce attrition. You want to identify which customers are possible defectors, and which of those are most worth the effort to retain. Finally, design a measurement system that tracks your marketing activities.
When the going gets tough, the tough do customer analytics.