Thursday, August 18, 2005

Marketing to the Right Customer Type

Read an article from about winning the budget battle with your CFO. There is a good digression in the middle of the article about understanding the different types of customers you may have and the revenue objectives you should (or should not) have for each type. Each industry is different, each company is different. Your mileage WILL vary. The important element is that all customers represent different revenue opportunities. You have to do the work to analyze which customers you have.

Who are your marketing dollars targeting? And why?

Existing customers - present 3 primary marketing opportunities:

Maintenance - do your customers provide a recurring revenue stream? (do you require a licensing or other kind of contractual fee?) As a marketer to these type of customers, you want to market just enough to reduce churn but no so much that you will erode your margins.

Loyalty - how are you preventing your customers from switching to a competitor? How do you keep your customers choosing YOUR products and services? Continued, on-going marketing can drive increasing loyalty and wallet share.

Up/Cross Selling - Whatever. Upsell. Cross-sell. Same difference. How you take exisiting customers from being a one item purchase and getting them to get the matching jacket to the pants they just bought or using analytics to INFORM the customer that other customers JUST LIKE THEM are buying a pair of shoes that complement the pants PERFECTLY. Increase your share of wallet this way.

Marketing to reduce churn and/or "save" a customer - customers have many choices available to them. They WILL want to switch once in awhile. Here's where you, as Marketing person have to get out your calculators and sharpen your pencils. How much was this customer worth? Do you want this customer as a customer? Sometimes the answer is no. I know this may come as a shcck to some. I am a heretic. Deal with it.

Marketing to Acquire New Customers - new customers are NOT the same as existing customers. There is a customer life cycle. It may be minutes long, it may be LIFETIMES long. What is your average customer life cycle? I digress. If you are a business needing growth, you MUST turn to marketing. In a highly commoditized, high churn business, new customer acquisition MUST exceed the amount of customer churn in order to deliver growth. Marketing is about math. Its not about being the guy or girl that comes up with the idea of guys in chicken masks thrashing out to fried chicken sticks.

Marketing to increase brand and start/advance the sales cycle - Brand awareness is a critical part of the sales cycle. You have a "touch" a customer x number of times before they are ready to buy (on high ticket items). (Everyone argues about the number of times). Marketings job is to deliver REVENUE OPPORTUNITES. I love that concept...revenue opportunities. Its an investment in future sales.

Experimental marketing - This is your Vegas bankroll. Trying out different approaches, different channels is important. You never know what will resonate with your customers until you TRY. Are you allocating some of your budget to blogging, podcasting, etc? You are MEASURING effectiveness, right?

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