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Customer Marketing: The Opportunity Most Marketers Miss

Customer Marketing: The Opportunity Most Marketers Miss

Who is marketing to your customers, or installed base?

You? Or your competition? Your competition will certainly be marketing but if you are not also, then you have a problem. Depending on the business, as much as 80 percent of revenue comes from the existing customer population yet we spend the lion’s share of our marketing budgets on acquiring new customers. So, shouldn’t we market to our own customer bases?

Many markets have become zero-sum situations where gaining a new customer means taking it away from another vendor, and that’s why installed base marketing is becoming so important. So, all this points to the need to keep your customers close through marketing or something very much like it.

Perhaps we are not more attentive because we assume our customers will be loyal and naturally call us back when they need something, but frankly, those ideas are quaint. The same market forces that drive the intense competition we see in most markets today are alive and well after the first sale. Customers talk among themselves more than ever in communities and other online media. They trade ideas and gossip about who offers the best deals and service, and commoditization in many markets means it’s easy to swap out vendors. So increasingly, we try to differentiate on service but we forget about the value of simple, purposeful contact.

However, calling it marketing might be off the mark since your customers most likely don’t want the same barrage of offers they get from your competition. Also, existing customers have a right to expect that you know who they are, what they bought, and its approximate lifecycle — and that you can reflect all this back to them in the form of more relevant communication. This means the business problems they need to solve will be slightly different. They are more likely to center on budgets, scheduling upgrades and training. Therefore your outreach needs to be tailored to those needs.

Moving Beyond Closing the Deal

The techniques that marketing uses to attract new customers can be easily applied to existing customers. This means programs directed at specific populations that have a particular version or vintage of a product, for instance. Unlike conventional marketing, the emphasis does not have to be on closing a deal. Instead, offering helpful tips on maximizing the return on the existing investment is a great way to keep the lines of communication open and prepare for the eventual upgrade.

At the same time, it also means collecting a slightly different set of data and developing metrics appropriate to existing customers. Since there is a level of trust that is already established and barriers are already broken, some of the information might be easier to collect.

Tracking the Right Metrics

As usual in many marketing situations, developing a collection of metrics and using them in combination can provide insights you can’t get any other way. Customer lifetime value (CLV) is a great example. When combined with other metrics like a utilization rate or average revenue — which you’ll need to get from other departments — it can show which customers might need an early upgrade and which ones might be moving towards reduction in use or even attrition. By marketing to your existing customers and capturing data from them on a regular basis, you will be in a better position to manage by exception. You will be better able to identify those situations that can really use the intercession of sales or service and possibly save an account from going elsewhere.

Understanding these and other things about existing customers is not hard but it hasn’t been done much before now because the technology that makes it possible did not exist until recently. But now that it’s here it is hard to ignore this great revenue source.

Bringing Value

Customer marketing or installed base marketing or customer nurturing or customer expansion — whatever you decide to call it — will require the potential cooperation of your service and finance departments too, but that’s not a bad thing. Their data combined with yours will help drive effective customer nurturing programs.

Modern marketing using analytics and metrics has given marketers a seat at the executive table because rather than speaking only about trade shows and campaigns, marketers have been able to contribute to discussions about revenue generation. Customer marketing is another good idea in the same vein and bringing it to the table is an excellent way to show that marketing is adding value. This is low hanging fruit that everyone should want to pluck.

   Image Credit(s):                Jrm Llvr                    

Written by

Denis Pombriant
April 22, 2014