Growing Revenue Through Installed-Base Marketing

How to Use Installed-Base Marketing to Grow Sales

Revenue growth is always a big challenge and is even more so today. Many of the natural or organic approaches to growing revenue are simply closed off.

For example, with inflation being very low, it doesn’t give a vendor much room to raise prices. At the same time demographic growth is tepid as most markets have populations that are basically replacing themselves, so these old standbys are unavailable.

New product development has been replaced by product line extension and at any rate, new products are mostly a matter for R&D. Extending a product line has its advantages but often it’s a zero sum game — you sell a new product and the customer retires the old one.

There’s even more less-than-wonderful news on the revenue front. The subscription revolution has vendors scrambling to provide their wares as services that attract small monthly fees. Since subscriptions just cost less than one time purchases, there is a natural contraction in revenue that will continue until there is a healthy backlog of deferred revenue on the books. This places a major drag on any effort to boost revenue.

The Problem with Sustaining Revenue Growth with New Business

That leaves us with just plain selling more, right?But what about the many markets that are saturated with vendors ready to lower their prices just to keep the lights on? Many corporations opt for establishing operations in other regions or countries but that’s an expensive option and one that’s not often open to smaller businesses.

Regardless of whether you sell conventional products or subscriptions or if your prices remain flat, as long as you are growing, you are adding customers every quarter. Customer logo count and general well-being are becoming the new goals and their recurring revenue the measure of success but that still doesn’t help with the need to increase aggregate revenue from all sources, but it gets us closer.

For many companies, especially subscription vendors, new business represents the minority of revenue flow. Other important sources include services, add-ons, maintenance, upgrades and their revenues are often assumed — but should they be? No revenue is completely assured and if your business is like many others, a customer that needs maintenance, replacement parts or even training still has options that don’t include you.

Your customers can come back to you or they can go to a third party and getting them to think of you before they consider another option is a legitimate marketing matter.

We often hear about cross-selling and upselling, but too often it’s in the context of a service call. From a vendor’s perspective there’s no time like a service call to mention a new product or a simple additional purchase. But customers may not see things the same, as they might be too focused on the service issue to consider an upgrade. That’s why it’s important to continue marketing to customers throughout the lifecycle.

Don’t Let Marketing Stop Short and Forget Existing Customers

Lifecycle marketing is different from the marketing you do to get customers in the door. For one thing, existing customers have already made a purchase so you’ve got the benefit of the doubt when it comes to additional purchases, but you need to translate that into demand. Marketing to new customers is largely about identifying a business problem and offering a solution. Once that solution is found and it works, the customer puts the issue in the rear view mirror. This means you, as a marketer, have to continue delivering a steady stream of thought leadership and value that helps customers see a future of needs and solutions that involve you and your brand.

If that’s true, and it is, then the occasional installed-base marketing message to announce an upgrade or a new version might be worse than nothing because it tells the customer that your only interest is in selling the upgrade, not necessarily in helping them get to the next plateau. The focus of marketing to the existing customer should be to help them extract as much value from their existing purchases as possible. If extracting more value happens to mean purchasing an upgrade so be it, but that’s very different from simply trying to move the next version out the door.

Don’t forget that there’s an added benefit too. With SEO your thought leadership can find new customers because it also acts as simple marketing, not just for a product but for a brand by showing that you’re working for your customers’ benefit.

So ideally, installed-base marketing should never stop. When done right it provides another revenue stream that might not be as big as the new business stream, but it can be very important for growing top-line revenue. And as the customer base continues to grow, installed-base revenue will grow too.

   Image Credit(s):                Timothy Allen                    

Written by

Denis Pombriant
September 2, 2014

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