Focusing on Relationships, Not Sales, Generates Greater Revenue

The Challenge: Traditional marketing has often focused on getting the sale. Instead, marketers should focus on retention and how to keep more customers for longer periods. Customer Lifetime Value, (CLTV), is a simple equation for helping you calculate the value of increased retention.

By understanding the lifetime value of a customer, you can determine whether you are spending enough to keep and groom customers, and what the resulting revenue will be from ongoing, repeat, purchases.

Insert actual or estimated numbers into the following lifetime value equation:

(Average Value of a Sale) X (Number of Repeat Transactions) X (Average Retention Time in Months or Years for a Typical Customer).

Kellogg Professor John Parker explains, “Organizing marketing to improve the performance of three key ingredients–lowering acquisition costs, raising total margins, and reducing the churn rate–can be an even more powerful application of CLTV for CMOs.” Research from Bain & Company shows the increased value of customer retention versus acquisition:

•	Acquiring a new customer can cost 6 to 7 times more than retaining an existing customer
•	Over a 5 year period customer attrition rates could reach as high as 50% if databases are left dormant
•	Businesses which boosted customer retention rates by as little as 5% saw increases in their profits ranging from 5% to a whopping 95%.

 
When we focus marketing efforts on customer retention rather than acquisition and engage customers throughout the entire relationship, the result is an increase in the lifetime value.

3 Takeaways for Marketers:

1. Engage with customers at 3 points in the customer lifecycle:

•	Pre-Sale: Understand their needs and preferences and begin engaging them accordingly.
•	Sale: Don’t think of the sale as a “close”. The sale is not the end; it should be the start of building a proactive, value-based, relationship.
•	Growth & Retention: The period between the last sale and the potential next sale is an opportunity for you to provide ongoing, proactive, engagement, and value. This is the time to gain a better understanding of your customers, why they purchase from you, what motivates their purchases, and how you can provide value between purchases, to keep them loyal and engaged. ERDM research shows that engaging and forming strong relationships with customers has 12 times more influence on retention and repeat purchases than customer satisfaction alone.

2. Cut down on email blasts and send only relevant, preference-based communications. A powerful way of proving that you care about your customer is to cut down on email blasts and only send targeted and relevant communications and offers. Consumers resent brands that indulge in “spray and pray” blasts of irrelevant email. This is viewed as disrespectful of their limited time.

3. You are probably not spending enough on your top customers. Identify the top producing customer segments and revise your spending accordingly. See the visual above.

Twitter: Using News to Connect with Your Audience

The Challenge: News and events provide powerful opportunities to connect with your audience. Twitter makes this easy. Following are 7 tips.

While not all companies can have a social media “touchdown” like Oreo’s now famous Superbowl blackout tweet, real time marketing is accessible to any size company. It only took 3 minutes to Tweet “Power Out? No Problem” with a captioned Oreo image “You Can Still Dunk in the Dark”.

Oreo is a great example of the discipline of Real Time Marketing. To see how important this has become, consider the Oscars and all the companies making attempts to become the next social media sweetheart. The marketing industry was even monitoring Twitter with #OscarsRTM documenting real time successes and failures.

Cleverly connecting with the audience is not reserved for big brands. Any size company can leverage news or events to make relevant connections through Twitter.

7 Takeaways for Marketers Using Twitter:

1. Knowing your audience provides an essential understanding of how they will react to your approach to a topic. Voice of Customer research by our firm reminds us to focus on the customer’s experience at all times across all channels. Evaluate using some of the many social media monitoring tools to keep up with what the public is saying.

2. Become a news resource for your industry. Announce newsworthy topics on Twitter ahead of the trend.

3. Real time response and empowered staff are essential. The social and content accelerators at ConvinceandConvert.com tell us “That’s why it’s so critically important to staff your social media front lines with people who not only have extraordinary passion for your company, but who also have the experience and judgment to minimize response delay”. Know what to look for when hiring a social media manager.

4. The media event and your company do not have to be related. However, you must add relevant value to the conversation. That value must tie back to your brand.

5. Communicate messages with the intent to interact. It’s not about selling. Richard Robins advises, “Customers want to be engaged, not targeted. With the exception of a few "passion" brands whose customers wait for any bit of product news, customers largely don't care about products. (If we cared, brands wouldn't have to pay $4 million for ads to reach us.) “

6. Learn from some significant mistakes committed during the past year. Stay on top of current events and understand why a topic is trending. The last thing you want is to gain attention for a social media #fail.

7. Do not expect every venture into real time marketing to work. Like other disciplines in marketing, this is all about testing and measurement.

Spike in Email Undeliverables: 5 Tips for Increasing Delivery

The Challenge: Major email providers such as Gmail, Yahoo, Hotmail and AOL have implemented new algorithms for email deliverability based on “engagement”. If your emails are not triggering sufficient interaction, they are likely not to be delivered.

Recently, most email service providers have converted to a new customized algorithm that calculates deliverability using a combination of the original email delivery rules plus new “engagement” factors: open rates, clicks, unsubscribes, and complaints. With these new human behaviors factored into the equation of deliverability, future emails that you send may be considered SPAM or not delivered at all, even to subscribers who signed-up to receive your emails. Email marketing service MailChimp explains an even more damaging point “if enough recipients click the ‘spam’ button on your email, the providers assume that no one else would want that email either.” Read Google’s white paper on deliverability and the Priority Inbox.

What can you do to improve engagement? Here are 5 tactics:

1. At a minimum, follow basic list management best practices, such as keeping your list opt-in only, honor unsubscribe requests and remove undelivered emails from your list. MailChimp suggests using a double opt-in method to further improve engagement metrics.

2. Motivate new customers to engage with you. Silverpop recommends a quality welcome series.

3. The strategists at Econsultancy suggest “Combining behavioral data and RFM (Recency, Frequency, Monetary value) creates Engagement-RFM (eRFM). Using this methodology can improve the accuracy of segmentation, strengthen influence and engagement, and lead to an increased ROI.”

4. Use personalization and dynamic content. Leverage this information to deploy personalized communications for significant events such as customer appreciation messages, unexpected “surprise and delight” communications, birthdays, post purchase “thank-you’s”, and dropped cart messages.

5. Reward email actions like opens, clicks, and shares. Marketing Profs highlights how companies like GameStop and Southwest Airlines are experiencing success with engagement by tracking subscriber’s interactions and awarding loyalty program points.

Key Takeaways:

1. Sending “spray and pray” emails will damage your brand, hurt your reputation, and compromise future deliverability of legitimate emails.

2. Provide value-added information. Per recent findings from recent Voice of Customer research conducted by our firm, customers are willing to provide in-depth information in exchange for receiving value-added information. For consumers, the rationale for providing preference information is to receive increasingly relevant offers, communications, and experiences.

3. Segmentation is more essential than ever. Develop increasingly specific customer and prospect segments so you can send highly targeted emails that are of interest to each recipient in your sub-segmented groups.

Burberry's Multichannel Innovation; 3 Tips

The Challenge: What can we learn from a 157-year-old fashion company that’s being called “the world’s most digitally competent luxury brand”? That a multichannel and personalized customer experience is becoming the expected standard among consumers.

Just as high fashion brands have been trendsetters in clothing, they are now trendsetters in multichannel marketing. Global fashion icon, Burberry, launched a program recently that upped the ante on multichannel marketing. Burberry’s Millennial-targeted “Runway Made to Order” campaign allowed viewers from around the world to live stream their Fall fashion show, and purchase and personalize items directly from the runway via a state-of-the-art interactive e-commerce platform.

Key Takeaways for Marketers:

1. Offer a Seamless Multichannel Experience
Burberry’s innovation is truly remarkable. The brand has taken the 2013 Autumn runway show -- traditionally an exclusive event, accessible only in-person -- and spread it across every conceivable digital medium: the show, streamed on Burberry.com and other sites, was the first in history to be broadcast live on Twitter; purchases through Runway Made to Order are accompanied by Smartphone-compatible product videos upon delivery; the live stream was accompanied by an Instagram feed showing close-ups of the products as they hit the runway, and a dozen digital cameras photographed handbags and shoes to be turned into an ‘accessories-only’ Facebook photo album.

Burberry has long been on the forefront of digital; but now, as marketers struggle to create a valuable customer experience across many seemingly disparate channels, Burberry shows us just how seamless it can all be.

2. Make it Personal
The ability to order products the moment they’re debuted is impressive enough; but, Burberry has added to this ability a highly-personalized touch.

Upon adding an item to an online shopping bag, customers are immediately informed that their purchase can be “customized with a bespoke nameplate and smart personalisation technology.” Orders are placed with the promise that a Burberry rep will soon reach out to the purchaser personally to ‘confirm requirements.’

3. Adapt Proven Tactics to the New Integrated Multichannel Mix
In a modern twist on product placement, Burberry, according to the recent New York Times article, supplies A-list celebs with key items in order to capitalize on the many active fashion bloggers and social media followers. By not limiting its presence to digital alone, Burberry applies the ‘influencer’ tactic to traditional media, using print and video advertisements featuring British actress, Gabriella Wilde.

The lesson: for maximum brand building, impact, and revenue, deploy a seamlessly integrated multichannel mix.