Every major industry was once a growth industry. But some that are now riding a wave of growth enthusiasm are very much in the shadow of decline. Others, which are thought of as seasoned growth industries, have actually stopped growing. In every case the reason growth is threatened, slowed, or stopped is not because the market is saturated. It is because there has been a failure of management.
The evolution of marketing processes
Companies now have to deal with many more Customer Contact Points (CCP's) and channels than they did just 5 years ago. While this creates more opportunities to reach your customers, it also makes it easier for them to defect, increasing the pressure on marketers to build relationships that last. It is important to know that each point of contact with your customer is a 'Moment of Truth.'
The constant development of the marketing process further complicates the matter. Dynamic and integrated CCP's and channels (virtual and real) are re-defining how we reach our customers. There are no longer any walls; we are all interconnected through Intranets and the Internet. And speed is measured in broadband width.
Lifetime Value (LTV) Models - once an important component of marketing - are an expectation of future revenue based on past performance and a series of 'what if' formulas. However, in today's environment, we're finding that by the time a question is asked, often the relevant
factors have changed and the model is waiting for a new set of variables.
"LTV Models are outdated because it's difficult to focus on speeding bullets," says Bart. "These models are not designed to interact with the dynamic technologies and marketing innovations that now directly impact every marketing decision."
A constantly evolving business environment
Business is changing because your customers are changing and their shopping habits are changing. Companies began with bricks, then clicks and then bricks and clicks. Today, almost everyone is wireless, interactive and virtual. Previously, companies spoke of never-satisfied
customers; then they became never-satisfied, real-time customers.
Today, it's your customer who controls the selling process - oftentimes, by the click of a mouse. Although there are numerous ways companies can influence real-time buying decisions, a better price, better service or a wider selection could be just a keystroke away. This makes customers less committed and in turn, completely undermines the LTV model.
So, you have to create relationships that last. To do this, measure each customer's dynamics - including demographics, lifestyles and purchasing history. The critical dynamic is not lifetime value, but where your customers are in their lifecycles of buying.
And most importantly, you must know when your customers have defected and initiate actions to get them back.
New marketing models for a new marketing environment
Many marketers believe retention is the hardest part of marketing. No so, says Bart. "If relationships with customers are built through a database-driven, marketing-focused initiative, you can reward patronage; you can recognise and thank your loyal customers while communicating value and reasons for the next purchase."
New marketing models are focusing on building relationships with customers based on a growth scenario of building share of wallet, not share of market. It begins by making every CCP a positive experience through exemplary service, timely and meaningful communications and rewards that are easy to understand and use.
It demands a customer-centric, enterprise-wide, management-led campaign that is as close to real time as technology and budgets allow.
It is important to consider whose lifetime value should be measured. Traditionally, marketers have measured the customer's lifetime value to the company. Maybe it would be better to turn the model around and measure the company's lifetime value to the customer.
If defections are a problem in your company
Management's challenge in today's real-time global economy is to maximise the company's current value to each of its customers, based on where each is in their buying lifecycle.
This requires understanding where your customers are through an "eyes open" focus that incorporates the following steps:
- Know and understand your customers intimately. The first step is to create a database of known customers that includes demographics, as well as buying habits and patterns.
- Now, employ direct marketing tactics to reward and communicate with your customers while tracking their buying behaviour patterns. Then, through a variety of reporting models, look for changes.
- Because all customers are not equal, it is important to group them to identify changes. It is easier to work with ten clusters of customers ranked in order of sales importance than with one homogeneous group. Clusters exhibit different buying patterns representing where customers may be in their lifecycles with your company.
- Further segmentation - utilising known demographics coupled with recency and frequency information - may help build a very accurate picture of customers in varying lifecycle stages.
- Survey customers who have been identified through database tracking to get a better understanding of the reasons for buying pattern shifts.
Implement an 'eyes open' approach
The strategy of employing a database driven, relationship-marketing focus applies to all businesses in all industries. Use this strategy to boost retention (and share of wallet) of your most valuable customers. This type of "eyes open" strategy revolutionises the concept of lifetime value, using database and direct marketing tactics to turn "customers for the moment" into "customers for life."
And remember, the growing range of customer contact points highlight the fact that you need an integrated strategy and that your staff needs to be trained across all points of interaction. This is not a short-term approach, but a long-term attitude.
These forgotten vendors, sometimes more correctly called 'providers,' often bear the brunt of a campaign planner's bad planning or miscommunication.
Audits are being done all the time within many companies across most departments to identify problems, opportunities and in some instances, the irresponsible or 'not accountable' behaviour of management and their staff.
We are often asked how we survive the hubbub of our every day business activities, the changing economy and building a balanced life. Simple! It is through our business model of 'collaboration' and support, building trusted partnerships with all our valuable customers, service providers, business colleagues, friends and family. And keeping an 'open door' policy - you never know who will walk in.
The communication industry is either restructuring, re-engineering or re-something-or-other. And with so many breakaway agencies popping up weekly - the question is asked more and more, how do I choose the right agency and do I have the right agency on board.