This CMO Talk with Michael Leander follows up on CMO Talk part 1 (find it here) and talks about customer retention and how to improve data driven marketing through profiling. Questions were asked by Suresh Thomas (GM, marketing with Strategic Marketing Services).
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Impact of customer retention programs relies on better profiling of customers
There is a clear correlation between your ability to improve or sustain customer retention and how well you have profiled your customers. And that is what this brief talk is about. Suresh Thomas asked me a few questions. See what we talked about in the video below or above.
Customer retention vs. customer acquisition: An unfair fight
As mentioned in the video, customer acquisition activities nearly always takes the front seat when it comes to resource allocation. And that is a shame. Most organisations can benefit hugely from more and better focus on customer retention.
There is plenty of evidence that shows why businesses are less focused on customer retention from a marketing perspective. For most it is just a state of mind. When top management are looking for growth, they focus revenue from new customers first. Perhaps it would be better to think about more from the good customers first.
Marketing to existing customers is so much easier and far less risky than marketing to potential customers. I think the cartoon by Ted Goff really says it all.
Logic, you say.
Absolutely, I say. But then ask yourself; are you following that logic? Are you focused on creating a good customer retention strategy, developing it, executing it, monitoring it? If you are, congrats! If you are not, then perhaps that is something you should look at now.
And if you do. Start with profiling. Check that you have a good database in place. And make sure that you have defined what type of profile data you need in order to be able to engage existing customers best.
Here are 3 quick tips to get started:
1) Look at how you can get transactional data (purchase behaviour) into the equation. Most businesses struggle with that and eventually marketers give up. If you don’t know how to make this happen – talk to an external expert or consider having someone host your database.
2) If you are tracking email campaigns and direct mail campaigns, use behavioural data to improve each step in the communication flow. Think about lead nurturing and how lead scoring can potentially help you. (see more about that here)
3) Make sure that you learn more about each individual customer in each step. Those whom don’t respond, get to them using a different channel. Think about how you can involve telemarketing and/or your sales reps in your campaigns. If the right customers don’t respond, you’ll want to make sure you understand why not. Your sales team would want to know that too.
Best practices are those you are able to create for your organization. I think that improving customer retention is all about focus. And that’s what we often tend to forget because we are too busy focused on customer acquisition. In my opinion that is often a mistake. But luckily one we can correct.
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