Tag Archive: go-to-market


Where to Spend Marketing Dollars: Acquisition vs. Retention

In past posts, I have spoken about a disciplined NPD (New Product Development) and closely managed Go-To-Market process as necessities for effective market release. I have also spoken about target messaging and product individuality. These are all table stakes to making sure customers are cared for and products hit the right audiences. Today, I want to focus more on the age old marketing strategy question of where to put your marketing dollars, customer acquisition vs. retention.

It have long been a debate for companies who argue over whether it is more important to retain old customers because it is less expensive than acquiring new ones, or spend more to acquire because it is one of the most effective ways to get the new customers that will produce new revenue and become more valuable. Practically, a balance is ideal.

Retention Vs. Acquisition

There is a long standing axiom that companies putting money into customer retention over acquistion net the best return. Retention focused messaging is a good place to start, positions your company well and allows you to focus on the messaging that draws customers to your product. It should increase margin accretion, engagement and loyalty within the customer base. Always a good thing!

How to spend additional dollars and the split of the budget becomes the next important hurdle to striking a practical balance. The decision should be based on traditional product metrics (margins, internal costs, competitive issues, etc.). However, most companies proportionally spend more of the marketing budget on acquisition over retention. Why not? Acquisition is sexy and brings in new dollars. Albeit usually at a discounted rate and lower margin. Heavy acquisition spend should not be at the risk of retention or you will see increased churn and lower customer loyalty. Spend more on retention and those costly acquisition programs are not necessary because fewer customers are leaving. Take care of retention and you can hone your acquisition messaging and grab a larger share.

CRM is all about building relationships

Effective companies learn about their customer’s needs and values, and create programs to match that learning. Loyalty programs work great here. They give the customer value, provide product and industry education to the customer while affording you with an amazing opportunity to interact with the customer and learn what they need and want. These programs should define decisions on training and additional customer services. It opens a communication line with the customer through which you can build a more intimate relationship. Administration of the program is personal preference, but should be easy to understand and follow for the customer with social media as a lynchpin. Customers will return and “buy-up” with you if you are engaged with them and providing perceived value. You can even use a loyalty program as part of an integrated acquisition platform if you have strategic partners that provide value. Mining your partner’s customer records may be possible if there is a tie in. 

Onboarding – Done Right  = Stickiness

O.K. you are going to need to spend some money on acquisition, but make it a meaningful spend. Many companies fail to maximize a new customer’s relationship because of poor understanding
and investment in managing the relationship during on-boarding. Too often a company over “sells” a newly acquired customer without educating them on the brand promise, how the loyalty program works, or the many ways to interact or purchase with the company. If companies invest some time and effort immediately post point of sale in customer education, they can increase customer loyalty and add-on sales. Companies need to make customers feel special with a thank you e-mails, survey on purchase processes, or invitations to private events. You can even ask for customers to create an online profile with social media hooks in the survey process. Essentially, you are building better, longer lasting relationships with customers who are truly engaged. Don’t let your hard earned acquisition efforts go to waste by not properly onboarding your customer. On-boarding correctly will yield repeat customers, loyalty and stickiness.

In Summary

Generally companies with fully baked value add loyalty programs, spend 30% of their marketing dollars on retention. You should be spending 60% of your dollars on customer growth. If you have a good customer, you should be able to grow them. You should make sure you are getting as close to 100% share of wallet before abandoning spend on a customer. This resultant margin accretion is found money. You should ensure that person is growing by the level of involvement with you. Were they after the lucrative offer, or have you done a great job on-boarding them and making them an advocate for you?

Interestingly, in light of today’s economic challenges, companies who already have a loyalty program in place, have identified retention as a key goal for the loyalty strategy, and who understand that they are spending money to keep customers are much better off than those spending 90% of their budgets on acquisition. A clear message that can be delivered to existing customers is “we recognize that times have been hard. Here’s what we can do for you Mrs. Customer.” There is a level of trust in the relationship investment that makes it an easier message. So instead of spending $100 on that customer trying to acquiring them and discounting your product base you could spend just $3 talking to them, maintaining their business and making sure they don’t go to a competitor and being able to say “we’re here for you when you’re ready to spend again.” That $3 is a lot cheaper than $100. You create and enduring relationship that customers value and help thwart consistent “promo hopping”. So, spend on retention first and then spend on acquisition with a better focus on how to retain 

In the past I have spoken mostly about getting your product to market, making sure you have good marketing programs to support your brand and building an ongoing relationship with customers.  Now, I want to touch on how you can offer support for your product and the role of customer self-assistance.

Just a few years ago when you needed help for a product you bought, you would call the company you bought it from and talk to someone. Companies often staffed call centers to handle billing and tech support. Soon after companies began outsourcing all or parts of call centers to offset direct labor costs. We are at a crossroads in the customer support business. Some companies offer staffed call centers, while others have begun migrating to a more 2.0 expereince moving primary support online. Much of this depends on the product/service being offered and the target customer base. If you are re-selling Retail Electric service for example, you are probably still very heavily supporting your customers through traditional call center tactics. If your model includes SaaS apps or other web-based distributions, you have probably added more self-help options. Truthfully, we most commonly see a hybrid approach of traditional support options and next-gen apps. Companies need to understand how “their” customers will seek support.

There are endless options you can choose from when offering self assistance. From self diagnostic tests to chat and e-mail, the choices are endless. Not every option is right from your product or customer base. Choose from some of the options I outline in the two major categories below and apply them consistently to your product/service, offer, marketing, brand and customers.

  1. Social Media – The social web spurs conversations that can help or harm a brand. Customer complaints can reach thousands of people within minutes. Consumers expect an immediate response. Monitor conversations on Twitter, YouTube, RSS feeds, your Facebook fan page, and other industry specific social channels,  and forums. This helps you respond quickly and appropriately to global or groups of issues. All of these social channels allow you to engage your customers in authentic conversations to assist them, and support brand loyalty. Offer peer-to-peer support forums. By allowing them to ask questions and find answers in an online community, users talk to each other, build relationships and solve issues without adding a single call or email to your contact center’s workload. Monitor the forum content and gain reusable content for your knowledge base.
  2. Web Services – According to Forrester Research, 72 percent of online consumers prefer to use a company’s website to get answers to their questions rather than contact companies via telephone or email. You need to provide this growing base of customers with options. You will free up agents to handle Tier II and III issues, drive down costs and do more with less.  Build and maintain a knowledge base of product information, and FAQs. Continuously add to it through social media tools, dynamic adds and search etc. Offer pop-up guides within the base to lead the conversations, or even link out to chat/e-mail services. A staple in the web services category is Chat. It can bridge the gap between your website knowledge base and phone-based interactions. It provides a way to engage a customer or prospect before they abandon a purchase or when they have problems solving their own customer service issue. Consumers like the immediacy of chatting with agents on an organization’s website. Chat can provide more timely and personal resolution, especially when leveraged as a complementary point of contact to the traditional call center support channel. For more complex issues, offer e-mail support with defined turn around times. Finally, push it to the cloud and make all of this available anywhere, anytime and any place. Mobile support with native app building is here and beginning to move all of this information past just PC accessibility. Take advantage.

The key in all of this is to provide your customers with interaction options across many channels and use your common knowledge foundation to provide consistency and efficiency. Empower your customers to self-serve at their convenience, through their communication channel of choice. Please listen to your customers and learn what they are thinking and act on it. Who cares if you think it’s a great service plan if they don’t? Keep your most loyal, knowledgeable customers—the ones with strong opinions and great product ideas close. Make them part of the ideation and innovation processes, so they can help you identify new business opportunities, guide your product roadmap, prioritize and refine ideas, and develop your next breakthrough product. Lastly, evaluate, baseline, identify and adapt to your customers.

You may have the best GTM strategy, an excellent project manager, built and brought your product to market with the customer in focus, but if your offer is not surrounded with marketing programs that match your brand, you are sure to miss your mark. The continuum of the GTM cycle must include marketing programs as part of the LEARN Phase of LBGUPS that add to your company or product line brand.

Let’s assume we are starting our brand, launching a new product line or transforming our offer plan for a product line. We need to ask a few key questions:

  1. Is our brand and marketing programs conveying consistent messaging, and building on our established brand?
  2. Have we done research and segmented our customer base to target our offers?
  3. Do our offers leverage each other?

Tamsen McMahon adds another apropos question to the list from a recent post on her blog shared with Amber Naslund http://www.brasstackthinking.com/2010/08/offer-or-sell/ “Offer or Sell?”.  Are we offering what we sell or selling what we offer?

Companies need to further the customer relationship and offer value vs. a product. Do you want to be perceived as a company that pushes widget after widget with little value add? You might  sell units, but will might fail to build a lasting relationship with your customer.  The marketing activities you use to support your product should not only push your current offer, but enhance brand awareness and elicit brand resonance/loyalty. If your brand fails to resonate and people don’t buy in to, you are doomed.

In today’s climate of corporate distrust fueled by bankruptcies, accounting scandals and non-transparency, your brand must be consistent truthful and respected to continue to enjoy success. As David Kiley explores in the clip on my vodpod widget on the right for Business Week, brand trust is what sets the stage for great performance and consumer trust.

In a nutshell, bring your product/service to market, build your reputation, treat your customers as your #1 commodity and watch the profits roll in.

You have followed my “Golden Rules” to bring a product to  your customers putting them first and managing the process through controls. Now you need to keep the customer in that #1 position and leverage them for add-on sales and incremental revenue. It is significantly cheaper to retain and add-on to a customer base than it is to acquire new ones. Use the information you gather about your customers to make customer service more than just a j.o.b. Give them a quality experience and complete satisfaction, and they will reward you with their business. Use my CRM and customer service strategies to keep your customers longer and engage them for future sales:

Make Great Service a Priority in Your Business

Every great leader establishes “imperatives” for his business and the people who work to make it successful. Excellent customer service must be one of these imperatives. Your staff needs to be trained on your standards throughout the organization; your policy that customers come first needs to consistently reinforced in every setting. Start small and set a standard way of opening/closing all customer interactions. Engage your employees by empowering them to make decisions, use good judgment, and bend the rules appropriate to their level and responsibilities.  Your operating “imperatives” must include good service and your staff must have the ability to operationalize your vision.

Know What Makes Your Customers Tick

Instituting a formal way of tracking your customer interactions will help you identify your best customers, as well as those who may not have utilized your offerings in a while. This will tie to a communication loop I discuss later. There are many software applications designed to do this. Depending on your size and scale of operations , simple Web-based apps or powerful “enterprise software” products might be appropriate. Maintaining current contact information and notes about each transaction with the software, you can sort the data or analyze it to uncover patterns of customer issues/resolutions. You can leverage it to build your knowledge base, CRM strategies and further hone your customer service professionals.

Use your Knowledge Base of Stored Wisdom

All organizations with great customer service programs have one similar trait. They have a consistent system for responding to customer inquiries or complaints. Your employees need to provide accurate information to your customers and offer a  solution to a problem or quote policies that address specific customer situations based on previous interactions or simulated conversations.

Your front line customer service warriors need to know exactly where to look for answers. Developing a “knowledge base” with answers to FAQs, methods for solving problems, and standards for resolving disputes prevents people from relying on the expert knowledge of others only that have more experience. This living breathing store of information should be flexible, provide an avenue for addition/suggestion, and be accessible remotely. Your goal should be to resolve issues during the initial customer contact, and make servicing the customer a comfortable, manageable process.

Effectively Manage Your Customer Relationships

Once you have some history on your customers, and how they interact with you, you can identify your best customers and reward them. You can institute frequent buyer services or cross promote your products with other similar or related offerings across industries. You can extend a service program, offer a 3 for 2 etc., the options are endless. The key here is to manage your customer relationships and reward them for their loyalty. Your churn will drop and your acquisition costs will drop.

Stay in Touch With Your #1 Commodity

Consistently reaching out to customers will make them feel you value their business (which you should). You can use standard off-line tactics, such as postcards, newsletters DMs, magazines or on-line strategies such as e-mails, blast news messages about products, special promos, etc. (of course make sure you follow CPNI rules and give them the opportunity to opt-in/out). Capitalize on social media and ask them to follow you on twitter, subscribe to your RSS feed from your blog or become a Facebook Friend. A simple hard copy or virtual thank-you note after a major purchase goes a long way. This creates a forum inviting customers to contact you with questions, feedback, or to discuss additional requests. Make sure the customer knows that they are your #1 focus, and you are always there to solve their problems, meet their needs and incorporate their ideas into future product developments.

By making customer service an imperative, knowing what makes your customer tick, establishing a knowledge base, managing your relationships and maintaining an open line of communication you capitalize on your acquisition investment and leverage your best sponsors, happy customers!!

Through my experience in numerous SDLCs and product development/deployment cycles one common theme seems to hold true. It is one axiom that when implemented correctly will bring any product to market on time and under budget. This process unifies marketing, IT, channel support and back office.

The cyclical process of Learn, Get, Buy, Use Pay, Service is a proven Go-To-Market strategy that will insure all of your items are cared for and managed to bring a product to market effectively. It is important to consider all of these elements to fully design, develop and deliver truly customer focused products.  Proper implementation however also requires close program management and controls. This approach demands that the customer is placed directly into the deployment cycle. Below is a definition of the different phases throughout the cycle. 

Learn – Contains all of the items that will be implemented that a customer will use to learn about the product. It might contain: Marketing (off and online), PR, cross-channel, blogs, facebook, twitter etc.

Buy – Defines the customer interfaces to purchase the product and the process to complete purchase. Can include transactional, resellers, direct buy, new payment processing etc.

Get – Contains all of the processes to be implemented that will deliver the product to the customers. This may include any fulfillment, legal terms, downloads, FTPs etc. These are the key methods that will get the product in the customers’ hands.

Use – This is the part of the cycle that most people focus on. There are the key methods that enable the product to function. Contains enabling all access points, and opening up code if necessary.

Pay – Defines the processes implemented to enable bill payment by the customer. This might include modifying existing bill adding out additional services, opening up credit card billing, or any transactional services.

Service – In my opinion, this is one of the most important, but overlooked phases of the Go-To-Market process. Most companies seem to consider this as a standalone process and divorced from the deployment process. This includes considering agent support processes, e-mail, chat, twitter, facebook, FAQs, blogging etc. Spending time building these interfaces before a product is deployed will reap tremendous benefits in cost savings, revenue and customer experience.

In summary, if a company utilizes this cycle of deployment they will be forced to place the customer first and challenge all elements of their existing strategies. This will also lead to comprehensive, logical project plans which can be managed and bring customer focused, effective products.