February 2008

How to have an effective and profitable marketing dialogue with your customers
By implementing these recommendations, you’ll make it easier to secure incremental business from your existing customers. By Rick Brough

We all know that our best source of new business is from existing customers. They are the people who know and trust us. There is built-in credibility that makes the next sale that much easier.
From a pure cost perspective, studies also consistently show that acquiring a new customer costs five times more than keeping an existing one. So it just makes sense to spend more resources on solidifying your customer base and expanding its sales potential, right?

According to a recent study by the US-based CMO Council, nearly three-quarters of senior marketing executives believe their companies are not realizing the full potential of their current customers.

Apparently not, as many companies continue to focus on new business, often at the expense of nurturing existing clients. According to a recent study by the US-based CMO Council, nearly three-quarters of senior marketing executives believe their companies are not realizing the full potential of their current customers.

Marketers today must manage increased competitive pressure along with economic fluctuations, industry trends and changes in customer behaviour. Consumers have more choices and are being solicited by more competitors through more channels than ever before. Thus, it is more important than ever to build relationships that create loyalty. Here are some tips to get you off to a successful start in building productive customer dialogues:

Listen. Your customers give you a lot of actionable information, both explicit and implicit. Your tools must allow you to assemble and deploy data for timely communications. And you need to go beyond transaction data to include data from enterprise solutions like SAP, as well as call centre responses, e-mail click throughs, warranty information and every customer touch point.
Make it easy for your customers to communicate with you by reaching out to them with surveys, newsletters, blogs and other marketing vehicles that encourage interactivity. Pay close attention and put their feedback to use developing new products, services and offers—or refining current ones.

Analyze behavior. Understanding customer preferences and buying habits is essential to expanding the relationship. Reacting to changes in buying behaviour is equally important. Focus less on outbound “push” tactics and concentrate more on cross-media dialogues that leverage your customer knowledge. But beware of old analytic tools that might not meet your current needs.

Aim straight. You don’t want to ignore any customers, but some customers warrant more time and attention than others. Make sure that your analysis identifies customers with the greatest potential and apply more resources to those segments. The process complexity comes from integrating all data from all channels. Getting good reporting from your business intelligence sources and centralizing the marketing database are essential to improving your aim.

Get personal. The best way to remain top of mind with customers is to build personal relationships. “Engaging” customers is the new marketing mantra, and companies that don’t adapt to the changing landscape will likely lose customers, market share and profits. You’ll need to add the required depth to your customer database by collecting and utilizing personal information ranging from birthdays and anniversaries, to age-related data such as children nearing their college years. Just be certain that you conform to Canada’s data privacy legislation, specifically the Personal Information Protection and Electronics Document Act (PIPEDA).

Integrate. Creating effective, interactive marketing dialogues with your customers requires your team to work together seamlessly. It also requires finely tuned communication campaigns across multiple channels, incorporating both print and electronic media. Customers can now move across channels multiple times in making a buying decision. Marketers that can’t communicate easily through different channels get lost in the shuffle.

Be agile. Rapid change and increased competition demand agility and speed. The most successful marketers react more quickly than the competition and execute their programs with greater speed. But don’t underestimate the challenge, especially when moving from mass marketing to more complex micro-marketing approaches.

Invest. Today you must manage more products, more promotions and more marketing channels in an effort to retain and grow smaller segments of customers— even down to the individual level— with each having unique expectations. This requires an increasing number of smaller marketing initiatives, trigger-based communications, and an emphasis on interactive marketing processes. And you likely need to accomplish this with fewer resources, which requires processes and technologies that ensure both speed and adherence to best practices. In short, your marketing department needs the right tools that enable the automation of many marketing processes and the right people who have the expertise in multi-channel marketing optimization.

The takeaway
Implementing these recommendations for building customer dialogues will make it easier to secure incremental business from your existing customers. What’s more, you will increase sales more cost efficiently than acquiring new customers. Capitalizing on this approach never made more sense as you try to generate more ROI with fewer marketing dollars. Creating effective and profitable marketing dialogues requires interactive conversations that include listening to customers, analyzing the data, aiming at customers with the highest potential, personalizing the communications and integrating the campaigns across multiple channels. Your ultimate goal is to leverage the dialogue knowledge you gain to address the age old direct marketing adage of “Right Message, Right Customer, Right Time and Right Channel.”

Rick Brough is director of consulting for Transcontinental Database Marketing, (www.transcontinental-dbm.com), which offers a full range of database marketing services ranging from strategic guidance to tactical execution.