Changing times call for smarter perspectives. As the corporate sentiment takes a swing from unbridled optimism to caution, professionals given the mandate of driving growth face the challenge of quickly adapting to this changed business scenario. Strategy interactions to drive aggressive expansion plans have been replaced by meetings to closely examine revenue streams, client portfolios, operations costs, and profit margins. The list of short term and long term initiatives that populate the minutes of these meetings is as long as a month-end grocery shopping list. Implementing this list is daunting – especially when you are most likely feeling confused than ever before. Revisiting some often discussed management wisdom –may not be a bad idea. The most important task is to track on your revenue growth targets, in a scenario where the marketing budgets have been cut or accountability of the marketing expenditures is being audited with tremendous enthusiasm.
The Pareto principle when interpreted in the context of customers or products – suggests that it is commonsense that we focus on the 20% of those customers/products which are in all likelihood contributing to 80% of the revenues.
Interestingly there is also the ‘long tail’ perspective. Long Tail marketing treats consumers as individuals with unique interests and needs. The long tail indicates smaller and smaller volumes of each product sold for an ever increasing number of niche products .You only need a few thousand people in the entire world to be interested in your niche offer, to succeed.
Given finite marketing resources, what should be the focus ? Do we align ourselves to aggressively push the 20% or should we spread our resources to squeeze out revenues from the ‘long tail’?
The choice is not that easy, yet it has to be addressed and a strategy specific to your business drawn out. I would personally not ignore either. There are risks and opportunities that are associated in both: marketing to finite number of customers and in spreading your marketing resources too thin in promoting multiple offerings across numerous small niches. The risk I realise in both cases is largely associated with the extent of loyalty that we would be able to generate. Though a clicheé, the wise thought would be to focus the marketing energies on building or keeping ‘loyal’ customers. A simple analysis of your customer portfolio over the years – would clearly throw up the potential revenues that you can draw out from your loyal customers – while spending the least of your marketing dollar.
Building loyal relationships is a tedious task – one which has to be taken up with passion. There are numerous ‘rule books’ elaborating easy steps to build lasting relationships with customers. The quick fix steps often miss the foundations of building relationships: that of needing to build mutual trust and be consistently engaged with the customers. Both are a function of frequency of interactions that the brand has had with the customer and the quality of these interactions. The engagements that the brand initiates to drive interactions need to be relevant to its existing customers. Here is the key challenge. The prospect who becomes a customer a few years back moves from one segment to another, example from a young single adult to a middle aged married adult. The environment around him has also changed. If the brand has over the years been able to lay the foundations of a rewarding relationship with this customer – there is a potential for it to expand its offerings to remain relevant to him as he traverses from one segment to another. Brands which succeed in doing so – increase their share of this customers’ wallet instead of losing him to another brand.
In the current scenario – both the customers and brands seek loyalty from each other. They look forward to a reciprocal relationship, one they can depend on to tide over though times. Brands who have invested (time) in building consistent relationship management programs have an advantage. They can leverage this investment and still grow. At their disposal are also some very sophisticated data modeling tools to profile customers and use predictive modeling to anticipate customer behaviour trends and respond to them by aligning their offerings. The ability to generate advocacy, build communities and use networking platforms can further help in optimising their existing relationships. The business of loyalty and customer relationship management is not restricted to loyalty cards, redemption coupons, bundled schemes and databases, nor is it the onus of the marketing department. It needs to be an organisational mandate.
As an organisation I would certainly allocate a majority of my energies on further strengthening my relationship with my existing customers to track on my current and future growth targets. The lifetime value of the equity associated with loyal customers can tide over many a recessions that one would see (in a life time).
Its sad to know that some relation ships failed because of the feelings that they're not appreciated with their partners. Do you have suggestion to avoid it?
Posted by: online writing | September 16, 2011 at 02:25 AM