TransPromo is not for everyone
admin | Feb 15, 2009 | Comments 2
Chief Marketing Officers are confronting a new set of challenges that require innovation. Today, the market demands more ROI for every dollar spent. The current worldwide economy as well as cautious customers are preparing for tightening purse strings and shrinking budgets. The Routes to Revenue™ research initiative released by the Chief Marketing Officer (CMO) Council highlights opportunities for marketers looking to implement programs that realize revenue from dormant or inactive customers while also activating loyalty from existing customers, leveraging color-rich, personalized and relevant vehicles that can cut through the clutter and move customers to action
It’s shocking that in this struggling global economy, a 76 percent of senior marketers believe they are not realizing the full revenue potential of their current customers. In addition, only 46.5 percent say they have good insights into retention rates, customer profitability and lifetime value, which was reported by the Chief Marketing Officer (CMO) Council in a “Routes to Revenue™”.
In tough times marketers want to keep their customer delighted to avoid flight. One CMO recently shared, “2009 is about keeping your current fish in the net happy – not about getting more fish.” So it is not surprising that the Routes to Revenue™ international audit of some 650 senior marketers revealed that making communications more personal and relevant was among the top strategies for realizing greater revenue and profitability from existing customers in 2009.
But not all customers are created equal. In fact, before starting any conversation on customer retention strategy, an understanding the economic value of your customer is key. In fact, recently many studies have been challenging the 80/20 rule. (80% of revenue is generated from the top 20% of customers) So targeting all of your customers may not be financially prudent.
In business school, customer economic value was estimated by using a “rule of thumb” – top 1/3 of your customer’s are the most profitable, next 1/3 was average, and the bottom 1/3- unprofitable. My friend Liz Miller always reminds me,”What good is targeting a customer that does not pay the bill?”
Customer Retention, Customer Re-activation and Customer Recovery are key topics of discussion for 2009. Since TransPromo can play a role in each, let’s do a deep dive over the next few postings.
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Good post. It’s becoming clear that the mass market is becoming much more realistically defined. Customers who don’t pay their bills are unrecognized section of the mass market. Lots and lots of marketing money has been thrown at everyone only to engage the tire-kickers and the folks who want, but can’t afford what you’re selling.
Once the banks figured this out, it led to significant increases to the bottom line.
The enabler is the new information that can be harvested from customer interactions. The banks went first because they organized this info as part of their way of doing business. Only eventually did they learn to harvest it.
The next step is to get some metrics of long term customer value. Your description of the gaming industry is a perfect example. The real problem is that very few industries have a clear metric for life time customer value and customer acquisition costs.
Lee!
It’s clear that TransPromo can be relevant, but it’s just a tool, not a goal or a pot at the end of a rainbow. One of the concerns I hear from corporate customers is that with all of the hype about TransPromo, the thing that goes missing in the conversation is what tools are needed to get there.
2009 will be a year that forces a lot of hard decisions by marketing departments and billing departments. Postage rates are going up, the costs of paper and other components of outbound printed communication are going up, and it doesn’t look like people really want to spend a lot of time online looking for their bills.
Corporate billers will need to figure out which of the many tools in their kit will help them communicate most effectively. TransPromo? Sure! It’s one way. But great integrated customer communication strategies take more than TransPromo.
Pat!