Optimizing Revenue in the Customer Life Cycle
High-performance marketers recognize that optimizing revenue is a journey and not a destination. After all, customer behavior evolves based on need, the right time to buy, and through the appropriate channel. Customer life cycle marketing is dynamic in nature, but the rewards are great because it is one of the more effective strategies for acquiring and retaining customers. Evolving your customer life cycle marketing to drive revenue performance not only generates higher profits but also creates a more satisfying experience for customers. Such marketing can be achieved by following eight proven best practices.
Step 1: Zero in on the customer life cycle.
In developing a multichannel marketing strategy and executing campaigns, most marketers profess to be very customer-centric. But often that customer centricity is very linear. It typically views the customer in the context of new customer acquisition, and there usually is homogeneity about the interaction—disproportionate spend on one marketing channel or a lack of insight on how the customer wants to interact with the brand.
According to Forrester Research's "Customer Life-Cycle Marketing Demands New Metrics," released in February 2011, a customer life cycle approach forces the marketer to think about the customer's buying process along four key dimensions: discover, explore, engage, and buy.
These dimensions represent different strategies, channels, and forms of customer interaction and buying opportunities. In fact, according to another Forrester report ("Cross Channel Design, One Channel Pair at a Time," released in January 2009), 70 percent of all buyers want to interact with brands across different channels, depending on their buying stage. Adding to this complexity is the stratification across interaction platforms (tablets, mobile, laptops, PCs, and kiosks) and voluminous customer data sources across and outside the organization.
Take the four stages and design integrated multichannel campaigns, through the use of program flows, for each stage. For example:
1. Discover: Welcome and Lead Generation/Customer Acquisition Campaigns
2. Explore: Nurturing Campaigns
3. Engage: Re-engagement or Engagement Campaigns
4. Buy: Promotional or Call-to-Action Campaigns
The only way to create and drive an effective multichannel marketing strategy is to build it from the outside in—through the customer life cycle, mapping the various stages to your customers' buying behavior, channels, platforms, and data sources. The combination of buyer behavior, channels, platforms, and data sources around the customer life cycle also contains the necessary information to drive a much more effective multichannel marketing campaign based on right-time revenue optimization, or making the right offer at the right time in the customer life cycle.
Step 2: Review customer history to determine your starting point.
The most obvious place to begin multichannel marketing is with the discover phase of the customer life cycle. This is especially true of marketing organizations that are totally driven by selling more products. At this juncture, marketing organizations often set up their outbound channels—i.e., email, events, and inbound channels, SEO, pay-per-click, and social media—to drive the most leads into the top of the sales funnel or to create buying opportunities, in the case of B2C. However, an initial mistake marketing organizations make in taking this approach is failing to review their customer interaction history. This history, with the idea that past behavior is the best predictor of future performance, guides the marketing organization toward the right combination of channels to use in its multichannel marketing strategy.
The explore and engage stages of the customer life cycle are part of the continuum toward producing buying opportunities, whether as a sales-qualified lead in B2B or a ready-to-buy in B2C. Again, customer interaction history is critical. While leads may be initially generated through email, events, or a variety of inbound channels, this stage may see more time spent on the Web site downloading various forms of content, interactions in online groups looking for customer references, discussions with sales, or continued receipt of email campaigns with new offers. In this stage, since the type of interaction is different—i.e., a potential greater readiness to buy—so are the channels needed to reach and cultivate them. To bring these two elements together, marketers must carefully map their campaigns to the stage.
Step 3: Define the use of customer intelligence.
Marketers embrace the need for customer intelligence as a way to gain actionable insight to optimize revenue. However, many view the creation of customer intelligence as costly and complex. The issue isn't whether customer intelligence is necessary; it's what kind of customer intelligence do marketers need to effectively segment their markets and then apply it to the customer life cycle? Defining the issue that way enables marketers to treat customer intelligence as an evolution, rather than a revolution, by:
- Treating existing data as customer intelligence
- Learning from it, e.g., what size customer or title groups are your best prospects
- Improving upon it over time and filling in the gaps—even if it is basic firmographic information, such as revenue size, industry, and titles
Taking this approach helps marketers to learn and achieve results. Marketers will discover the benefits of database marketing and applying customer intelligence in more meaningful ways, and will begin the execution of multichannel marketing campaigns, at the right time, and in the right places, to optimize revenue.
Step 4: Apply customer intelligence to the customer life cycle.
Most marketers would be very surprised to learn they already have what they need to create more sophisticated segmentation strategies that are customer life cycle based. In fact, they need to unlock the power of customer intelligence in the form of their existing data. Whether all of that data is readily accessible, inaccurate, or complete is not the point, nor should it hinder you from beginning your customer intelligence journey. What is there is actionable today, right now. Even the simplest marketing campaigns produce a customer interaction history that qualifies as customer intelligence.
Ask basic questions that begin to tell the marketer who is typically responding to their campaigns and how. What is the best way to engage them? Is this the best market segment? In this simple example, a marketer would form the beginning stages of segmenting, profiling, and interacting with customers in ways they want to be communicated with and at the most opportune time.
Step 5: Know when to educate and when to engage.
Most marketers don't think about the difference between education and engagement marketing. But the difference is critical in customer life cycle marketing, particularly in marketing more complex products.
Education marketing can differentiate and create value in the mind of the buyer, while engagement marketing can create a greater connection between brand, need, and buyer behavior. The key is your decision making around when to apply these forms of marketing at particular stages of the customer life cycle.
The discover and explore stages are particularly suitable for education marketing. At these stages, buyers are looking to understand their need, or perhaps eliminate particular types of products. The objective in this stage is to move the customer further along, toward the engage stage. In the engage stage, engagement marketing is about issues like trial, reviews, interactions among users, and affinity to the brand.
Understanding the difference between education and engagement marketing can also help in channel selection at different life cycle stages.
Step 6: Explore your customer's entire journey.
The customer life cycle should not be confused with the sales cycle. It is a continuum from the life cycle of a prospect to being a satisfied customer. It encompasses both acquisition and retention.
Most marketers, especially in the B2B world, think primarily about their prospects as future customers, and secondarily, about their existing customers as having limited upsell and cross-sell opportunity. But if you think about customers holistically, your existing customers can provide insight into the behavior of your best prospects, while also significantly increasing the opportunity for upsell and cross-sell.
A holistic view of the customer, around a single profile that details all aspects of the customer's buying behavior, from purchase history through product use and customer service, provides sophisticated segmentation opportunities to increase revenue performance.
Step 7: Drive account penetration and market penetration strategies in tandem.
At the highest level, there are two types of customer life cycle objectives and strategies marketers must consider when leveraging buying behavior—account penetration and market penetration. The former focuses on customer retention or brand loyalty, while the latter is critical to new customer acquisition. Unfortunately, most marketers have become preoccupied with market penetration. However, they must take their organization's business objectives into consideration, rather than assume that new customer acquisition and increased market share is the defining corporate goal. By formulating a specific segmentation and life cycle strategy around account penetration, organizations can significantly grow their company's top and bottom lines, fueling new sources of growth.
Step 8: Get there faster with an action plan.
Marketers need to remember that creating a roadmap toward more sophisticated customer life cycle strategies is a journey, not a destination. The journey involves a specific plan toward realizing the use of customer life cycle marketing to increase revenue performance. However, marketers need to begin that journey by using the data they have available today to drive significant, incremental improvement of revenue results. Following these eight steps will create an action plan for the entire marketing organization to begin thinking and behaving as high-performance marketers focused on the customer life cycle.
Joe Cordo is CMO of Extraprise, which specializes in right-time revenue optimization for B2B and B2C enterprises, providing database marketing and demand generation services. For more information, contact him at joe.cordo@extraprise.com or visit http://www.Extraprise.com.