February 1, 2023
Companies everywhere are looking to cut overhead and other costs to keep up with a changing market and an economic recession. That usually means that marketing budgets are the next to go. Much like during the pandemic, businesses will have to pivot and discover new marketing solutions to combat the economic recession, inflation, and other market changes. Your competition is getting savvier, so the question becomes - what are you going to do about it? Marketing is critical during this time. These events can cause the marketing message to shift due to the new challenges your current customers or prospects are facing. Don’t be afraid to revisit your marketing strategy and buyer personas to make sure your messaging and positioning are still relevant.
Often in businesses we work with, CEO’s or other members of the leadership team, get laser-focused on a customer acquisition strategy. New leads, new leads, new leads! That’s great, we do need to talk to strangers and we need new customers to grow market share. But in certain businesses, customer retention strategies should be just as important.
With one of my recent clients, we did an exercise to calculate the lifetime value of a customer. What we discovered was that customers are 10% more profitable every consecutive year. So in year three, these current customers are now 30% more profitable. On a high-priced product or service, this makes an incredible difference to the company’s profitability. So then the question becomes, what needs to be done to retain these current customers? And how much of our marketing budget needs to be allocated to retaining customers and acquiring new ones? A challenge I enjoy.
In this chart from Gartner, I am most focused on the 31% of loyal customers who still trade down. These loyal customers are defined as customers who have been buying from you for a long time, but due to certain factors, have decided to seek less expensive alternatives. Those customers might be the easiest to sway depending on what they “actually buy” and not what you might be selling. How are you finding out what’s important to them and what they are actually buying? And are you regularly building these relationships by doing touch-ins and showing how valuable they are to your business? I have two options to help with this:
Hire an outside company to speak with actual customers and find out what they find most valuable, what they are lacking from the relationship, and if they are a true raving fan (loyal). BlueByrd has executed dozens of voice of customer research projects. In fact, we like to do it before we kick off any engagement so we can get ahead of the conversation to find out what the customers value and find different about your business.
Tangent: product managers, or very technical people, when asked “tell me about your product” will often start by telling us about the shiny features and benefits. Don’t get me wrong, I love features and benefits and how the product actually works. BUT - that is not always what the customer is buying. They could be buying peace of mind, efficiency, a guarantee, or whatever it is that the solution provides for them from a physcological standpoint.
Doing a regular check-in on your customers can give you more information than you might think. It’s relatively inexpensive to use a service like SurveyMonkey or TypeForm to gather information. Asking the right questions is important and should be thought through. In 2017 I started working for an Occupational Medicine service provider, and they were doing very little to collect customer feedback or data. With nearly 50 clinics, they were unsure of patient interactions, how the staff was performing, and if people were likely to come back or not. Upon implementing an online customer satisfaction survey, we set up a text message automation so an hour after someone’s visit, they would receive a text message with a link to a survey to share their experience. What we found was that 88% of the interactions were incredibly positive. They actually had a very high Net Promoter Score (NPS). The results were reassuring and helpful to get specific feedback. Compared to the paper survey they had in the clinics, this automated online survey increased survey responses by a whopping 800%!
The point is, if you are getting feedback directly from the customer, you can fix the issues and continue doing what they value most. Don’t be afraid to hear what the customer has to say, embrace it.
Once you have customer feedback, you can use it to boost retention and gain new customers.
The final chirp
You may not be able to win over every single customer, especially in commodity-priced businesses. Understanding your customer and why they buy will give you a massive advantage. Once you know what they value, you can use that to maintain and grow the relationship. BlueByrd can support these initiatives and give you some practical advice on what your next steps should be.
Positioning outlines why your product is unique in comparison to market alternatives, and messaging describes to your target segments what you’ll do to deliver on the promises made in your positioning statement. It is a powerful one-two punch, and you need to be able to communicate yours before you start spending money on tactics.
Properly understood, the job of a marketing department is to drive revenue for the company. Some marketers do so by building and maintaining a brand, others focus on generating new leads, and others still focus on enabling sales to close more quickly and consistently. A good company with a mature marketing department does all of these things, even if they focus on some areas more than others. But there’s one area of revenue generation where the marketing department is often relegated to a passive participant or even outright excluded: pricing.
Congratulations! We have officially made it to the end of the year. Are you tired? Or do you feel accomplished? We hope it’s the latter! The BlueByrd team has been hard at work this year working with B2C and B2B companies in healthcare, oil & gas, chemicals, manufacturing, leadership development, software, financial services, robotics, and senior living industries. We doubled in headcount and revenue this year and we couldn’t be more proud or thankful to our partners and clients for choosing to work with us. Cheers to another amazing year in 2023!
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