Surviving the Downturn: Strategies Part 2

In my last post, we looked at re-tooling the “price” – P  in the marketing mix.   This week I’d like to hone in a bit on the “promotion” -P.

We all know that marketing expenditures are shifting from traditional branding efforts and media to more direct ROI methods and “customer nurturing” or social media.  With budgets shrinking marketers are faced with having to do MORE with LESS.  So, what are some of the savvy marketers doing?   

Well that depends on what industry you are in, and whether you are a B-to-B or B-to-C marketer.  But, one strategy that many marketers have embraced is to focus more on RETAINING customers rather than acquiring new customers.  I’m not saying they are abandoning their new biz efforts, but SHIFTING more of the marketing budget towards retention.

If you think about the old 80/20 rule (in the B-to-B world), where 80 percent of your business comes from 20% of your customers, then it really makes sense regardless of the economic climate to keep those customers loyal to your brand.  Many companies are stepping up their efforts to identify and nurture the decision makers and influencers in their top 20%.  It’s not enough to just focus on one or two individuals in an account, but rather anyone who has an experience with your product or service.

Another main reason is the obvious –it simply costs much less to maintain a customer than to acquire a new one.  So, in a downturn when budgets are scarce, it makes sense to change your main focus to maintaining your market share vs. growing it.  Some of the tactics being deployed are:

               Loyalty programs:  Companies that have them are enhancing and promoting them more.   Companies that don’t have a loyalty program are creating them.  One strategy that is also growing is  the “brand ambassador” program.  The brand ambassador program can be implemented with various media —direct mail, email, inserts, collateral material, social media, and by word-of-mouth.  It’s simplest form is the “referral program” where your friend gets xx and you get xx for referring them.  A few more expensive to implement, but bring in a positive ROI are the following social media tactics:

           Tap into customers’ enthusiasm with online ratings and reviews.  Many marketers have seen an explosion of new sales just because they implemented this feature in their website.  One company, eBags expects to yield over $400,000 in profit from a $200,000 investment in one year!

          Create a community to energize your customers.  This works best if your customers have a passion for your product/service and have an affinity for each other –especially in a B-to-B environment.   Constant Contact- an email service provider for small business owners is experiencing an incredible snowball effect from this effort —13000 participants -10% from it’s customer base, with 30% of the community providing referrals. That equates to an 82% growth rate for the company! 

More to come..have a great day!    Brian.

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8 thoughts on “Surviving the Downturn: Strategies Part 2

  1. customer reviews are a great way to get on the fly market research at relatively little cost, on your products and services if the architecture is implemented correctly on your site.

    The feedback however needs to be rigorously monitored by the folks in charge of your CRM and PR to make sure any issues are dealt with immediately and that you develop a sincere and clear line of communications with your clients. Not to mention allows for strategic cross pollination into other revenue streams by proper add on or up sell positioning.

    At the end of the day keeping your clients engaged will reward you on the upturn and allow you to increase your market share when business conditions change.

    Another great post, your insight greatly appreciated.

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  2. Jimbo

    Customer reviews can be great if, as M Van Brakle says, they are monitored closely. I’m sure we’re all aware that most unsolicited reviews tend to be negative. Most customers that have a positive experience generally feel they have gotten what they have paid for and will jump to their next challenge, whereas a customer that feels they have been short-changed is much more likely to write a bad review.

    If your company is equipped to quickly deal with customer complaints through the online review process the idea can work out great, as potential customers can see what lengths your company will go to satisfy the customer. If you are not ready to handle bad reviews and if you don’t have the staff to passionately, pleasantly, professionally and proficiently (my own version of the 4 P’s!) deal with customers the idea can sink you quickly.

    An idea I have seen a few companies grab hold of is the concept of customer forums. This can work especially well if you have a technical product, as they can go online and post questions. Your support staff can handle questions and you will find customers helping other customers as well. If you really want to engage customers to help each other you can allow your own support people to positively rate forum members posts based on the value to the community. Those rating points can then be turned into entries into a monthly drawing or other motivational tool. At least in the beginning it will attract more users to create more valuable contributions, which is the only way to make forums a long-term communication tool.

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    1. Brian Snider

      Hi Jimbo-

      I agree with you. To implement effective programs like customer forums or online reviews, companies must allocate the correct amount of resources in people, time and money to do it right. And to your point, they must be “passionate” folks who interface with the customers directly –not someone with a stoic attitude. Thanks for your insights! Brian.

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  3. Hi Brian,

    I totally agree that focusing on retention is a more intrinsic way to increase the CLV of clients. I do agree that implementing ratings / comments (reviews) can help to bind.

    But if it’s enough to really keep / create a community. I’m not sure. I think a company must do more to test if the possible user groups are interested to build a community at the supplier. I have written a blog with a few steps how this can be tested.

    http://hhvo.wordpress.com/2009/03/28/marketing-20-social-marketing-dont-start-with-your-community-until-youve-proven-that-you-deserve-one/

    In my opinion – creating mashups – to improve the attraction of the business comes before the step to build a community. It’s usually a lot cheaper and can be done faster.

    Kind regards,

    Ha

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    1. Brian Snider

      Hi Ha-

      Interesting take… I have to admit, I haven’t heard the term “creating mashups” yet. I’ll check your blog out.
      Thanks for commenting! Brian.

      Like

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