Why Marketers Should Focus On 'Old' Customers
Technology and service providers, especially those that target B2B model, get very excited about the prospect of acquiring a new customer. New customers are not only important for driving future revenues, but also keeps up the momentum as seen through the eyes of investors, analyst firms, the media and even employees. However, in the process those who get most ignored are existing customers. In his new blog post, Todd Berkowitz, research director at Gartner states that renewing customers and growing account revenue are typically far easier and more cost effective than trying to increase revenue by adding new customers.
These revenue sources are often more predictable and higher-margin and reduce the need to continually close many new customers every quarter, which is why many providers often measure customer lifetime value as a key performance indicator. Berkowitz estimates that providers can increase revenue by as much as 20% by taking a programmatic approach to marketing to existing customers.
“When study after study shows that it’s easier and cheaper to sell to existing customers than to try to acquire new ones, marketers should be completely engaged in this effort. Account managers do a great job with account maintenance but they are neither marketers nor product experts. And that’s a problem because customers don’t just want access to support or basic account management, they also want frequent contact, tailored offers, white papers and other things that should be coming from product marketing and management rather than sales,” explains Berkowitz.
In a Gartner survey of over 500 buyers of B2B technology and services completed last 2013 also showed a significant number of respondents viewed these activities as extremely significant in terms of expanding the relationship, and therefore the propensity to buy more technology and services
“Of course you can’t simply flip a switch and start marketing to your customers without a thoughtful, programmatic approach,” says Berkowitz, adding that expanding usage, cross-selling and up-selling is very different to making the initial sale.
Gartner recommends a framework based on four steps including:
Agree on Marketing’s Role and Objectives Collect, Consolidate and Correlate Data to Uncover Hidden Opportunities Map Content and Activities to the Customer’s Buying Journey Enable the Field and Partners for Selling to Existing Customers
Each of these areas can require significant time and effort upfront. While so much more data is available than ever before, not of all of it is created equal, and it’s important to figure out what really matters. Analyzing the data usually requires tools that work based on resources, skills and IT support. Content geared toward existing customers will need to be developed or modified from existing content. And if the sales force (particularly the account managers) and partners aren’t really adept at cross-selling and up-selling, they will need training and support in order to be successful.
“In the end, a customer base should be viewed as an asset, one that needs to be both protected and constantly nurtured to gain maximum value. To capitalize on this asset, provider marketers need to apply the same level of discipline, rigor and effort toward expanding existing account revenue as they do toward acquiring new customers,” Berkowitz sums up.
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