Customer Loyalty: Best Practices in Customer Retention & Growth

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  1. In many technology firms, Marketing is focussed almost exclusively on identifying prospective accounts with very little effort on existing customers. Once a prospect converts to a sale, the relationship is primarily managed by Sales. This divide makes it challenging for Marketing to focus efforts on generating revenue from existing customers.

  2. Because the cost of closing prospective accounts is increasing, Marketing’s ROI is declining and this can result in Marketing budget cuts. If Marketing had a greater role in communicating with existing customers, organizations would generate more profitable sales revenue and Marketing would be able to deliver higher RIO.

This ITAC/SMA Marketing & Sales Executive Think Tank was hosted at IBM Canada in Toronto, Ontario by Greg Coughlin, Client Director, Rogers, IBM Canada Ltd. The discussion was moderated by Bob Becker, Principal, SMA.

Attendees

  • Rob Daleman, VP, Corporate Marketing, GMC Software
  • Claude Couillard, Canadian Field Marketing Manager, Hewlett-Packard (Canada) Co.
  • Greg Coughlin, Client Director, Rogers, IBM Canada Ltd.
  • Azhar Khan, Director, Lead Generation & Marketing, North America, Interwork Technologies
  • Craig Taylor, Client Executive, Channels, Lenovo
  • Trevor Dantas, VP Marketing/Digital Products, Toshiba Canada Limited
  • Pauline Zelazny, Manager, Digital Marketing & Communications, Toshiba Canada Limited
  • Peder Enhorning, President & CEO, Unilytics Corporation
  • Paul McDevitt, Business Leader in Marketing Sales, Services/Marketing Strategy, Unity Connected Solutions
  • John Wayling, Director, Canadian Sales Operations, Xerox Canada
  • Sandi Sandiland, GM, Xerox Service Marketing, Xerox Canada
  • John Morrison, Director of Strategy and Marketing, Xerox Canada

What We Learned

  • More focus should be spent on existing customers as an organization cannot grow if it cannot keep its customers.
  • There is a great opportunity for Sales and Marketing to work together to uncover additional business, through activities such as referrals.
  • If Marketing could communicate directly with customers, the Sales team could focus on building relationships.  User groups could be valuable for Marketing to obtain upfront and candid feedback.

What is your balance of marketing investment between customer and prospect marketing? How do you establish the balance of marketing resources between customers and prospects?

  • It’s a challenge to balance due to limited funding; just not enough to make impact. Typically funding is for National campaigns.
  • It’s difficult to measure if balance is met. Organization-wide focus is on retention, while Sales is in acquiring new business.
  • Challenges are the follow ups on leads. It is easier to fulfill existing clients than new clients. Sales tends to chase growing business with existing customer base.
  • Sales sells the deal but are not there 12 months after implementation. This sort of timing is a struggle.
  • Sales team should own relationship but unfortunately it is not with the right people. For example, they may have a good relationship with the organization’s IT director but not with the CIO. It is challenging to understand the relationship and level of loyalty.
  • There doesn’t seem to be a lot of focus on existing customers. Customer loyalty needs to go beyond the IT and Service departments.
  • The challenge is to leverage sales force. We should not depend on Sales to drive loyalty. Perhaps there is a need for a loyalty program?
  • 80% revenue comes from 20% of clients. Preserve the core and stimulate growth. An organization cannot grow if they are unable to keep the business.

Why is customer marketing such an overlooked element in the revenue generation mix, and how can you achieve better results? What is the strategy you have established to shift resources from prospect to customer? What are the most effective ways to win new business when marketing to your customer base?

  • It is challenging for Marketing to develop campaigns for prospects versus customers. Sales feels that Awareness Marketing is for net new prospects, not the ones that Sales has been working with.
  • Complex sales involve many parties and may take many months. Sales may communicate again after many months. Challenges include (1) How to leverage customer satisfaction to sell more. (2) How to leverage successful satisfaction level to sell to others. (3) How to control different touch points and be consistent. Sales is unable to manage this type of servicing as well as nurturing the relationship.
  • Content marketing specifically for new customers works but not in engaging existing clients. Generic content is not as successful since there are many different audiences – especially new versus customer.
  • Today’s end user is 90% decided before making their purchase. The challenge is how to get to them before they hit 90%? Become their guide during sales and it can become a more credible lead.
  • Large organizations have clients that ask, “What have you done for me lately”. Large organizations suffer in personal relationship. It is easier for smaller organizations to know and understand their client.
  • Loyalty is not an event but rather a life cycle. Typically, loyalty is not consistent with life cycle of sales. How do you enable loyalty without heavily involving Sales?
  • Not all needs hit at the same time in a client’s portfolio. Obtain client commitment for a reference at time of contract signing. It is easier done on large sales versus smaller ones. Frame success at point of sales to get commitment from a new customer for reference. With a successful sales transaction, this is the time to ask for reference.

Have you seen success with loyalty programs to drive business?

  • MCI, Sprint and AT&T had similar programs (3 months free); however MCI had a specific budget for those clients that signed up and MCI did whatever they needed to do to retain keep them.
  • Ask why customer is loyal? Because they like the product/service? Or because they are “stuck” with it? Could be both; cost of change can be too expensive.
  • Bring all value propositions to “put more hooks into fish.” With more hooks, harder to leave.
  • Loyalty programs can help get intimate with your customer rather than transactional.
  • A loyalty program could be started by paying representatives for customer testimonial/ referrals.
  • Volume based pricing with current spend is working.
  • Create an added value piece to differentiate your product.
  • Better job on references; at time of negotiation is good timing.
  • Tie innovation piece with sticky piece and client is there to stay; watch renewal time become a different conversation; 5-year contract can become a 10-year contract. Make your sticky piece innovative.
  • Think more like a small owner and act like one.
  • Value proposition is Sales; Sales needs to be exceptional so that the client wants to deal with Sales.
  • Focus on an industry, such as conducting a quarterly webinar in the senior industry; get in their face about what is up and coming.
  • Promote on-demand training; all end-users need it. This is added value.
  • Tie emotions to product and services. Apple has done this successfully.

Are user groups effective?

  • Users groups are useful to get them talking on what’s out there. It can give organization insight into your customer advocating on telling you what to build; rather than this is what you’re going to get.
  • Valuable but not perceived as such to the organization as it difficult to measure. For this reason it is difficult to see value.
  • Users groups depends on activity. Marketing uses it heavily to obtain genuine and authentic feedback.
  • Getting customers out of office for a face-to-face event is challenging. Can a video online forum be used? Salesforce Dreamforce is successful.
  • More intimate sessions achieves more valuable feedback.
  • User groups tend to be done selfishly as they need to know what clients need. The better feedback is typically from prospects.
  • Ask your client/prospect why they would leave. This could be a dangerous question; you may learn what is not working and why they are not happy.

Posted By: SMA

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