Getting More from What You Have
It’s difficult to find a consumer facing business that is not being disrupted by the rapid pace of digital evolution. Social media has altered customers’ expectations of the quality of services and communications they receive. Smart phones and mobile apps are changing the way people search for products, and the continued rise of e-commerce models is changing the way people buy those products. To address this environment, businesses must decide where to focus the majority of their energy—on acquiring new customers or finding ways of getting more out of the customers it already has. I will examine the latter.
For many businesses, particularly larger ones, the return on customer acquisition programs has declined significantly. The “digital disruption” is one major cause. But since the global financial crisis, many businesses are experiencing increasing competitive pressures in their markets, a slowing in customer growth and rising costs to acquire customers. As businesses encounter and recognize this point of “entropy”, they have begun to focus on how to generate more revenue from the customers they already have.
For these businesses, a digital customer experience plan can form the sharp end of a marketing strategy that can generate huge value. A well thought through and executed plan will both leverage any data and insights that already exists about your customers and also identify what data points are most valuable in determining your marketing strategy and how to collect them. Developing a digital customer experience plan will inevitably shift the organization to a “customer centric” marketing strategy.
Developing and executing a customer centric marketing strategy is transformational for most businesses. It nearly always identifies untapped revenue streams, begins a process of increasing customer lifetime value and more generally changes the direction of a marketing strategy in a way that significantly improves margins and increases cash flow. And there are “indirect” benefits that usually flow from such an approach. One of the most significant of these is that customer acquisition costs fall due to an overall rise in customer advocacy. As the company increases its focus on existing customers, many aspects of the overall customer experience begin to improve. As customer satisfaction scores go up, the number of customer advocates increases.
In the book “The Experience Economy”, Joe Pine and James Gilmore describe how businesses can achieve sustainable profitability by focusing on the needs of the customer and tailoring experiences to suit them. They compare the emergence of the trend to create revenue from customer experiences to the rise of the industrial economy. To quote the authors:
“ …the growth of both the Industrial Economy and the Service Economy brought with it a proliferation of offerings that did not exist before imaginative companies invented and developed them. That’s also how the Experience Economy will grow… Those businesses that regulate themselves to the diminishing world of goods and services will be rendered irrelevant. To avoid this fate, you must learn to stage a rich, compelling experience… ”
The world we now live in is in the process of becoming forever changed by the perfect storm of technological change and the aftermath of the global financial crisis. Your customers are still willing to spend; they just want the right reasons to do so.
Mark Cameron is CEO and lead strategist of social media conversion and commercialization agency Working Three. While his agency is based in Melbourne, Australia, he works for some of the world’s most innovative and forward-thinking brands. As a regular speaker and writer on social media and digital strategy, Mark stays focused on customers and outcomes, not the technology, leading to simple strategic conclusions.