During these recessionary times, marketers are missing out on a big revenue opportunity when it comes to leveraging their existing customers, according to a study by the Chief Marketing Officer Council.
The study, “Routes to Revenue,” found that 75.9% of senior marketers believe they are not realizing the full revenue potential of their current customers.
“It begs the question, "If marketers don't believe they are realizing the full revenue potential of their customers, then why aren't they doing something about it?' ” said Donovan Neale-May, executive director of the CMO Council. “It underscores the tendency of marketers to look outbound rather than inward. In many cases, these folks are spending money on acquiring customers when they could be losing their existing customers.”
The study—based on an online and in-person survey of more than 650 senior marketers conducted in the fourth quarter—also found that only 46.5% of marketers believe they have good insights into retention rates, customer profitability and lifetime value.
Some of the top obstacles to realizing the full revenue potential of customers include lack of real-time data and analytics that capture insights from across all customer touch points (22.3% cited this as the top obstacle); information that is selectively gathered and is often inaccurate or incomplete (21.0%); and data being siloed and restricted in its availability and use across the organization (15.5%).
“Many marketers, and in most cases the larger organizations, don't have the insight into their customer data to be able to determine what the opportunities are,” Neale-May said.
“The constrained environment we have today will force marketers to do more analysis, get more data, get more insight and intelligence into their customers, and map strategies to upsell, cross-sell, partner and be more inventive in the ways they engage with existing customers.”
The survey asked marketers what strategies they are using to realize greater revenue and profitability from existing customers. The top responses were: becoming more personalized, relevant and precise in customer communication (60.1%); finding new ways to cross-sell or upsell current accounts (44.5%); addressing under-penetrated markets or new customer segments (41.0%); and using more efficient channels or alternative media to engage customers (32.2%).
The survey also asked what companies were doing to improve top- and bottom-line performance. Marketers said they were: reducing head count, overhead and/or budgets (40.0%); automating complex and costly processes (38.7%); outsourcing more services and functions (31.2%); and divesting unprofitable business units or lines (20.7%). (Multiple responses were allowed.)
Neale-May said there are three core areas marketers should be focusing on to improve their overall performance: customer insight, customer experience and customer advocacy.
“That is all about retention marketing and more individual retention management,” he said. “Most creative groups tend to see value in external programs, rather than looking at the customers they already have, the cost of acquiring customers, the value of the deal and whether they are targeting customers that are most predisposed toward the company or brand.
“These do not all require outside media or marketing dollars. They require much more drilling and integrating with the customer database and sales organizations.”
For example, he pointed to an effort by Best Western International to include promotional offers on its loyalty reward statements. The program was conducted by InfoPrint Solutions, a joint venture of IBM Corp. and Ricoh Co. It achieved a 278% return on investment.
The survey found that only 23.2% of marketers are leveraging customer insight and print technology to deliver individualized marketing messages to customers on transactional documents such as monthly statements, bills and invoices. M