When a company starts, their focus generally lies on attracting new customers. Their marketing efforts are therefore almost 100% focused on customer acquistion. It is at this moment that the value of a real marketing generalist shines through, and they get praised (yes, you should praise your marketing team from time to time, we like that) for being able to create an overall story and strategy which makes sense and brings in new business. However, where this approach makes complete sense in the beginning, chances are that once your company has reached a certain level of maturity, there is less and less value to be won with new customers. Instead, more efforts need to shift towards the existing customer base, and so should your marketing team's competencies.
Companies that already have an extended customer base after an intense acquisition focus can decide to have a look at their pool of customers and focus on how to offer and extract more value there. It’s the combination of both which is at the center of Value Management: with a better understanding of the needs and wishes of your customers, you are able to offer them more value through your products and services, and in return their lifetime value increases.
'The biggest advantage you have on your competitors are the customers you have today. Not the ones you’re aiming for tomorrow.'
Most of your value lies in having a better understanding of who your customers are, how they behave, and what they expect from you, than anyone else in the market. This is why it is crucial to take a strategic approach on how you will manage your customer value, and never neglect that inward focus. We call this Value Management. Be honest, what makes you feel better: getting a free voucher from a company that is trying to win you over, or getting a free voucher from a company that is thanking you for your loyalty?
Having a giant customer database could be compared to owning a big gold mine. You have paid (a lot of) money to obtain the rights to mine there, yet, if you just look for the lumps of gold that you find on the floor, or that come falling down when you go for them with your pick-axe (= acquisition), and don’t make structural optimizations to support it, chances are you will only distract a minimal portion of the value it contains before it finally collapses. The same applies to Value Management which also requires a specific cocktail of skills and expertise in your company to be successful.
The holy trinity of Value Management
When looking at effective Value Management, we can identify 3 key competencies:
- Data analysis
- Strategic thinking
- Campaign efficiency
Chances that you find them all in just one person are little, yet, having them combined in your team is something we should all aim for. You do not only need all three of them, they also need each other, and they should always be in balance. As soon as one of them overpowers the others, you will end up with actions that do not perform the way you envisioned them. If you only focus on the data, you will develop services that people need, but don’t want, since they don’t get what’s in it for them. If you only focus on the story, you will leave your customers disappointed once they find out what little you can actually offer them. And if you want to go too fast too soon, people will be put off by how pushy you are and feel overwhelmed.
If all three work in perfect synergy, your customers find themselves at the center of a marketing effort which is designed to offer them the experience they need, in a way they want it, brought to them in a unique and tailored approach. If that’s not delivering value, I don’t know what is.
Because experience has shown us just how important this trinity is, we always build teams with these three different profiles. It does not only help us to prevent the biggest pitfalls in Value Management, but it also enables the team to focus and leverage their individual expertise. Let’s take a look at a simple, but efficient, set-up.
Value Management through an interdisciplinary marketing team
Since we are working on our existing customer base (our goldmine), it is crucial to start with analytical data profiles that can gather, structure, and analyze all your customer data into relevant customer insights. Most of the time, they will focus on the quantitative data you have in-house (think about purchase history, loyalty programs, general CRM data, etc.). However, they should also have a look at qualitative data that can be gathered just for the purpose of this initial investigation. That way you have both what your customers say, and what your customers actually do.
Besides getting a better understanding of what your customers are looking for/being triggered by, this should also allow you to personalize your offering or, in an earlier stage, to create customer segments on which to focus and tailor your communication. Whether these segments are need- or product-based, that’s up to you and the analysis you want and are able to perform. However, try to step away from the obvious classic segmentation and try to look for segments that will respond to the same ideas, rather than the same ID’s.
Once these insights are gathered and the segments are identified, it’s time to start translating this information into a clear value strategy. When getting serious about Value Management, you should always try to answer the following question: What do I want my customers to do more? It’s in the process of answering this crucial question that your strategic and creative marketeers will thrive. Their goal is to take all this processed data and start listing different approaches in which they can help your company to increase value. If they are able to rely on the valuable insights gathered by the data team, creative marketeers will come up with a whole list of possible angles and tactics to increase customer value. When the ideas are shaped, it’s time to set them into practice, and see what works and what doesn’t.
You can distill the best insights and have them translated by the most creative minds, but it won’t do much for your business unless they find their way to the right costumer at the right time in the right form. That’s why you need the third crucial element: performance-driven and energetic ‘growth hackers’. Their job and skills lie in setting up the ideas that get created by the strategic marketers, and rapidly scaling and validating them in real campaigns and communication.
Here it’s important that they are able to, rapidly, create material for each scenario and segment that has been identified by the data and creative brainstorms. It is not about pushing all your messages to all your customers, but about creating that 1-1 fit between what a specific customer can give to you, and what you can give them in return. Therefore, growth hackers will need to create and activate materials for each and every scenario you defined, in each and every segment you defined.
If done successfully, your reward will be double. First of all, your customer will remain, increases his value to you, and deny your competitor an opportunity. At the same time, the way your customer responds to your efforts, will again generate data, that will help you to have an even better understanding of their needs and wishes, and thus start the whole process again. To end with the words of Uncle Sam: do not ask what your customer can do for you. Ask what you can do for your customer.
Interested to learn more about Value Management? Discover how to prevent your current customers from leaving and win back those who've left: grab our Value Management Maturity Checklist.
This blog post came to life thanks to the input & insights of Frank Cornelis, Chief Operating Officer at addData, the data entity within our group Customer Collective.