Retention is King

There are too many companies asking, “How do we acquire more users?” that should instead be asking “How do we get better at keeping the users we already have?”.

Its easy when approaching the problem of growth to think that you just need to get more users, after all that seems to be the very definition of growth. However, if you take a step back though and think about growth as the maximization of user-weeks over time, it quickly becomes apparent that focusing on retention has a much larger effect than topline growth. This is also much more of a sustainable growth mindset. Rapid user growth followed by rapid user attrition is an indicator of unsustainable growth. Strong retention of users over time is a good indicator of product-market fit, something you’re hopefully looking to achieve anyway.

Retention is the place I start everywhere I go.  Building a strong retention program is the key to success for any business.  There's the old "It's much cheaper to keep a customer happy than find new ones" saying, but it goes beyond that.  If one thinks about it logically, the bigger base of loyalty business that is retained, the more money one will make.  Retained/loyal customers have many advantages over new or dormant ones.  

Customers in retention campaigns have a well-defined pattern of behavior

These customers are perfect for targeted promotions, cross-sells and upsells.  Because of the purchasing and communication interaction behavior stored from these customers, tailoring offers specific to the needs of customers is the easiest way to convert into sales.  The less that is known about a customer, the more shotgun approach is taken and less likely to obtain real revenue.

Customers in retention campaigns have less expensive communication channels

Because the customer is known, the communication with the customer is much cheaper on a converted basis.  Even through the direct mail channel, which can be as high as $3-4 per piece depending on how elaborate it may be, the conversion rate is much higher on this type of communication.  Most communication in this channel can be near free, with email and push notifications through apps.

On the other side, acquiring new customers is very expensive.  Even if going completely online, the conversion rates are so small compared to the cost per click or action, that it makes the customer acquisition cost upside down for 2 - 3 purchases for many companies.  If the business needs to go traditional advertising routes, now the cost becomes staggering.  

Retention customers bring in the most revenue

While this varies from business to business, I doubt you will find many longterm successful organizations that don't have this phenomena.  The loyal customer is the bread and butter for the business and can be relied upon to grow revenue.  Within retention campaigns there are customers of all different types and understanding the loyal customer that can spend more money is the best opportunity for profit growth.  

It may seem counterintuitive to look for growth in your loyal customer base, but I have always thought of it like this.  The more customers that I can have in the active customer base, the more opportunity I have for growth.  Acquisition rarely can go away and there should always be a plan to acquire more customers, but that cost should decrease as the business matures.  For a very mature business, this cost should be as low as possible.  

A simple way to illustrate this is 

New Customers + Retained Customers + Reactivated Customers = Active Customer Base.

So if the business can acquire at a consistent base, lets call this 1 million customers per year and retain the majority of their customers, lets call this 10 million customers, then they can grow their active customer base by close to 1 million per year.  Now if those customers are retained and a new million come in, the growth lies in increasing the retention customers.  Otherwise, it costs too much to try to double your acquired customers, especially the more mature the company is.  Try to focus on retention first, it is truly the King.

Study: 80% of Companies Will Increase Digital Marketing Budgets

Woohoo!!!  I think this is a wise move as we move into the golden age of digital marketing.  Until now I believe the many companies viewed this area as media buying and website analytics.  Digital marketing is the force that will bring the customer experience to fruition by combining online and offline behavior.  Creating consistent content and messaging from one channel to the next will be key in the coming years.

"One challenge that has been very prominent for digital marketers is the hiring of great talent, and companies are finally getting the budget to do that," said Laura McGarrity, VP-digital marketing strategy at Mondo, a technology and digital-marketing resource provider.

According to the study, the top hiring barriers are finding skilled talent (cited by 65% of respondents); the cost of quality staff (30%); attracting top talent (21%); retaining top talent (16%); and culture fit (26%).

Talent is in high demand and I think what companies have to realize is the talent they are looking for do not necessarily have many years experience in the field.  In fact, there is very little experience in the new age of digital.  Finding talent will be harder than looking at a resume and seeing if the applicant has X number of years and X degree.  These are not the metrics companies should be aspiring to hire.  The metrics should include applicants that have expressed their thoughts about digital marketing and whether their thought leadership is the direction the company is trying to go.  

"Turnover has been a really big issue," Ms. Garrity said, noting that the average tenure for digital marketing professionals is 12 months to 18 months. By comparison, average CMO tenure is 45 months, according to executive recruiting firm Spencer Stuart in a March 2014 report.

"There is such high demand and it's such a new space -- people are hopping around to find the best jobs," she added. "It is a candidate's market, particularly in digital marketing."

The top skill sets companies are hiring for this year are digital/social (54%), content creation (44%), big data/analytics (33%) and mobile strategy (30%), Mondo found.

There should also be a questioning of why there is so much turnover.  Even though it is a talent market, there should be less turnover if the work is rewarding and CMO's are really bought into the innovation.  Too many times CMO's tend to be brand focused and the digital marketer will get frustrated in that environment.  

The study also asked marketers which digital platforms will drive customer engagement in the future. It found that today, mobile is seen as a key driver of customer engagement by only 24% of respondents, but in the next three to five years, that will increase to 70%.

The 24% number is too low for mobile as a key driver.  Today is the age of mobile and if companies aren't focusing on mobile, they will be behind in three to five years.  Mobile strategy takes time to implement and companies need to start now.  

The next 12 - 18 months will be very interesting in the digital space as technology vendors are building platforms that can support the wants and needs of marketers.  Upcoming technology will push the boundaries of what is possible.  Many companies will want to leapfrog steps to get to the end goal quicker, but it is important to realize to take advantage of the next low hanging fruit before jumping too fast.  That is why it is imperative to start now on the digital strategy.

Next Generation Customer Experience - business2community

Terry Green writes for business2community:

...we all talk about customer journey mapping but how many of us have actually done it? No I don’t mean sitting listening to a boring presentation about the subject whilst fiddling with my mobile phone or making a half arsed attempt at it with no commitment – I mean really done it like we meant it?

I’ve always said that the key to getting any customer oriented change programme though an organisation is to get the business leaders to walk a mile in the customer’s shoes. Cliched? Yes but no longer enough. The challenge now is to get everyone inside your organisation to see themselves from the customer’s perspective and to understand how it makes them feel to interact with you.

What better way than customer journey mapping?

It is so important for organizations to do this mapping, but I agree with Green, it never seems to resonate with a larger team.  I feel because people going through this exercise tend to treat this as a transactional exercise instead of an emotional one.  What I mean by emotional is customers have an emotional attachment to their journey, they don't feel like what they are doing is a transaction.  

I believe one person should own the customer journey and bring people into the process for specific parts of the journey.  Journey mapping is a very overwhelming experience, but when broken up into pieces it could generate great conversations from the entire organizations.  When taken into pieces, the organization can concentrate on the emotion of a specific piece of the journey without having to get overwhelmed by the entire journey itself.  

It’s only when you have got your people to stop thinking like vendors and truly moved them into the customer’s headspace that you can start their journey towards customer centricity.

Your Digital Strategy Shouldn’t Be About Attention

I really like this article.  Digital has the potential to be one-to-one in real-time, but so many marketers use it as a commercial.  I have been working with Adobe and their marketing cloud for a couple of years now and their vision is very compelling.  Right now it is just that, a vision, but it is getting closer to reality.  

To make such a vision a reality, marketers have to push companies with great visions.  The tools can't push the vision, they have to enable the vision.  If marketers continue to use these tools to push brands and not relationships, the vision will be wasted.  

It’s easy to win “clicks” by titillating people with Kim Kardashian’s naked behind or a list of the world’s cutest human-cat baby unicorn fairies. And it might lend a dreary day a moment of relieved escapism. But it won’t help anyone. To do that, you must educate. Not in the awful, misused corporate sense of the term: dully lecturing them about “product benefits.” But helping them develop the capabilities and skills they’re going to need to live better lives. What will your “digital strategy” help them become better at? Does it have a point? Skiing, dating, cooking, coding, creating, building? If the answer is no, you don’t have a strategy. You have a vaudeville show.

Google Tabs happened, now marketers must step up their game

Marketing is always most effective when it is delivered with something else of value. If you open your postal mailbox and its nothing but ads, you tend to throw the whole bunch away. But, if one offer comes along with other interesting pieces of mail or if it includes something valuable like a gift card or a coupon, you tend to give it more attention.

Very profound statement.  It is not worth delivering a piece of mail or email without an offer.  The offer doesn't have to be something that cheapens your brand, but it has to deliver value to the customer receiving it, or else you will become junk mail or unsubscribed.

The new Gmail tabs obviously create an interesting challenge.  Even though they are being viewed less, it may provide customers a better way to interact with brands.  When all email is together, emails can get skipped or just ignored as they scan through.  However with the tabs, a customer has to be going and looking for a promotion.  Isn;t that what digital marketing is all about?  Engage with the customer when they want to be engaged, instead of the bombarding of their email feeds?

We asked nearly 5,000 consumers their attitudes toward the switch to Gmail Tabs inbox view. About 40 percent of respondents say they now spend less time with promotional messages from their favorite brand, while only 7 percent of users say they spend more time with promotions. This large percentage of respondents revealing they don’t spend as much time with their favorite brands shows that marketers must up their game.

Marketers should always be stepping up their game.  I get so many emails from companies on a daily basis, maybe this will make them stop and think about the "spam" strategy that seems to be the norm in this channel.  When emails are targeted and offers are valuable and thought out, customers will engage with your brand no matter what tab they are on.  Continue to over communicate and your brand will never make it out of the promotions tab.

Digital Marketing - The Benefits of Always-On versus Campaign

Within the digital space, campaign based marketing acts like the traditional “push” model. The goal is to communicate a key marketing message to as many people as possible in hopes that they will learn a specific message and/or perform a certain action. They are in the market until the objective is complete, then they go silent again. The always-on models acts like the “pull” model, focusing on finding the specific people who want to know more about what you offer and will thus participate with us in some way. The always-on model runs indefinitely, it is just optimized over time.

Hmmm.  Articles like this make me wonder what the future of marketing looks like.  So many so-called experts talk in circles and and paint a picture of this perfect world.  What David Alexander is describing is something that costs a fortune and takes many years to build.   

Eventually we may find all of this "free" and "cheap" marketing is so much more expensive than the traditional campaign based marketing we are all trying to get rid of.