thefunnel

Why do companies chase away customers and then complain about having to find new business? Doesn’t the concept of “Lifetime Value” work for them?

Shortsightness, lack of a customer focused strategy, difficulties in measuring LTV and no assurance that the customers will remain loyal.

It’s unfortunate but in many companies marketing doesn’t have a seat at the big table and therefore decisions are made purely on short term financial basis. There’s lots of talk about customers, brand and loyalty, but not necessarily deep understanding. Companies need passionate marketeers high enough on the ladder. Lack of metrics is another factor. Particularly true for non e-commerce, complex and long sales cylce B-2-B, where the debate about direct marketing contribution and influenced marketing contribution is still in its early phase. Thirdly, I believe many companies under invest in technologies and infrastructure that would enable better customer management and better marketing, and even if they do a reasonably good job, the data is often in silos

The second problem relates to the brand and how to measure what customer value and why they buy. In working on my dissertation for my MSc, I created a “value model” for my research framework, and although this provided good insight into the buying decision, I’ve always been frustrated by not being able to put the model to “work” and make it more practical for everyday marketing. There are also other aspects to this same problem area that I’ve come across in various awareness / preference / customer satisfaction data. One of the most fascinating discussions I had with customers was when I did some research into what content customers value. I was talking to one extremely loyal customer who has always purchased a particular product (let’s call this product A) from us, and probably always will. In the conversation I asked him the question about why he doesn’t buy other (different category, but similar usage, for the conversation let’s call this product B) products from us. His answer was. “You are not the “B product company are you”! This is true, but not the rational answer that you would expect from an engineer (always rational, looking only at what will best solve their problems). His answer explains, why a company can score relatively well in awareness and preference research, and also in many cases being considered as an alternative for “a secondary product”, but when the purchase order is placed, it’s always for the competitors product. So here we have a company, ours, that scores high on all important brand and product attributes, for both products (A and B), but somehow despite scoring high, this customer decides to allways buy product A from us, but never buys product B. Same company, same sales person, same service department. The obvious question to ask in situations like this is, are we faced with managing several brands (by product category) instead of the one brand. The many brands theory also works the other way and would explain why our competitors haven’t achieved a bigger market share in the product A category although they’ve been trying for years. The business implications of this is that entering new product categories, although they are adjacent, on the same bench, for the same customer, is going to take a lot more work and longer that most people realize. It will also call for completely different marketing strategies and tactics. Generating a lead, issuing a quote or being invited to a do a demo is not enough, to declare a marketing success.