Precision Marketing: 76% of senior marketers not getting it…

Chief Marketing Officers are confronting a new set of challenges that require innovation. Today, the market demands more ROI for every dollar spent.  The current worldwide economy as well as cautious customers are preparing for tightening purse strings and shrinking budgets. The Routes to Revenue™ research initiative released by the Chief Marketing Officer (CMO) Council highlights opportunities formarketers looking to implement programs that realize revenue from dormant or inactive customers while also activating loyalty from existing customers, leveraging color-rich, personalized and relevant vehicles that can cut through the clutter and move customers to action

It’s shocking that in this struggling global economy, a 76 percent of senior marketers believe they are not realizing the full revenue potential of their current customers. In addition, only 46.5 percent say they have good insights into retention rates, customer profitability and lifetime value, which was reported by the Chief Marketing Officer (CMO) Council in a “Routes to Revenue™”.

In tough times marketers want to keep their customer delighted to avoid flight.  One CMO recently shared, “2010 is about keeping your current fish in the net happy.” So it is not surprising that the Routes to Revenue™ international audit of some 650 senior marketers revealed that making communications more personal and relevant was among the top strategies for realizing greater revenue and profitability from existing customers in 2009.

But not all customers are created equal.  In fact, before starting any conversation on customer retention strategy, an understanding the economic value of your customer is key. In fact, recently many studies have been challenging the 80/20 rule. (80% of revenue is generated from the top 20% of customers)  So targeting all of your customers may not be financially prudent.

In business school, customer economic value was estimated by using a “rule of thumb” – top 1/3 of your customer’s are the most profitable, next 1/3 was average, and the bottom 1/3- unprofitable.   My friend Liz Miller always reminds me,”What good is targeting a customer that does not pay the bill?”

Customer Retention, Customer Re-activation and Customer Recovery are key topics of discussion for 2010.  If you have any thoughts, please join our community or post a comment.

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