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The Strategic Approach to Building Customer Loyalty

22/1/2019

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While all the glamour is around building new business opportunities with fresh prospects, businesses should not be too busy with new sales at the expense of their existing customer base. This is often the case - especially around the beginning of the New Year - and businesses who are not actively building loyalty with their existing customer base will face losing them.
 
When embarking on building loyalty campaigns with their customers, businesses should ask themselves the following questions:
 
Are the benefits of other brands or products sometimes more important to the consumer? Are there associated negatives with the businesses brand or products? Is there a range of brands or products that could provide benefit to the consumer?
 
In answering these questions businesses will soon realise that they have a number of strategic opportunities to the challenges that arise, including:
 
Getting serious about managing customer relationships: are you interacting with each customer or group of similar customers with unique needs in a unique way?
 
Being focused on value creation: is there a company wide effort in improving the life-time value of customers? By increasing the revenue per customer and delivering customer value you will keep the relationship engaged for a longer period of time.
 
Avoiding cannibalisation: this is where it is important to avoid offerings that will shift consumers from one product or service stream into another without increasing overall revenue for the business. This can go undetected for months or sometimes years and correcting its impact on revenue can be very difficult in the short-term.
 
There are also tactical marketing options to consider in building customer retention and loyalty initiatives. Business owners should include one or more of the following tactics:
 
Offer loyalty incentives such as: discounts, VIP programs, referral rewards Encourage larger volume or frequency of purchases Special reminders to the current database of customers to take action Develop product line extensions to engage a deeper or broader connection Develop new offers, events and promotional activities to current customers on the database Encourage new uses, tie-ins with complementary products and/or services through special customer promotions  

Case Studies in Customer Loyalty

We've heard that it is easier to sell to an existing customer than it is to acquire a new customer, yet it’s amazing how many businesses don't develop customer loyalty or retention programs. This leads them into a constant drive for new customers, and this type of activity is not sustainable or scalable for most business owners.
 
Many iconic businesses have grown their success and reputation through customer loyalty. Apple have developed a loyal following through creating an emotional attachment between their customers and their products. Developing trusting relationships over time has led to an almost cult-like following of the Apple brand, where their commitment to providing cutting edge technology to people usurps their business need to make sales, at least, in the eyes of their customers.
 
Apple have also built up a network of line extensions and a huge sense of excitement with each new release. As the range is designed to connect and work symbiotically, Apple have created more than loyalty - they have also created a need for other products in their catalogue.
 
Just as Apple have successfully honed in on the customer experience in order to create sales growth, businesses such as Starbucks and Harley Davidson have built their names on their own reputation within an existing client base.
 
Starbucks created a first-class customer loyalty program, which revolutionised the coffee industry. Their star-based app has built a need in customers to engage, make purchases, and remain loyal due to the rewards provided through the program. They have expanded their rewards system to include purchases outside of their cafes, and even introduced a gold member’s card, with the look and feel of a top-level credit card. The perks experienced by a card holder and app user encourage customers to remain loyal, while Starbucks benefit from repeat business.
 
Harley Davidson isn’t just a motorcycle brand - it’s an institution. Using branding, they have built themselves up to be a hugely successful company. Like Apple, they have focussed on a niche market and sold an experience, where their customers aren’t just purchasing a motorbike, but rather a sense of freedom, power and adventure.
 
Harley Davidson have a couple of other tricks up their leather-clad sleeves. By restricting the supply of their products and forming a “family” through their loyalty program, “Harley Owners Group”, they have simultaneously increased the perceived value of their products and the emotional connection associated with them. In other words, they have built a brand which people connect with, and will return to regardless of price.
 
Customer loyalty is the bloodline of many service based businesses too. There is a huge deal of trust building required in service based business models. For example, many recruitment agencies know that once the client relationship is established, it’s a natural progression for clients to return. Recruitment and outsourcing agencies like Marketing Temps, who have recognised a need for on-demand marketing skills, have taken the time to learn exactly what each business needs before advising and supporting them through one-off projects, temporary scaling, and expert recruitment guidance.
 
Director of Marketing Temps Kam Ozonaran says, “…flexible staffing and outsourcing isn’t just a money-saver, it’s the solution for a business need and the beginning of a new, ongoing relationship. 50 per cent of our revenue targets are set to come from existing customers”.
 
Going for Market Leadership
 
Achieving market leadership is not something that happens by hustle alone; it takes effective planning and intelligent execution.
 
No matter what stage a business is at, it is obvious and essential that owners grow their businesses strategically by forecasting expansion, acquisition and loyalty into their business supported by sound marketing plans and sales targets.
 
Understand that customer satisfaction is the key to repeat business, as well as new possibilities through their recommendations to others. Where a customer feels valued and experiences their transactions with a business as being of value too, loyalty develops.
 
Businesses such as Harley Davidson, Apple, Starbucks and Marketing Temps have built their success not on what they offer customers, but on the value associated with that offer. Whether a sense of freedom, the excitement of cutting-edge technology, VIP treatment or individual care for another’s business success, it is the emotional connection and satisfaction which develops a loyal customer base.
 
Happy customers mean return customers, and the impact this can have on the long-term success of a business is not to be underestimated.
 
Also see Part I - The Strategic Ways of Expanding into new Market Segments and Part II - Mastering the art of new Customer Acquisition of this series.
 
Kam Ozonaran is Managing Director of Marketing Temps an on-demand marketing recruitment firm specialising in flexible resourcing solutions. Kam helps organisations to build their strategic mechanisms for better marketing capability, flexible recruitment; competency based training and marketing operations design.

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Mastering the Art of New Customer Acquisition

22/1/2019

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Business growth is multi-faceted and depends as much on market expansion as it does on customer acquisition and loyalty. Regardless of the maturity of a business, the ability to concurrently expand into new market territory and draw new customers is based on several factors.  As discussed in Part I of this series, the following points must be addressed:

  • Competition
  • Filling gaps in customer use
  • Improving regional exposure
  • Improving accessibility for both existing and new customers
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Whether a business is marketing a unique brand to a wider segment or developing brand offerings to smaller segments, a marketing campaign must target the specific needs and outcomes of that segment through the appropriate channels and services.

The key to growth is of course connecting with new customers within your segment whilst building on and nurturing that relationship for future growth and sustainability.

 
New Customer Acquisition
For many businesses, especially those who are relatively new to their market segment, new customer acquisition should be the core focus of their marketing activity.

Clearly, customers are the cogs who keep the wheels of business turning and this is of utmost importance to every business, especially start-ups and new entrants into the market.  Developing a loyal customer base provides the groundwork for success in new markets.

To drive successful customer acquisition, a business needs to grasp three fundamental concepts: positioning, targeting and benefit barriers.
 
Positioning
It is of vital importance to understand and articulate the space that the business occupies within the current segment, which in turn allows the business to create clear value to the consumer.  This is the fundamental principle of positioning.

For a business to hold a market position they first need to understand both the market segment as well as the growth taking place within that segment.

Then, the business needs to tailor the reach of marketing specifically for those customers within the identified market segment, along with any consideration for direct or indirect competition within the market.

Although this is such a basic concept, positioning is truly where a business allows their value to shine, so that the marketing mix is able to draw and attract those customers who will bring loyalty and growth to the business.
 
Targeting
The concept of targeting is around identifying and planning marketing to acquire customers who are strategic and significant in their purchasing behaviour.  This is one of the keys to business growth since a loyal customer base creates a profitable and stable business compared to single customer transactions.

When planning out the targeting for a campaign, a marketing mix must strongly appeal to the specific desires of that target segment by creating a need for the products or services offered, which would lead to an increase in sales and customer growth.
 
Benefit Barriers
For each potential customer, there is an obstacle - often by way of a thought - which stands between their current situation and what you require them to do.

This obstacle is known as a benefit barrier because it stands in the way of your prospective customers realising the benefit that your product or service offers and as such businesses need to address these barriers and find solutions to overcome them.

This is ideally done through a unique and specific marketing mix which allows a business to stand out compared to its competitors.  Through harnessing these market insights businesses can develop an understanding of the consumers’ needs.  This in turn allows a business to target its products in a tone and manner which connects with customers and influence them at a much deeper level.

Connecting with customers in this way ensures increased purchases and continued loyalty within existing and new market segments.

There are certain factors that need to be considered by businesses in this phase of market maturity, and coincidentally they are no different to those businesses that are looking to expand into new market segments. 

To gain an understanding of the relationship between customers and brand recognition and growth, the following factors need to be taken into account:

  1. Responsiveness: Are consumers unresponsive to the benefits offered by your brand?
  2. Trust: Do consumers lack the confidence that you will deliver for them the benefits of your brand?
  3. Competition: Do consumers believe they already have these benefits through another brand?

Unsurprisingly, these factors are the same set of questions used in Part I of this article series, however now the context is that of acquiring new customers within an established territory.

These questions need to be kept at the forefront of your mind and reviewed periodically to ensure that the business is fulfilling the needs of their market segment. 

In answering these questions, businesses in this phase may discover major pain points.  It is possible to address these issues through a greater understanding of their customer needs and outside competition.
Businesses looking to acquire new customers should engage in the following marketing tactics to fulfil on this strategy:

• Promote Awareness: through activity to the target audience
• Increase Value: through value added promotions or products
• Generate Demand: through specific campaigns

As discussed in Part I of this marketing series, many businesses are quite proactive in acquiring new customers, however it is equally important to retain and nurture your existing customer base through building customer loyalty.

While acquiring new customers is crucial - especially when entering a new market segment - it is the loyalty and repeat business generated by that customer base which creates both momentum and stability for your business growth.
 
Kam Ozonaran is Managing Director of Marketing Temps an on-demand marketing recruitment + outsourcing agency specialising in flexible resourcing solutions. Kam helps organisations to build their strategic mechanisms for better marketing capability, flexible recruitment; competency based training and marketing operations design.
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The Strategic Ways of Expanding into new Market Segments

22/1/2019

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​One of the biggest challenges facing business leaders is effective growth.  For many it's a thorn in their side which is causing considerable frustration.

Managers facing this challenge may be wondering why their product or service is not bringing in the sales required, or why their marketing is not working as expected, or why customers are not sticking around.

For a business to grow, marketing needs to be focused on three core areas, namely:
  • Expanding in to new markets
  • Acquiring new customers from existing markets
  • Ensuring that existing customers become repeat customers

These core areas work in cycles and so it is important to identify the maturity of your business in the context of the current market segment. A more mature business may be ready to expand their footprint in other segments, however a business that is not as new may still need to penetrate the existing market and acquire enough customers.
 
An established business that hasn't reached full maturity within their market segment maybe required to target their existing customer base and increase the volume of sales or the sales frequency and build customer loyalty.

Each phase of the maturity cycle will be characterised by different trigger points, and hence there is no one-solution-fits-all approach to growth.  Identifying your business' maturity within the current market space is the first step to take.

In Part I of the Marketing Leadership series let's kick off by having a look at the more mature businesses first.

Expand in to New Territory

The first step of any growth strategy is to identify the barriers in the minds of customers that stand between what they currently do, and what you want them to do.  Businesses need to address how they will overcome these barriers and attract consumers to them, as opposed to their competition or even inaction.  This can be done by harnessing insights: the understanding of customer needs, the type of products, tone and manner of communication aimed at connecting with consumers at a much deeper level and influencing them to buy or continue buying from the business.

Highly mature businesses will find that consumers are not responsive to their brand and marketing in their current market territory.  The reason why is often puzzling to many businesses, but here’s the thing: the answers are often right under their nose!  Here’s where customer insights can be found:
  • Industry events: There are numerous industry events out there, however turning up is only the initial step.  Business leaders need to be active in engaging with the industry experts, exhibitors and speakers - ask questions, draw upon their knowledge and leverage their hard work to obtain your answers.

  • Existing customers: Your current and active customer base is one of the best sources of information for your company - after all they are already doing business with you!  A mature business should have feedback systems in place so this is where you can compile and review the customer feedback reports - which will give you current and invaluable insights.

  • Dig in to the Archives: Have a look at previous customer feedback reports - there will be nuggets of gold that you will find in this data.  Just because the data is older, it doesn’t necessarily mean that it is no longer relevant or no longer applicable.

  • On the Coal Face: Your frontline staff are not only the face of your business, they are in contact with your customers daily.  Who better to talk to and obtain information from than your sales people and your service staff?  They will be able to provide you with the insights you desire.

Venturing into the Unknown
When you are expanding into new territory, you’re not always equipped with a GPS.

However you can still map out your journey if you ask the right questions.  The right questions will uncover the road you need to take, and help you to identify the obstacles that you may face.

Once you have this knowledge you can then take steps to remedy the obstacles and expedite your journey into successfully establish your business in the new territory.

Questions should be asked in the following areas to help you to extract the insights from the sources and give you direction on how you should approach your business expansion:

1. Responsiveness: Are consumers unresponsive to the benefits offered by your brand? 

2. Trust: Do consumers lack the confidence that you will deliver for them the benefits of your brand?
3. Competition: Do consumers believe they already have these benefits through another brand?

As you collect data from answering these questions, you will be able to identify certain obstacles - or gaps - which you will need to manage in order to ensure that your growth plans are successful.  Again, we need to ask the right questions so that from the ensuing answers we can bridge the following gaps:
  • The Competitive Gap: Can we bridge this gap by actively offering consumers an alternative brand experience to our competitors?
  • The Usage Gap: Can we bridge this gap by firstly winning new customers; and secondly increasing the usage with our existing customer base?

  • The Distribution Gap: Can we bridge this gap by opening more distribution channels within the existing market area? 

  • The Product-line Gap: Can we bridge this gap by offering our products to new customer segments?

Entering into new market segments can be emotionally and mentally challenging because as a business leader you are literally venturing into uncharted waters, and this can be quite risky.  This also takes an immense amount of courage and the best way to check if you’re on the right path is by consistently testing and measuring the results of those tests.

We recently helped an IT company to expand in this way.  Based out of Sydney, NSW, our client had reached saturation within the NSW geography. We’ve been working with this client in exploring and uncovering opportunities in not only new geographies like Victoria, and also by exploring the possibility of them expanding into new demographies, like age segments.

This will take testing and measuring and it is important to test each phase and measure the results before going all in with guns blazing.

Once you have enough data from the questions that you’ve asked, you may wish to employ one or more of the following tactics to fulfil on this strategy:
  • Differentiate: Develop a differentiated brand or product line with unique features to fit with the desires of the consumers in the new market segment or territory.

  • Niche: Develop brand offerings to several smaller potential segments, and build your strength in servicing a niche market.

  • Benefits: Design promotional campaigns that address specific interests and outcomes of your target audience, their pain points and their drivers.

  • Channels: Build unique media channels to build brand presence, product profile and reach between your offering and your new target audience.

  • Risk: Design service programs to reduce and even potentially remove the perceived risks to customers in the new market segment, and lower the emotional barriers to entry.

Expansion into a new territory is an activity that only a business with a high level of maturity in that market segment should actively pursue.

For businesses that do not have a strong foothold within their market segment, their primary goal should be new customer acquisition, with marketing activity to be focused on new lead generation.

Whilst many businesses are quite proactive in acquiring new customers, it is just as important to retain and nurture your existing customer base through building customer loyalty.

Part II of the Marketing Leadership series will focus on new customer acquisition within the current market segment, and the tactics that will support this strategy.
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Part III of the Marketing Leadership series will focus on building loyalty with your existing customer base and how to strategically leverage your customer relationships to deliver more value and keep them coming back for more.
 
Kam Ozonaran is Managing Director of Marketing Temps an on-demand marketing recruitment firm specialising in flexible resourcing solutions. Kam helps organisations to build their strategic mechanisms for better marketing capability, flexible recruitment; competency based training and marketing operations design.
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    Author
    ​Kam Ozonaran​

    Kam takes an innovative and passionate approach to building marketing capabilities for businesses. 
    She has held a successful corporate career and has built successful businesses that have demonstrated her vision and insight across marketing strategy and effective implementation. With keen insight into marketing strategy and implementation, along with an extensive network of industry contacts, Kam is not afraid to dive into unknown waters and pioneer new ways of doing business.
     
    Kam is the Managing Director of Marketing Temps, a marketing recruitment firm which is disrupting the industry with an agile approach to connecting businesses with the brightest minds in marketing across Australia.

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