December 15, 2014

Retention marketing gets a modern treatment

Every marketer knows the adages and has heard the numbers: acquiring customers is more expensive than retaining them.

Yet many marketers still don't prioritize retention over acquisition.

There is a certain rationale behind that. For starters, there's really no such thing as 100% retention. (If nothing else, all of today's customers will be dead within 100 years!) So, without a rate of acquisition that beats the rate of attrition, your customer base will shrink to nothing at some point in time.

And then there's the competition: the need to win a sustainable market share. If you're not acquiring the new customers in your market, someone else is. That someone else will get the economies of scale, and you will lose power. After that, your future acquisition efforts become more expensive as you have to take a greater amount from competitors instead of acquiring the prospects that no one has yet.

You have to keep acquiring.

Still, this rationale doesn't diminish the need to retain customers in order to capture more of their life-time value potential. In fact, it highlights the need for more, or better, retention efforts.

Of course, not everyone is totally ignoring retention. But even among those who do retention activities, these will often be quite unoptimized. Studies show that even those who do a great job segmenting and targeting for acquisition tend not to apply similar analysis, profiling and personalization to their retention marketing. Or if they do, it is only a coarse bucketing of offers—wisdom of the crowds stuff.

One company is highly focused on the discipline of retention marketing. Retention Science are applying the modern techniques of data science to the task of retention. This is important because, while the tools and techniques are similar at a high level, the levers behind optimizing retention are different than those of acquisition. For marketers, and for the tools they use, a focus on the science, strategies, and tactics of retention makes a difference.

Executing Retention Marketing is playing both offense and defense. Offense, in that you can grow usage among your naturally higher ROI existing customers. Defense, in that you can keep them coming back before they seek out the competition.

If you're firing on all your acquisition cylinders, but still looking for growth—and better ROI—turn to the science and art of retention marketing.

December 11, 2014

The challenger sale and marketing

I see The Challenger Sale on a lot of office book shelves these days. If you're not familiar, the Challenger Sale is the next step in the evolution from transactional sales to solution selling and now beyond. 

Setting out to try and identify what "star" performers are doing differently—with the goal of training the middle 60% to be better—the authors undertook a large scale study of thousands of sales people, looking at 40+ dimensions.

Doing factor analysis, they found that reps, across industries, clustered into five groups. Four of the groups, the Hard Worker, the Relationship Builder, the Lone Wolf, the Reactive Problem Solver are likely recognizable to anyone who works with sales people. The fifth was the one they dubbed the Challenger. And it was this group that consistently performed better.

Each group brings a number of good qualities to the table. What the Challengers bring is a, well, challenging approach. They do what the authors call Teach, Tailor and Take Control.  They teach prospects, tailor a solution, then take control of the relationship.

I'll leave it to you to read the book and explore the details. What motivated me to post this was what became clear as soon as I saw the "Teach, Tailor, Take control" framework for selling.

That is, Challenger sales reps succeed because they do exactly what marketing is supposed to do. When its done right, Teach, Tailor, Take control is marketing. We educate, frame the solution, and nurture the prospect along their buying cycle. In other words the best selling approach is not selling, it's marketing.

Whatever the benefits of bringing a Challenger framework to your organization's sales team are, one of the biggest opportunities is to help align sales and marketing.