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Harvesting New Customers in Hungry Times

By Ian Michiels CRM Buyer ECT News Network
Feb 26, 2009 4:00 AM PT

Recession. Nine letters you never want to see together in one word; at least not in that order. Sales and marketing departments across the globe are reeling from one of the worst financial crisis in recent business. The stock market is down, unemployment is climbing, and businesses are bracing for what could be a long, slow recovery.

Harvesting New Customers in Hungry Times

As an analyst at the Aberdeen Group, I'm privy to a constantly refreshing set of data that captures market pressures, intentions, best practices and technology adoption trends in sales and marketing. This data provides insight about key trends and best practices that top performing organizations are leveraging to maintain a competitive advantage in the current economy. I thought I would share a few of the most poignant insights from the data archives in the Customer Management Technology Group and perhaps shed some light on a few best practices for allocating marketing and sales resources more efficiently (to maximize customer acquisition) in these tough times.

Brace for 2009

There is every indication that 2009 is going to be a tough year for all organizations; budgets are being cut, headcount is being cut, and strategies are being revisited. The way businesses and individuals are purchasing new products, solutions and services is changing rapidly. For sales and marketing, this means longer sales cycles, increased competitive pressures and fewer real opportunities at the top of the sales funnel. Marketing must rapidly adapt to changes in the customer buying cycle and more efficient ways to reach new and existing customers.

Early findings from the upcoming "2008 Aberdeen State of the Market Report" suggest sales and marketing leaders will be focusing on one key metric in 2009: customer acquisition. That's not to say that customer retention is taking a back seat. As most marketers know, current customers are far more profitable than new customers, and finding ways to retain, satisfy and cross-sell / up-sell existing customers will be a critical component to allowing organizations to shift resources to more profitable channels. However, all organizations anticipate new customer acquisition will take the biggest hit, and therefore should receive the lion's share of marketing budget in 2009.

I think there are three significant themes organizations need to focus on to maximize customer acquisition in 2009. These are a byproduct of dozens of research studies and best practices across hundreds of top performing "Best-in-Class" organizations.

Marketing Channels Matter

Personalization, intimacy, and relevancy will drive customer acquisition in 2009. We are seeing a tremendous number of organizations planning to re-allocate marketing budget to skew marketing spend toward channels like online / interactive media and email marketing (which happen to be the most profitable channels in 2007 and 2008, based on multiple studies in each of these years). The January 2009 report "Recessionary Marketing: How Best-in-Class Companies are Weathering the Storm" revealed that 82 percent of the 250-plus respondents planned to re-allocate or adjust marketing budget as a result of the economic downturn.

Email and the Web site represent low-cost channels with measurable returns. However, these channels are only effective if outbound marketing messages are relevant to customers and prospects. Over two-thirds of organizations (across multiple studies) plan to increase spending on email marketing. Simply put, everyone should expect to receive more email marketing campaigns in 2009. Consequently, many organizations are likely to see a lower response rate on email marketing efforts, especially when the marketing messages in these campaigns are generic. In 2009, it will be critical for organizations to deliver a highly intimate, personalized interaction with prospects over all marketing channels; an interaction that builds trust, loyalty, and reduces the desire to hit the dreaded "Junk Mail" button.

Above all, personalization was the key differentiator for top-performing organizations in 2008. The more intimate the interactions, the more market share organizations captured. Unfortunately, many organizations are at a distinct disadvantage when it comes to executing highly personalized digital marketing campaigns. This will be the key challenge for 80 percent of the market in 2009. Personalization is only as powerful as the quality of data that is being used to personalize the marketing message. Research shows that the average company struggles with the following three main challenges:

  1. Alack of data centralization: Data exists across multiple siloed technologies
  2. A lack of centralized technology to make the data actionable: Creating, executing and measuring multi-channel campaign efforts
  3. Organizational challenges: Different internal groups manage different channels causing brand consistency issues across multi-channel efforts

In order to maximize customer acquisition in 2009, organizations will have to rapidly find ways to mitigate some or all of these challenges.

Lead Nurturing and Trigger Marketing to the Rescue

When times are good, it's easy to let 'long-term' revenue opportunities fall through the cracks in lieu of short-term revenue. But a recession is not time to leave stones unturned. Inefficient sales and marketing alignment starts to stick out like a sore thumb during a recession.

The fact is, there are still going to be opportunities in the market; it just might take longer to convert these opportunities into revenue.

Lead nurturing is a marketing concept where marketing campaigns are sent to potential prospects before prospects are qualified by sales. Nurturing efforts should position a company as an educational resource for prospects during the buying cycle. In a recession, lead nurturing campaigns should be used to nurture and support the prospect's buying cycle until they are ready to purchase or talk to sales.

This could be months, but it's worth the wait. Research shows top performing organizations are more likely to leverage lead nurturing programs, and they have typically had them in place for 2-3 years. A properly executed lead nurturing campaign could take months to start bearing fruit; however, if the marketing messages in the campaign are appropriate, lead nurturing should start deliver a steady flow of new opportunities over time.

Sales and marketing leaders can be confident they are maximizing acquisition from all "potential" opportunities that might come their way. Lead nurturing will definitely be a competitive differentiator for companies that leverage this practice in 2009.

Trigger marketing techniques can supplement lead nurturing campaigns to help organizations deliver impactful, personalized drip marketing campaigns based on prospect buying behavior. Event triggers can be used to deliver targeted follow-up messages automatically based on customer behavior.

Listen to Your Customers

Customer buying behaviors are changing rapidly as consumers and businesses react to the economy. Pocketbooks will be tighter, and consumers will approach purchases more cautiously. At the same time, consumers are more savvy about purchase decisions. We can compare prices across Web sites and brick-and-mortar stores, view consumer reviews from our peers, and sometimes even negotiate deals with resources that are available for free from home.

As a result, businesses need to keep in touch with customers to understand how the buying cycle is changing on a periodic basis. This insight should be applied to cross-sell and up-sell marketing campaigns to maximize revenue opportunities for new and existing customers.

Depending on the nature of the organization, any number of channels/vehicles may be used to solicit customer feedback. Today, of course, survey invitations are pervasive, cropping up on telephone calls, in retail locations, in email, on Web sites, on merchandise receipts and even on actual merchandise. Today, e-mail has supplanted direct mail as the primary channel for reaching out to customers with survey invitations. Top performing organizations reward survey respondents with prizes, free offers, coupons, and other incentives. This is a critical component to customer feedback management and helps build a loyal following of brand advocates who can be identified and marketed to uniquely to maximize sales.


Ian Michiels is a research director and the practice leader of the Customer Management Technology Group at the Aberdeen Group. He can be reached at ian.michiels@aberdeen.com.


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