Every business starts with winning new customers. But what happen after you have won them over the conversion threshold?
Treasure in your backyard
Organic growth is an often under-appreciated but the most cost-efficient avenue for growth. Smart growth strategies leverage minimal resources to maximize growth.
Why? Because these customers have already decided to buy from you, and they have experienced your products/services (assuming they love the experience).
The value these customers bring goes beyond a single transaction!
Customer lifetime value (CLTV) is an important concept to grasp. It considers the accumulated profit and revenue deliver over the probable length of your relationship.
Know your crops
I make it a point to know how much of the overall business revenue comes from existing customers.
The Pareto’s rule suggests that 80% of the business can come from 20% of the customers. These percentages vary for different types of businesses.
In order to effectively harvest new value from current customers, you should study your customer base to know where to prioritize your efforts.
Here are some principles. Consider,
Segments which bring greater monetary value
- In terms of revenue and profit. they give you greater leap in growth
Segments which buy from you more frequently
- You are likely to be their prefer brand and the loyalty factor Is higher
Segments which bought from you most recently
- You are still fresh in their mind and they may still come back again
These are the segments you do want to keep.
Advanced analytics can be deployed to segment and rank them into mathematically according to recency, frequency and monetary values, also known as RFM segmentation.
Retain and grow
What’s left, hereafter, is to design marketing tactics to get them to buy more often and spend more with you. This usually cost less than the cost of acquiring new customers.
CMO’s Notes is a series of short reflections, inspirations and lessons from my career in marketing, comms and branding, more generally framed as “Marketing”. M in CMO really refers to “many” as there are many roles the CMOs of today need to live up to