A number of years ago I sat in a conference room of a Fortune 500 company speaking with a number of marketing directors and VPs about the focus of their demand generation strategy. Like any company there was a limited budget and they wanted to invest in areas that would produce the highest ROI. With this understanding, I suggested they look at shifting their strategy away from customer acquisition to customer cross sell and up sell.
At this suggestion, the Director of Marketing Operations chimed in and said, “we ran an analysis and realized if we could add $10,000 to our renewals, we could generate $40 million in incremental revenue.” I was ecstatic, I thought we had found our focus area and I was looking forward to helping my client.
However, my excitement was short lived as others talked about the lack of data quality to market effectively to their customers. Others worried that if they “did not fill the top of the funnel” sales would push back. The list of reasons and excuses kept coming and needless to say, there was no customer marketing program.
This story is not all to foreign to many of the clients and prospects that I speak to on a regular basis, the lack of marketing to the customer base, or what we refer to in the D3 Methodology as Demand Expansion.
While new client acquisition has long been associated with the practice of demand generation, the reality is that you may do well to shift some of that focus to your customers in order to maximize the value to the organization. If you need further justification, keep reading to find some reasons as to why focusing on your customers is a key component of any demand generation strategy.
It’s A Whole New Journey
Many marketers I speak to confirm that they have mapped out the buying journey of their ideal customers as part of their persona development. However, what many fail to realize is that you must do the same for your customers.
Once a customer makes a purchase, things change. You must consider onboarding, adoption and understanding that there may be new stakeholders involved that were not part of the buying process.
You also need to gain insight into the various stages a customer will go through so you can market to them effectively. This is not an exercise in creating a “customer funnel” as I have heard some say. The funnel is not the customer journey. If you disagree, let me know the last time you heard any customers say, “I’m in the sales accepted lead stage of my buying process”.
Much like you would with an acquisition campaign, map out the customer journey to know how to engage them along every step and what content and channels will be most effective to do so.
It Is All About The Experience
The new competitive battle ground for brands is customer experience (CX). In fact, research by Walker indicates that 2020 was the first year that experience was the top brand differentiator over price and product.
We could dedicate a number of blogs to customer experience alone as it is such a big topic and that experience begins long before a customer buys anything. That aside, creating that experience is a necessity. Not only will it build loyalty between you and your customers, it is also a way to generate revenue, which is the entire goal of demand generation. PwC research shows that 86% of customers are willing to pay more for customer experience.
If you need a reason to invest in Demand Expansion, this may just be the justification you need.
Maintaining Market Share
I once spoke with a CMO who was telling me about the market share they had captured over the last year due to their customer acquisition campaigns. No doubt their results were impressive, but when I asked about his customer retention rate he had no idea. Upon further examination, the retention rates were quite low, so while they were bringing in new customers, just as many, if not more, were leaving.
Of course, you want to grow the revenue you get from your customers, but the first step in making that happen is to retain your customers. Add 95%+ retention rates of your customer base to new customer acquisition, and you will surely grow your market share and create a sustainable revenue engine.
If you are truly committed to building an always-on revenue engine through your demand generation programs, Demand Expansion cannot be overlooked. While the focus on acquisition is important and can be enticing, 90% of customer life time value occurs after the first purchase. Given that marketing is a revenue creation role, Demand Expansion deserves equal attention and investment.
As Chief Strategy Officer, Carlos Hidalgo guides DemandGen’s enterprise clients on developing their strategy and initiatives for digital transformation, helping to make the complex world of digital marketing simple while driving revenue and achieving operational excellence. Carlos is widely recognized for his expertise in B2B change management strategies, marketing, sales, content development and demand generation, and has spent the past two decades helping enterprise marketing and sales leaders optimize their approach to demand generation for maximizing revenue growth.