Should you disregard or include ex-customers in your marketing plans?

The previous post ‘How many customers do you have? Really.’ identified 8 distinct groups of customers based their current status. Two of these groups that rarely receive as much attention as they should are:

• Customers don’t exist – the customer company doesn’t exist for various reasons.
• Customers not using – customers that don’t use your product/service/solution.

Why should you pay attention to, and spend marketing resources on ex-customers? Because, firstly you can learn valuable insights and secondly there is potential revenue from your ex-customers. Most companies tend to disregard ex-customers because they view them as a lost cause and it’s too unpleasant or difficult to communicate or deal with ex-customers. But they’re missing out on a significant opportunity to improve their business by learning from ex-customers. And there is still potential revenue to harvest.

Customers that no longer exist – nothing you can do about customer companies that shut down, go out of business, merge, get acquired or cease to exist for whatever reason. However, there were people inside those companies that used your product, maybe even liked your product. These people have moved on to other companies, they know about your product/service/solution, you probably have their names in your database. Find out where they are now and reconnect. Someone with a positive previous experience with your product/service/solution can be a valuable contact to market and sell into the company where they currently work.

Customers that have stopped using your product/service/solution – this can happen for a variety of reasons including dissatisfaction, new management preferences, a competitive product/service/solution that better meets their needs or many other reasons. Losing customers is painful and costly and has a direct impact on Lifetime Customer Value (LCV). The customers you have lost can provide valuable insights to prevent losing more customers by applying those lessons for improving or correcting whatever caused them to defect. Proactively taking action based on empirical research and analysis from these ex-customers can greatly improve retention and loyalty for current customers.

“The Customers you lose hold the information you need to succeed.” – Frederick F. Reichheld

Just as most companies do a win/loss analysis on current sales deals, you need a continuing Customer Defection Analysis program to gather information from ex-customers for business and marketing plans:

• The first step is to categorize the reason for defection – let the information from ex-customers guide you to the right categories rather than preconceived internal opinions.
• Identify the underlying causes in the ex-customers’ context, that led to the defection. Look for commonalities and trends to determine appropriate corrective action to avoid or minimize future defections.
• Get information about when they stopped using your product, what they’re using now, whether they’ll make the same decision again, etc.
• Determine what other useful and relevant information to gather for the Customer Defection Analysis based on your specific business/ product/service/solution circumstances.
• Identify possible revenue opportunities with these ex-customers:
• Can you provide paid services to help them migrate from your system to their replacement system? I know this sticks in one’s craw, but getting someone from your company into the ex-customer environment to provide services can yield significant insights in addition to the services revenues.
• Can you sell them something that is either complementary to their new system or addresses a completely different functional area of the business?
• Put them on the contact list for appropriate marketing programs to stay in touch and consider your business/product/service/solution for future needs.
• Although gathering information from ex-customers may seem difficult, most people are usually willing to share the reasons for the decisions. Don’t be defensive, argumentative, judgmental or try to rectify the past – just listen and learn.
• Being understanding, supportive and helpful during this information gathering process can put your business in a more favorable position for possible business opportunities with ex-customers.

Are you currently disregarding or including ex-customers in your marketing plans? Has this article given you food for thought to reconsider your practices in this area? Your comments are always welcome.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Marketing in a ‘Customer-driven’ company

Following on from my previous three posts on company culture drivers; this post looks at the ‘customer-driven’ company and how Marketing functions in this type of environment.

This is not about being customer focused, providing great customer service, creating value for your customers, listening to customers and all the other good things related to taking excellent care of your customers. This context of customer-driven is about companies who are slavishly dedicated to serving their customers to the extent that their business strategy and culture is driven by their customers.

The customer-driven company culture is prevalent in smaller companies where the founder started the company with a contract for the first customer, added more customers, grew the business, but essentially does what the customers want. There are however a surprising number of large and public companies who are basically customer-driven. A key characteristic is that the company is dependent on a relatively small number of customers for the vast majority of its revenue. So, while customers get ultimate service and attention, the company has limited scalability, high risk exposure to various changes in customer companies and limited control over product and go-to-market strategy.

“You can't just ask customers what they want and then try to give that to them.
By the time you get it built, they'll want something new.” Steve Jobs

These companies are likely to have a collection of ‘markets of one’ – i.e. each customer (or small sub-group of customers) is essentially its own market segment. While there is usually a common thread across these customers, they don’t comprise a market in the usual manner. These ‘markets of one’ and lack of the usual market scalability, heavily influence marketing options and approaches.

Marketing in these companies seems to be focused on two main areas:

1. Retention – while customer retention should be a high priority for all companies, it is particularly critical for companies that depend on a relative small number of customers. Marketing programs such as newsletters, free educational events, customer conferences, satisfaction surveys and featuring customers in trade publication articles appear to be most common. If customers pay recurring support or maintenance or other types of retainer fees, then marketing must run programs that emphasize the value customers receive from these fees.
2. Cross-Selling – marketing campaigns to sell more products and/or services to existing customers. The key is to focus on complementary or additive solutions relevant to each customer’s situation.
   

New customer acquisitions tend to be more opportunistic and generally not driven by a significant marketing campaign.

A good approach for improving marketing effectiveness in customer-driven companies is to reach more people in different roles in customer companies. But you shouldn’t just send the same stuff to more people – it should be personalized and/or role-based materials that connect to each individual’s responsibilities. This will enable developing greater exposure, more customer advocates, more buyers and ultimately better retention and more sales from existing customers.

Do you work in a customer-driven company as defined here – what’s your marketing approach?
(use the comment link below to share your thoughts on this topic)

Next post, a look at marketing in a market-driven company.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com