We all know the old adadge that selling to new customers costs a lot more than selling to existing ones, so perhaps we should just stop chasing new ones – in these austere times that might make sense.
However, as I’ve mentioned here before (Customer Acquisition vs Customer Retention), it does seem that going after these expensive new customers is much more attractive than some boring direct marketing to exisiting ones. However, this blog is not about urging you to spend more time on your existing customer marketing (I’ll leave that for another day – as Chad Bauman says, “Want to get into trouble? Concentrate on new audiences” – so we’ll come back to that), but about how you should approach your new customer acquisition.
Just marketing to exisiting customers is a non starter – old customers go away or die and if you didn’t replenish the existing customer pot, you will soon run out of people to sell to. Remember, your existing customers were new customers once.
Part of the problem is that we think of marketing as a cost, something we have to spend money on and as such something to cut when times get tough. Marketing, done properly, is an investment. You are using some of today’s money to generate an income stream in the future. And that is the key and like all investments it needs analysis and decisions.
It is not enough to compare the cost of a sale to an existing customer to one to a new one. On a campaign basis that is always going to lose. What we need to look at is the lifetime value of a customer and use that information to identify the best source of future exsiting customers.and what ongoing activity is going to maximise the return. So get out those spreadsheets and start looking at your best existing customers and where to get more like them.
Lifetime Value is the key to good new customer marketing.
… oh, so I was talking about marketing to existing customers after all
One question we keep getting asked is “how do I stop our newsletter being thrown into the junk mail box?”. If you are involved with email marketing, and I include newsletters in that, then this is obviously an important consideration. Avoiding the waste basket has been the goal of direct marketeers since direct mail started and the advice for email marketing to a large extent is very similar.
The easiest way to avoid the junk mail box is to get the recipient to mark your emails as safe/not junk. A lot of this centres around showing the recipient you know them, what they are interested in and in return you are interested in what they have to say.
1. Be personal: first of all address the recipient as an individual. Try to make sure that you know whether they like to be addressed by their first name or more formally. Do they know someone in your organisation? If so, can you send the email from them? Are they members of your friends scheme? Then send it from the membership manager – it just reinforces the relationship.
2. Divide and Conquer: What do you know about your recipients? Do have any purchase history? Have they told you what they like? Do you know what links they have taken previously? You probably have a vast amount of information available so use it to segment your lists and send them information they would be interested in. Do you have a group of large value contributors? Then give them special treatment. Are there people who are just not interested? Then don’t email them and try to find out why they aren’t interested – quality not quantity counts.
3. Communicate: don’t just instruct – “our next performance is on ….”, “new products in the shop…” – encourage your recipients to communicate. Ask for their feedback, direct them to places where some feedback has been published already, direct them to your facebook page and twitter account. Let them converse with you in the medium they are most comfortable with.
4. Test, Monitor and Analyse: Email marketing should not be fire and forget. Keep looking at you stats. What do people click on? Which articles have no interest? What is the best time of day to send your newsletter? Which layout works best?
5. Get the technical stuff right: Deliverability and legalities. using a trusted mail server and using a verified sending address is a great help in getting your email to the intended recipient. Make sure that you include a simple way for a recipient to unsubscribe in every email; treat you email as any other communication from your organisation and include your physical address; Don’t mislead in your subject line.
If you want to get started then take a look at Masque Mail, our low cost emailing solution or get in touch.
Segmentation is based on a principle: everyone is different; and a hope: but in certain aspects they are not that different – people can be grouped together based on some similarities and grouped in large enough bundles to make marketing cost effective. “Segmentation is a compromise between the homogenous mass and the single individual”1
Segmentation is at the heart of effective marketing. It is about understanding your customers. The goal has always been one-to-one marketing where each person is a segment and we talk to them as an individual. While technology has moved us in this direction, even printed material can now be customised based on the attributes of each recipient, it is still not cost effective to market on this basis wholesale and so breaking our audience down into manageable chunks makes sense.
Of course segmentation can be used in two ways: marketing more effectively to our existing customers and supporters – which involves profiling and analysing our existing customer database (“if you have one”
, Katy Raines, p6 JAM issue 37
– if not contact me//shameless plug
); or looking for new audiences – which really involves looking for a general profiling tool that can be used to identify those similar to existing audiences or represents the type of new audience you would like to attract.
The latest edition of JAM (Jan 2010) from the AMA
looks at segmentation which was the subject of the very first JAM back in 2001. A long time between discussions and so a welcome addition to the JAM series. Interestingly we have contributions in both editions from Heather Maitland and Andrew McIntyre, so gives almost a history of the development in arts market segmentation over the last decade.
What is clearly illustrated is that although the marketing environment has changed dramatically, with the development of the Internet and computing power in particular, the concepts behind segmentation remain the same: as Maitland prefaced her original article “Marketing is a planned process that involves talking to the right people, about the right things, in the right way, and at the right time, to achieve your objectives”. Couldn’t have put it better myself.
1. Andrew McIntyre JAM March 2001