Forgetting to Target Current Customers Is a Costly Mistake

  |  February 22, 2012   |  Comments

Targeting existing customers provides the opportunity to acknowledge your insight on their interests and needs.

Struggling to drive revenues and "show the value" of their marketing investments, many businesses become so concerned with improving conversion rates and one-time transactions that they lose track of the bigger picture and forget about what made them successful to begin with, their current customer base. Companies that over-direct their focus on targeting new prospects, forgetting that engaging existing customers may require less guesswork on preferences and can actually provide more effective conversion rates, are missing an opportunity to broaden their sales funnel and improve overall growth rates.

Targeting existing customers provides the opportunity to acknowledge your insight on their interests and needs - and when done effectively, can be a very powerful tool in building a long-term relationship. When I'm looking for a boot similar to the ones I loved last season, Zappos immediately has three options to suggest based on my past behavior and pricing thresholds. Amazon, long-considered the pioneer in delivering custom recommendations and suggestions, provides similar guidance based on past behavior and its data on how segments buy "like" items. Investments in technology that identifies not just associated products, but recommended products based on a complex history of buying patterns, keywords, and profile data can often yield results competitive to investing in a new campaign or branding initiative, often with faster payoff.

When targeting existing customers, there is an increased burden on the marketer to be more precise with their messaging. While targeting current customers keeps them engaged with your brand, they will expect that messaging to them is based not on broad campaigns, but what you know about them. If you are a financial services firm, this could be as simple as ensuring the banner ads on the post-login account pages are reflective of the product mix in the account. For grocers, if a user has previously ordered catering for Passover, messaging around Easter ham specials is probably not an ideal suggestion. Companies lose customers along the way, but one of the reasons shouldn't be due to irrelevant messaging and product promotion.

There are times, however, when targeted marketing can take on the same "creepy factor" that is associated with traditional display retargeting. Just as we don't love seeing ads for a product we just viewed follow us around through our email and other sites for months on end, there is a slippery slope when marketers make assumptions based on changes to buying habits. As we recently saw with Target, a young woman received a mailer from the company speaking to an upcoming pregnancy - based not on any indication or registration for maternity goods, but based on the products and pages that she viewed or consumed. The tricky part of Target making this connection based not on obvious buying indicators such as diapers and onesies, but through a more subtle change in buying habits, is that it may be wrong or at least complicated to explain. In this case, the woman had not yet shared this news with family, making the mailing a surprising and rather awkward experience for all involved.

The challenge for marketers is to find the right balance between connecting the dots in terms of past behaviors and projecting that insight into offers that may be valuable, without overstepping boundaries. Targeting based on actual behavior and not implied behaviors may provide the marketer with a middle ground that's likely to be more effective than non-targeted efforts, but doesn't cross the line.

Fundamentally, targeting current customers offers the ability to deliver an experience and set of personal and relevant offers that should improve conversion - but needs to be delivered in a contextual and subtle manner.

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ABOUT THE AUTHOR

Andrea Fishman

Andrea Fishman, VP of strategy and a partner at BGT Partners, leads BGT's Chicago office and has extensive experience in marketing and management consulting. She and her team drive value to BGT's clients through the development of behavioral marketing programs, web analytics, measurement programs, industry benchmarking, competitive assessments, and the design of integrated marketing programs.

Andrea has been with BGT since 2003 and is credited with strengthening partnerships with such clients as ADT, Sony, ADP, and Avaya. Prior to joining BGT, she served as global vice president at divine, inc. She's also held strategic positions within marchFIRST, The Lewin Group, and the office of U.S. Sen. Edward Kennedy.

A graduate of Brandeis University, Fishman was awarded the Wasserman Scholarship for academic achievement and was named a 2010 Stevie Awards Finalist as Best Executive in a Service Business. She is a frequent judge for the eHealthcare Leadership Awards and is involved with the Special Olympics and Chicago Cares, a community service organization.

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