The Value of Customers – Flipping the Economics of the 80/20 Rule

The value of a Facebook fan has been roundly debated, analyzed, and quantified based on a number of factors, assumptions, and the phase of the moon. For most brands though, the value of a Facebook fan is a proxy for advocacy, loyalty, access, and other measures that are hoped for, planned to, invested in – all to ultimately lead to customers.

Traditional marketing has always recognized the value of customers in the marketing arsenal. Loyalty cards and customer appreciation days, personalized mailings, enhanced service, catering to special needs, or even greeting good customers and calling them by their name seem quaint precursors now to the turbo-charged capabilities available today. Because of our ready access to customer history of sales and other behaviors and our ability to hitch those markers to other outside data points, we’re able to extend the experience of relevancy from actually relevant customers to potentially relevant pseudo customers. These customers-to-be used to be the small but important growth engine of business – the 20 in the 80/20 rule.

Applying the 80/20 rule meant that you anticipated the majority of your revenue would come from current customers and that some smaller part would come through a continued expansion or exposure to new audiences. To maximize revenue opportunities, emphasis, resources, and investment would be similarly split in the minority against the goal of finding new customers. Digital marketing has brought new tools and new opportunities to flip the economics of the 80/20 rule where current customers can be romanced more cost effectively, leaving more budget and energy to apply to finding new customers. Although new customers have always been more costly to find and convert than existing customers, with new digital tools in hand, marketers are finding costs decreasing for both.

New Tools, New Rules

Leverage social communities. Part of this new equation requires using existing customers to find more like themselves and bring them into the customer fold using social tools that didn’t exist prior. Keeping good customers happy and giving them reasons to share their connection to your brand or company is not only cost-effective marketing but effective marketing. Keep your customers engaged and talking online and they will be your best sales people.

Plan for new behaviors. New consumer activities are now commonplace that have the potential to impact other consumers both directly and indirectly. Customers can now easily rate, review, share, post, or blog about their experiences with your product, its delivery or service, or even other people’s reactions to it. They can snap photos of the product or service experience or post a video. This wide dissemination of their experience can be a good thing if it is a good experience, but a very bad thing if it is not positive.

All this transparency has created heightened expectations. The first priority is to make sure the customer experience is a positive one. There is no hiding in this world – making the marketing function much more intermingled with operations. Second, make sure you use those positive, public testimonials where you can, and give consumers the tools and a reminder, even an incentive, to make them public.

Maintain a presence in all critical channels and across all devices. The consumer experience is multifaceted now. It might start with a search on a smartphone, continue with product reviews on a tablet, or include a store visit or an online catalogue request. The scenarios are endless. Especially with the (just in time for the holidays) release of the new iPad Mini and many more affordable tablet options, the market is exploding with various ways your customers may connect with you. Chances are good they have many different connection points to you across devices and channels and may multitask across several. You will be expected to know about and coordinate across the spectrum, treating them as one customer regardless of where they touch you.

Honor preferences and apply what you learn. You don’t really need to communicate across all platforms if your customers tell you either explicitly or through data how they want to hear from you. You’ll also save money and avoid annoying customers if you have a measured and segmented communications approach that varies with the customer and season, among other variables. Using the appropriate level of testing and analytics for your business will enrich the customer picture dramatically. When exercised well, this brings efficiency to your operation that allows you to reinvest.

None of this work is free or easy, but it does fundamentally change the value of a customer and your relationship with customers. More efficient customer communications and marketing plans mean that you can spend more of your budget on growing your customer base and investing in the ever-widening range of digital options to reach both current and new customers.

Change image on home page via Shutterstock.

Related reading

Overhead view of a row of four business people interviewing a young male applicant.