strategic business marketing reflection
Session 9: Gaining and Retaining Customers
Lecture Outline
• Building revenue sources from five sources
• CRM • Retaining customers • Misunderstanding between sales and
marketing • Gaining Customers
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Quote
It is worth remembering that it takes five times more effort and cost to gain one new customer
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• Purchasing Orienta1on and Nego1a1on • Chapter 3
3 • B2B Rela1onships and Networks • Handout
4 • Market Sensing / Price value • Chapter 2
5
• B2B Strategy and Planning • Chapter 4
6 • Managing B2B Products and Services • Chapter 5, 6
7
• Integrated B2B Marke1ng Communica1ons and Consulta1ve Selling • Handout
8 • Business Channel Management • Chapter 7
9 • Gaining and Managing Customers • Chapter 8, 10
10 • The Digital Evolu1on in B2B • Handout
11 • Exam Briefing and Poster presenta1on
Understanding Value
Crea0ng Value
Delivering Value
B2B Marke1ng Framework
1. Regard Value as Cornerstone. 2. Focus on Rela0onship Interac0on and
Networks. 3. Focus on Business Market Processes. 4. Stress doing Business Across Borders.
Guiding Principles
Building Growth from Five Revenue Sources
Source: HBR, April 2004 pp. 127 - 132
Questions for marketers
• How can Marketing Automation be used to increase the value of customers through the customer life cycle?
• How do I implement permission marketing with mobile, social and messaging applications?
• How can I apply personalisation and mass customisation cost effectively in my marketing?
Differences between relational and transactional marketing
Transactional paradigm Relational paradigm
Market segment Individual customer
Transaction duration Lifetime
Margin Lifetime value
Market share Most valued customers and customer share
Mass market broadcast Dialogue and tailored communications
Passive consumers Empowered clients
Digital CRM ?
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The four classic marke1ng ac1vi1es of customer rela1onship management
Permission marketing
• Key concepts – Not interruption marketing – Not SPAM – Requires opt-in (online to e-mail) – Opt-out – Learning about the customer – Initial and continued relationship is based on
incentives.
A summary of an effective process of permission-based online relationship building
Matrix of customer touch points for collecting and updating customer email contact and other profile information
Ques1on: Why is retaining exis1ng customer over 1me so
cri1cal?
Leakey Bucket Theory
Marketing dollars spent on Acquisition
Customer Level
Customer Dollars lost through leakage.
Why customers are more profitable over time
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-10 0
10
20
30 40
50
60
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
5th Qtr
6th Qtr
Base Profit
Increased purchases
Reduced operating costs Referrals
Price Premimum
Creating and maintaining relationships involve
1. Choose the right partner 2. Create a cooperative process 3. Create an accountability structure 4. Observe and control the partnership.
Misunderstanding between Sales and Marketing
• Studies show that as many as 80% of all inquiries are never followed up by sales.
Misunderstanding Between Sales and Marketing
• Research has repeatedly shown that nearly half of all inquiries will turn into a sale for someone within 12 months-if not you, then your competitor!
Misunderstanding Between Sales and Marketing
• The challenge is to identify those inquirers who are qualified sales leads without sending sales people off to do the labour - intensive work of screening and qualifying.
Misunderstanding Between Sales and Marketing
• Research proves that at any given time, an inquirer is probably not a prospect, and a prospect is probably not a sales lead.
Misunderstanding Between Sales and Marketing
• The mission of the marketing department is to supply enough qualified sales leads so each territory can meet its periodic sales quotas.
Misunderstanding Between Sales and Marketing
• The answer... ... is to recognize the important differences between an inquiry and a qualified sales lead.
Figure 8.1 Gaining Customers
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Prospecting
• Generating leads.
• Handling inquiries.
• Qualifying prospects.
Mutual Fit Assessing
• Scheduling the first meeting
• Learning each other’s requirements and preferences
Gaining the initial order
• Demonstrating value
• Negotiating the first sale.
Fulfilling the Initial Order
• Coordinating supplier functions.
• Completing the transaction.
• Deciding to do business together.
Delivering Value Initially to New Customers
Marketing Communications Activities
Consultative Selling Process
(1) Prospecting For New Business Relationships
Ø Generate leads from business market databases.
Ø Prompting and gathering inquiries via integrated marketing communications.
Ø Qualifying leads and inquiries as prospects.
Ø Getting the sales force to follow up with prospects.
Prospecting For New Business Relationships
Three types of potential customers: • Leads • Inquiries • Prospects
Sales Funnel
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Flip The Funnel
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(2) Assessing Mutual Fit
Ø Scheduling the first meeting Ø Getting started for consultative sales Ø Initiating dialogue for complex sales
Ø Learning Each others Requirements and Preferences Ø Plan the call Ø Open the call
Ø Investigate Requirements and Preferences
(3) Gaining The Initial Order
Ø Demonstrating Value Ø Propose solutions Ø Gain the order Ø Negotiating the first sale
Ø Pricing the Initial Offering Ø Negotiation Approaches Ø Understanding Batna
(4) Initial Order Fulfillment
Ø Coordinating Supplier Functions Ø Completing the Transaction
Ø Manage Revenue Ø Follow up with prospects after the sale
Ø Decide Whether to Continue Doing Business Together
Conclusion
• Marketing is responsible for managing the lead to revenue management
• CRM is at the height of an effective customer management system.
• The importance of sound customer retention and acquisition strategies is vital for any successful B2B organisation.