Don’t Confuse Motion with Commotion

Published: August 23, 2010

Folks are “following,” “friending,” and otherwise opting in; web site visits, page views, and downloads are up; email open and click-thru rates are good, and other metrics are trending higher.

So, with all of this activity are you satisfied with the number of new marketing qualified leads (MQLs), sales qualified leads (SQLs) and closed deals?  If not, you’re not alone.  A recent report from the CMO Council indicates that 44% of marketers are struggling to quantify the value of online marketing spend. They’re seeing commotion, but not forward motion.

“Nothing Happens until Something Moves”– Albert Einstein
In response, marketers are adopting customer lifecycle marketing strategies.  Customer lifecycle marketing recognizes that prospects and customers move through stages in their relationship with a company – from the first contact they make with us, to the point where they are enthusiastic advocates.  Every communication with prospects and customers strives to advance people in the lifecycle.  In other words, the success of a customer lifecycle marketing strategy is all about movement.


Get the latest B2B Marketing News & Trends delivered directly to your inbox!

What’s the business value of managing the customer lifecycle?  Research from consultancy firm Bain & Company indicates that a 5% increase in customer retention can increase a company’s profitability by 75%.  Noted author and customer loyalty expert, Fred Reichheld, reports that companies with the highest concentration of customer advocates outgrow their competitors in most industries – by an average of two-and-a-half times.

Segment and Target the Right Buyers
Conventional marketing solutions track “commotion” metrics, the ones that measure response.  While response metrics are important, the motion metrics of customer lifecycle marketing address the question, “Are we marketing to the ‘right’ people, and are we moving these relationships forward?”

The CMO Council report goes on to state that 62% of marketers view customer segmentation and targeting as a top priority.  In other words, marketers are looking to focus resources on the “right” people.

Matching well‐targeted audience segments with relevant communications is a proven method to increase buyer engagement and conversion rates. For example, an HVAC system manufacturer appended their database with household demographics. The company analyzed their customer database and discovered new insights. Previously, they targeted large new construction homes exclusively. However, they found that in the northeast, a large segment of their customers used their products in old home renovations. Their analyses also showed a large segment of customers were building midsize homes.

This provided a segmentation opportunity. For each geographic region, they segmented the database by new construction and renovation, and by midsize square footage homes and large square footage homes. They created messaging relevant for each segment. To the northeast region’s midsize home renovators the direct marketing treatments included photography, copy, and offers that spoke to the need to improve the heating efficiency of old homes in the cold winters. The creative content targeting the southeast region’s large square footage new construction segment was quite different. As a result of proper customer segmentation and targeting, the return on direct marketing investments increased by over 125%.

Move Buyers Forward in the Lifecycle
Segmenting and targeting the right people is half the equation.  We need to land and expand more business – faster.  This requires visibility, tracking and active management of prospects and customers through each stage of the customer lifecycle. 

For example, a specialty retail chain wants to reduce the time it takes to move customers through three lifecycle stages:  New, regular, and premium.  The retailer knows that if they can turn a first time customer into a regular, they are three times more likely to convert the customer into a premium – one who will purchase several times as much as a regular customer over the lifetime of the relationship.

A new customer advances to the regular customer stage when they have made three purchases in a 30-day period.  A regular customer advances to the premium customer stage when they have purchased or renewed an annual savings club membership, and they have increased overall purchase volume to a defined level.

Offers and promotions are tailored according to the target segments in each lifecycle stage.  While the success of individual marketing tactics are measured by response and redemption rates, the overall marketing programs are judged by their effectiveness in advancing customers from one stage to the next using two metrics:  lifecycle stage churn rate and the average stage duration.

To avoid confusing motion with commotion, savvy marketers are segmenting and targeting the right audience to match the right messages, offers, and promotions.  They are also actively managing the forward movement of relationships through the lifecycle to reduce buying cycle times and increase customer lifetime value.

Richard Cunningham is vice president of marketing with Right On Interactive, a leading provider of customer lifecycle marketing software solutions that transform the way marketers nurture business relationships – from initial contact to brand advocacy.  He is a veteran of B2B corporate marketing with companies ranging from start-ups to Global 100.  Follow him @roi_marketing.

B2B Marketing Exchange
B2B Marketing Exchange East
Campaign Optimization Series
Buyer Insights & Intelligence Series
Strategy & Planning Series