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Avoid Losing Your Customers—Or Margin—With the Right Marketing Spend

By Jeanne Roué-Taylor

Why do your customers _______ (buy, rent, subscribe, bank, fly, etc.) with you? This is a complicated question because there are many “paths” to the answer, not unlike the directions Google gives from Point A to Point B in a modern city. It depends on each customer’s individual goals and preferences…the rough equivalent of deciding the fastest, most direct, or most scenic route. Without an answer, it becomes a challenge for how much marketing spend to dedicate to maintaining the pull with existing customers.

Marketing Margin Wasting Problem

Untangling this question involves having a framework for understanding how to focus resources and time on marketing based on the customer’s spending levels. Marketing nirvana is about getting it just right by finding the sweet spot and aligning tactics so that a high-spend customer has just the right amount of marketing focus/spend to not be at risk from a competitor, nor at a point of reduced profitability.

Easier said than done.

Optimizing Marketing Spend

While it may not be easy, it is becoming easier than ever before. Optimizing spend involves having a deeper understanding of the customer and what it takes to drive the marketing success metrics that matter most. There are ways to optimize across the customer base that are different for every company, but the process for determining the right levels has become clearer and broadly applicable in recent years. The tools are far better, the visibility into customer behavior across a wider set of interaction points is better, and there’s a much more complete pool of data to optimize against.

There’s more to optimize today than ever before.

The Marketer’s Most Important Job—The Maintain Phase

Finding that optimal point of return changes based on the lifecycle of the customer relationship, which spans from Acquire to Recover, as shown in the diagram on the right. The marketer’s job is to get customers into the Maintain phase as fast as possible and to keep them there as long as possible. The three curves on the diagram are high, medium, and low spend, reflecting that fact that not all customers can spend at the same level over the long term. Marketers need to have best practices for each level of customer spend, recognizing that there are different ways to influence and different levels of return on investment for each.

Marketers need to know their own maintenance patterns. Nudge too much and profitability goes down; nudge too little and frequency and revenue go down. (We’ll focus more on that soon.)

For more on how to use nudges, influences, and rewards to create success in customer marketing, check out our on-demand webinar, Nudges, Influences and Rewards Part 2: Must-know Factors for Success in Retail Customer Loyalty.

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