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Bottom-up marketing – don’t let history repeat itself

George Bernard Shaw once said: “If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience.” 

You would think people and businesses alike would learn from their experiences and not repeat those decisions and activities that resulted in less than favourable reactions or outcomes.  Amazingly, for many businesses, this doesn’t seem to be the case.  Humans have a tendency to forget or not evaluate mistakes.   For many it’s the eternal ‘groundhog day’ - the lesson that was missed at school - the point that just wasn’t understood at the time - the results that were not analysed because gut feel was good enough – the pain that wasn’t felt or maybe a naive optimism that the next time around things will be different, better.  For whatever reason, we regularly witness these familiar occurrences - but why?  In business, the temptation is often to stick to what is known and repeat the same old way of doing things.  This might be one answer.   And, as a mind-dulling consequence, we predictably reap what we sow and history repeats itself over and over again until it’s too late to address where things have gone wrong. The constant pressure to drive marketing activities has a part to play in this stalemate.   There’s a budget to spend and expensive resources to justify and keep busy so money is ‘thrown’ at traditional telemarketing, direct marketing and more modern digital media in the hope of enticing new opportunities and to service existing customers in a uniform way.  This ‘bottom-up’ approach is incredibly inefficient and wasteful.  What’s more, it’s the proverbial tail wagging the dog – let me explain why.

We recently worked with a large catalogue company that adopted a broad-brush, all-encompassing approach to its business acquisition and customer development activities.  Following analysis of its transactions we were able to determine that around 35% of its activities resulted in developing a meagre 9% of its total revenue.  The bottom-up marketing approach was driving a greater number of calls and catalogue mailings but the desired results were not achieved.   It showed that much of the focus was on the wrong customers – those who spent little or no money and not enough on those who hand a demonstrable history and propensity to buy more goods.  In a nutshell, customers were being treated as equals and clearly this wasn’t warranted.  Coming to terms with this simple concept of customer inequality can have a major impact on marketing, business acquisition and customer service as it shifts investment to those customers that spend most with you - those considered as your ideal, or as we call them at Blue Sheep, Treasure accounts.  The premise that 80% of your business typically comes from 20% of customers should therefore be modelled into the proportionate attention that the 20% are to be given and conversely what you do with the 80% that are unproductive or worse – actually losing you money!   In an ideal world, most businesses would be better served by a more even distribution of customer worth across the base to minimise risk due to lost business.  This can be achieved.  At Blue Sheep we have developed a unique analytical service called Money Mapping to safeguard businesses against wasting money on unprofitable customers and identifying those important customers that will protect your future.  The process identifies factors such as cost to acquire, cost to serve and revenue generation.  This information can be used to help shape marketing and servicing approaches in a logical and focused manner.  Strategies can be formulated to deal with demanding customers that sap your life’s blood and spend no money, for example, by re-evaluating lines of interaction – pushing customers onto the Web, removing dedicated management resource, redefining cost structures and so on.  But first, before you can make these decisions with any clarity you need to obtain a thorough understanding of the relationships you hold with customers, their ‘real worth’ to your business in terms of current and potential and what’s more, where you should ideally be focusing efforts to find more, similar, profitable customers.  The impact of Money Mapping can be hugely significant resulting in re-evaluation of existing business and marketing practices and the reduction of customers.  Yes – you read that correctly, fewer customers but better relationships and higher profitability.

If you consider what your Treasure customers look like they are likely to share some characteristics that make them so.  They may be easy to deal with, self sufficient, make few complaints, have equal relationships, buy on a regular basis and see you as being an important partner or supplier.  They acknowledge your company’s efforts and respect the role you play.  They see you as adding value to their business.  Ideally, they are in it for the long haul but need the quality and consistency of service, support and relationships. I’m sure you recognise these business traits – and a lot more besides.  Money Mapping will stop history repeating itself.  It ensures that you don’t continually do what you have always done.  It creates a dynamic framework from which to maximise the business’ efforts, resource and investment.   It identifies the customers that fit your ideal relationship.   In my mind there’s nothing worse than making the same mistake twice – but it happens.  What we want to achieve is making the right decision every time so your history is really something to talk about.