Customer Share Marketing: How the World's Great Marketers Unlock Profits from Customer Loyalty

Description

Customer Share Marketing: How the World's Great Marketers Unlock Profits from Customer Loyalty teaches customer share marketing, which leverages customer loyalty through direct marketing and advanced, Internet-driven sales techniques. Author Tom Osenton demonstrates how leading companies apply customer share marketing to increase sales and profits, often more effectively and at a substantial savings over traditional methods.

Sample Content

Online Sample Chapter

Customer Share Marketing: Getting the Most Out of Your Customers

Table of Contents

Acknowledgments.


Foreword.


Introduction.

I. THE BATTLE FOR MARKET SHARE.

II. UNLOCKING THE POWER OF CUSTOMER LOYALTY.

III. ACQUIRING CUSTOMERS AND PERMISSION.

IV. RETAINING CUSTOMERS AND GROWING CUSTOMER SHARE.

V. MARKETING IN THE NEXT ECONOMY.

Preface

Introduction

Every Saturday morning, I fill up the family car with gas at the local Mobil station. The routine is generally the same, week in and week out, and usually costs anywhere from $23 to $27, depending on the price of gas and exactly how much of it we've consumed over the past week. Lift the handle, select the grade, reset to $00.00, fill the tank, and pay the attendant. A week later, I'm back at the pump: lifting the handle, selecting the grade, resetting to $00.00, filling the tank, and paying the attendant. At this point, I could perform the task in my sleep, consistently contributing, on average, about $25 per week to the station's business.

Until one Saturday, while I was paying the attendant for gas, I also bought a dozen donuts and a cup of coffee. It was the first time that I ever spent more than $30 during one visit to the Mobil and it caused me to realize something about gas—that it was basically like toothpaste or shampoo. I realized that no matter what the folks at Mobil did to entice me to buy more gas, I would only buy more when I ran out.

I also realized something about the business of selling gas—it's all about market share. It's about selling gas to more people as opposed to selling more gas to the same people. In marketing terms, growth for a gas station is all about acquiring new customers.

As for the returning loyal customers—like me—the only way to generate more money from retained customers is to sell them something else along with the gas—like donuts and coffee. Unlike an acquisition strategy that primarily relies on new customers to grow market share, a retention strategy gives marketers the opportunity to grow customer share by selling more to the customers they already have.

Market Share Marketing: The Art of Acquiring Customers

Over the last half-century, the leading marketers, advertisers, and agencies in the United States perfected the art of acquiring customers and growing market share. In fact, it's very unlikely that we will ever witness such a run on

customer acquisition as we did during the decades immediately following World War II, when consumers began to establish brand preference across dozens of products. It's difficult to imagine any group of marketers better at developing and successfully executing wholesale customer acquisition strategies since 1950 than U.S. marketers and their agencies.

But with market share levels largely established, it has become very difficult and very expensive for marketers to grow sales by growing market share.

Ask most nationally branded packaged goods manufacturers today who buys their soap or their beer, and they'll tell you 29- to 49-year-old women or 21- to 49-year old men. On the other hand, ask L.L. Bean who buys its outdoor gear, and the company produces a printout of the names and addresses of individual customers, along with their purchasing histories, that would fill a room. Direct marketers such as L.L. Bean have always known who their customers were—literally and figuratively. For mass marketers that primarily promote to enormous groups of people based largely on demographics, a list of consumers who buy their products once, twice, or two dozen times a year, for the most part, simply doesn't exist.

So why should this be important to mass marketers now?

Hitting the Market Share Wall

After a company has sold to virtually every man, woman, and child on the planet, how does it profitably grow sales? When a company with an established and loyal customer base is unable to grow by adding new customers, that company has "hit the market share wall." Look at Procter & Gamble, for example: an enormously successful company that was launched by two immigrants in 1837 when the population of the United States was less than 16 million.

Now, more than 160 years later, P & G proudly boasts in its 2000 Annual Report that it successfully markets more than 300 products to more than 5 billion consumers in 140 countries. Think of that—five billion consumers. If the world's population is 6 billion and the remaining 1 billion are either too young, or too poor, or have no access to P & G products, how do companies such as P & G proactively impact sales growth? Significant growth for such companies, more often than not, has come from acquiring competitors, launching line extensions to existing brands, or making the case to consumers, through costly advertising and promotion, to switch brands.

But now the Web enables a new and powerful fourth alternative: a three-pronged strategy that (1) uses the power of mass marketing to both sell products and acquire permission to communicate with prospects and customers directly by future email, (2) uses email to create one-to-one permission-granted, relationship-enhancing conversations with existing loyal customers, and (3) uses the Web as a sales facilitator at the center of promotions that encourage and drive repeat sales online or offline.

Customer Share Marketing: Getting More from Existing Customers

Though it is difficult to measure, the value of brand loyalty as a P & G asset across its stable of products worldwide is significant and powerful. Consider the impact on company sales if P & G more aggressively employed cross-selling strategies to leverage the loyalty that a customer has for one P & G product to buy another.

There is a significant amount of stored brand equity associated with the products and services of thousands of companies. That stored brand equity, or brand loyalty, can be leveraged to help sell customers more of the same product or more products within a family of brands. For example, offering combination discounts on compatible P & G household care products, such as Bounty paper towels, Mr. Clean multipurpose cleaner, or Cascade dishwashing detergent, with multiple purchases of Joy dishwashing liquid could move the sales needle for a host of P & G brands.

In many ways, P & G is like the local gas station. It markets and sells fixed consumption products such as laundry detergent—products that are typically purchased only when the consumer runs out. Selling more Tide to consumers who already have a box is difficult at best. But create a customer loyalty program that rewards loyal Tide users with the opportunity to receive electronically delivered coupons with discounts on Downy Fabric Softener or a package of Pringles—both P & G brands—and you have the makings of a customer share marketing program that proactively markets more of what a company has to sell on a one-to-one basis.

Mass Marketing and Direct Marketing

This book is not about mass marketing or direct marketing. It's about mass marketing and direct marketing working together to sell more to existing customers. It is also about how the Web makes it possible, practical, and profitable to do both. Historically, we have treated these important and disparate marketing initiatives as mutually exclusive activities, with mass marketing ad man David Ogilvy on one end of Madison Avenue and direct marketing guru Lester Wunderman on the other.

But the Web is beginning to change that as more and more established brands are realizing that the interactive nature of the Web can be an effective and affordable means of enhancing customer relationships as well as growing customer share.

Best Practices from the World's Leading Marketers

The marketing principles discussed in this book can be applied to the marketing initiatives at companies of all shapes and sizes—both B2C and B2B. It doesn't matter what you're selling or to whom or how many customers you have. Whether you're a company with 50 customers or 5,000,000, the objectives are the same—to generate increased sales and profits.

You'll be able to learn how the world's leading marketers, such as Frito-Lay, Coca-Cola, and Johnson & Johnson are applying customer share marketing strategies to generate more sales from loyal customers. Best practice examples are presented in two separate chapters:

Chapter 11, "Acquiring Customers and Permission," is a collection of best practice acquisition examples from leading marketers such as American Express, Frito-Lay, and BMW, which detail how companies such as these are using the Web to acquire both sales and permission for the purpose of building an inhouse permission-granted database of prospects and customers.

Chapter 13, "Retaining Customers and Growing Customer Share," is a collection of best practice retention and customer share growth examples from companies such as Campbell Soup, Kellogg's, and the Coca-Cola Company, which illustrate the effective use of the permission-granted list to convert prospects to customers, customers to repeat customers, and repeat customers to loyal customers for life. You will learn how companies are using customer share marketing strategies to increase the amount of business from the loyal customers they have invested millions to acquire.

Best practice examples are presented as formatted mini-case studies that cover a breadth of marketing disciplines—from online and offline advertising to acquisition email marketing to customer promotions—and make it easy to understand the elements, strategy, and in many cases, the results of the effort.

There are also a few important words and phrases that are used frequently throughout the book and require a clear definition to avoid confusion:

Prospects and Customers: Prospects are defined as potential customers. Until they actually purchase something, they remain prospects. Customers are the folks who have purchased something from you—trading their money for your product. This may seem obvious, but many people categorize prospects that sign up for promotions or enewsletters as customers. For our purposes, they are not.

Opt-in and Permission: There is considerable debate over what is permission and what is not, and whether opt-in is the same as permission. For our purposes, opt-in names represent a list of prospects that are rented from a third-party broker. Even though permission may have been granted to a third-party, the names in your permission-granted database should be names of either prospects or customers who have granted permission directly to you, not through a third party. If permission is not granted directly to the marketer, then the name is neither permission-granted nor owned by the marketer. Third-party opt-in names can be a very valuable source of prequalified leads, but until those leads say yes to you, they are considered opt-in names.

Getting Serious

One hundred years from now, when the book that chronicles 21st century marketing strategies is written, it will no doubt describe the work of marketers who were successful at practicing both market share and customer share strategies as part of a truly integrated marketing strategy. The book will also show how mass marketers made the shift to embracing direct marketing as an important complementary initiative in order to successfully manage 21st century customer relationships.

This shift is rapidly gaining momentum as marketers of all sizes are getting serious about how they can best use the Web and email to more effectively manage their best customers. The innovators have already begun to make use of the Web to more effectively manage and grow their customer relationships. Regardless of whether you are a Web marketing innovator or just starting to integrate the power of the Web into your marketing plans, this book is designed to help you keep moving forward—maximizing the Web as a tool to unlock profits from loyal customers you already have.

Updates

Submit Errata