As a marketing professional in a service centric organization you realize that a traditional marketing strategy will not be able to differentiate your brand and provide a successful path toward continued revenue growth. As service marketers, we are taught that other factors such as people and processes, play a critical role in developing our marketing message.
If the marketing mix for service centered companies needs to be tailored, shouldn’t the methods by which we measure success also be adjusted as well?
Companies should focus less on current sales and rather shift attention to CLV. A fiscally unhealthy organization can sometimes be difficult to see before it is too late. Good current sales but poor prospects on the horizon spells danger. The customer lifetime value metric emphasizes long-term health over short-term profit by quantifying the future profit a customer will generate, properly discounted to reflect the time value of money.
Revenue minus cost of goods equals product profitability. Profitable products equal profitable brands. Right? … well, not entirely. Service companies should pay more attention to customer equity (the sum of their customer’s lifetime value) over brand equity (the value of a brand) Shifting focus again to the customer relationship places a marketing emphasis on things like customer loyalty and the value of customer referrals to build long-term sustainable profitability in a market sector.
Service-centered organizations should measure satisfaction over demand. Building loyalty, retaining customers, cross selling services are all excellent ways of increasing equity. In fact, when contrasted with the cost of new business development, mature businesses would be hard-pressed to increase profits without leveraging these marketing strategies.
Even though we as marketers say ‘customers first,’ do our actions say something different? Do we build brands around customer segments, or customer segments around brands? It may seem like semantics, but it led to the failure of Oldsmobile at the cost of billions of dollars.
From the late 1980s throughout the 1990s General Motors spent more than a decade and quite a considerable sum of money trying to convince America that “this is not your father’s Oldsmobile,” before finally throwing in the towel in late 2000. In hindsight, a path of less resistance seems clear – direct younger car buyers, who are clearly seeking something different, toward a new GM brand suited to their taste. The reason why this happened is also clear – all too often we can elevate “the brand” over the customer relationship.
Novocent helps you connect with customers by creating the building blocks of communication. We work to articulate the intangibles that differentiate your organization and can transform that messaging into actionable projects like:
Are we a ‘good fit’ for your team? Toss us a small project and let’s find out.
