For Service Centered Companies
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 learn that other factors such as people and process, 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, appropriately discounted to reflect the time value of money.
Revenue minus cost of goods equals profitability. Profitable transactions equal successful brands. Right? … well, not entirely. Service companies need to focus more attention on customer equity metrics. Customer equity is a calculation of the sum of a customer’s lifetime value as it equates to overall brand equity.
Shifting marketing focus to the client relationship places emphasis on things like customer loyalty and the value of potential referrals while building long-term, sustainable, profitability in a market sector.
Service-centered organizations should focus data capture on satisfaction over demand. Building loyalty, retaining customers and 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 strategies into on-going campaigns.
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 arguably led to the failure of Oldsmobile as well as some other Amercian car brands 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, better suited to their taste. That same introspection also establishes the point of failure; All too often we 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.
