You Nurture Your Relationship with Your Spouse, Don’t You? - Marketing Watchdog Journal

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		September 2008, Issue 55

Lead-Generation Best Practices
You Nurture Your Relationship with Your Spouse, Don't You?
By Tim Wilson, Vice President, Services, Bulldog Solutions

Three Tips for a Long and Happy Relationship (with Your Customers)

If ever there is an overused analogy when it comes to marketing, it's got to be the dating analogy—in other words, you don't ask someone to marry you the first time you meet them. You need to work at the relationship, you need to figure out where and why you are compatible, you need to be aware of what other people are saying about you, etc. The analogy is used all the time because, frankly, it holds up to any number of deeper dives into the subject.

At the same time, a tenet of good business for years has been to avoid getting caught up in spending all of your energy chasing down new customers and neglecting the customers you've already acquired. "It's a lot cheaper to retain and grow your existing customers than to acquire new ones," is a mantra in any business school and in most businesses.

When it comes to lead nurturing, these two concepts work well together. Especially in a BtoB or considered purchase environment, lead nurturing is critical when it comes to effectively acquiring new customers—when you have that first date (generated a lead), neither you nor the prospect knows each other all that well, and many of those prospects are not at a point in their buying cycle where anything you could do would drive them to buy. So, nurturing is the best way to prove your value as a longer-term mate so that, when they do get to a point in their buying cycle where it's appropriate to move the relationship to the next level, it's you that they want to take that step with.

This Article Is Not About That Kind of Nurturing

Let's move beyond dating to when that dating has progressed to the point of a marriage—the analogy in business is that this is a purchase event, when the prospect becomes a customer. Nurturing your existing customers is as important as nurturing prospects. When companies focus on customer growth and retention, they often see this as being simply "excellence in customer service and support" (I'm not implying that this is simple to do; rather, it's a simple concept); that is inherently reactive. In other words, you serve them well when they ask you for something. But nurturing, on the other hand, is more proactive. It's a way to both bring more value to the customer (thus, solidifying your relationship) and to put offers in front of them that they are more likely to respond to.

The following are three strategies you can use to better nurture your existing customers:

1. Use Your Data for Segmentation

Typically, you have some very valuable information about your customers that you don't have for non-customers. Mainly, you have data about what they've bought from you. You also often have more detailed and more accurate contact information. And, if the purchase was a BtoB purchase, you may also have reliable information about their company—certainly enough information to find the company in Hoover's or D&B or some other system to determine where their headquarters are, how long they have been in business, what industry they are in (SIC or NAICS code), and so on. In order to effectively nurture your customers, you need to determine which of this data matters when it comes to segmenting them.

2. Be Proactive About Time/Service Renewals

One of the most commonly overlooked customer nurturing opportunities has to do with annual service renewals. Worst case: A company does not even notify its customers when their service period is up. Almost as bad is when customers simply get a get a notice that their service period is about to expire.

A more effective nurturing program that addresses annual service contracts is to include both a "ramp-up" period—providing information early on in the service period as to how to get the most benefit out of the service—and renewal-oriented nurturing that starts well in advance of the renewal date. Targeted e-mails that both let the customer know how often they/their company are using the service while also helping them use the service more effectively can plant in the customer's mind that this is a service they must have. The goal here is, of course, that when customers eventually get their renewal notices, they aren't scratching their heads trying to figure out if they've actually used your services during the last year.

3. Retention vs. Growth: Apply Them Both. And Know the Difference.

Of course, you want to both retain and grow your customer base. While these go hand in hand, they can look very different, and you should assess possible nurturing messages as whether they do one or the other. If you're nurturing program is simply, "You already bought X. Would you like to buy Y?," you will quickly alienate your customers. Rather, "You bought X, and we wanted to let you know that some updates (software downloads, documentation, articles, etc.) are available that you might find useful" demonstrates that you are committed to your customers' success, and if these customers have not been actively using product/service X, it's a soft nudge for them to start doing so.

"Growth" messages (which can be combined with retention ones) need to be very diligently framed in customer benefit terms. Even though this is a Marketing 101 concept, it is very easy to fall into this trap, i.e., assume that because your customers have bought from you in the past, that just the mere fact that you have a complementary product available will convince them to buy that, too. Clearly understanding the value of the cross-sell—what additional pain points the combination of products/services would assuage, or why an upgrade might make sense from the customer's perspective, is critical.

And a Final Word ... on Divorce

First and foremost, existing customer nurturing is about preventing a business divorce—a.k.a. customer churn. Determine whether your company's churn rate is unacceptably high. For many companies, the easiest way for an existing customer nurturing program to deliver real value is by finding "likely churn candidates" and nurturing them to retain them. The tricky part is being able to identify them as at-risk before they've already made the decision to leave. In the case of one SaaS company, this was done by comparing service usage by each customer over time and then correlating that to customers who failed to renew their service. The company developed a list of ways that they could offer to help the customers use their service more effectively—some of these did not directly bring revenue to the company, but, rather, were free resources or access to partners—and then implemented a nurturing program to make these suggestions. The results were quick and substantial. Within three months, renewal rates went up significantly.

To sum it all up, here are the keys to a long and blissful relationship: Keep track of the details, be proactive, don't take anyone for granted, and always remember the anniversary. So you tell me: Does the dating analogy still work? Let me know what you think.

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Tim Wilson is vice president of services at Bulldog Solutions, the lead-generation optimization and management company. Visit www.bulldogsolutions.com to learn more.

Marketing Watchdog Journal is a monthly newsletter from Bulldog Solutions, a lead optimization and lead management company dedicated to helping our clients generate more, better leads and turn them into revenue. We welcome your feedback on this newsletter's content and design, and encourage you to share your ideas for topics you would like us to cover in future issues. Please send your comments or questions about Bulldog Solutions to Amy Bills, senior manager of Field Marketing.