Brands from every B2B and B2C industry sector have embraced the power of storytelling — whether it be branded storytelling or “true” storytelling — in their efforts to stand out and make a human connection with their audiences. Public relations and advertising agencies, and viral digital firms everywhere, talk about the power of storytelling throughout their websites and the importance of a brand’s emotional value.
For the most part, social media is to thank for enabling brands, both B2B and B2C, to make a more transparent and genuine connection with people. In fact, Bryan Kramer, a social media strategist and CEO of PureMatter, goes as far to say that it’s no longer about B2C or B2B marketing. Instead, he says, it’s all about human-to-human. That is #H2H.
Simply by virtue of what they sell, some organizations have had an easier time than others in making a genuine connection with their target customers. Most of us are familiar with emotional story telling from big consumer brands like Coca-Cola, Apple and Kellogg’s, to name just a few. B2B companies have to work harder at it, though.
Historically, emotional storytelling hasn’t come as naturally to B2B companies like Analog Devices, Inc., a semiconductor manufacturer, or Abbott Rubber Company, a manufacturer of industrial hoses and rubber products. The emotional stories exists for these brands, but to find them they need to dig deeper and include every employee, and not just their marketing and sales organizations, in their search.
The good news is that more and more B2B companies are recognizing the power of stories and are using social media, as well as traditional channels, to share them. They are using new channels to share new angles about their organizations and are even having a little fun along the way in their quest to emotionally connect with stakeholders.
Blogs and communities are always buzzing about one form of marketing or another. And if you listen closely, you’ll notice that most of the marketing conversations going on—whether they’re about inbound marketing, SEM, affiliates, or mobile—emphasize the importance of getting new or more customers, as opposed to keeping the ones you already have.
The same trend can be seen in the way companies reward their sales and marketing staff. Those who acquire new customers are rewarded with generous commissions and recognition, whereas the ones working to retain current customers get a lukewarm pat on the back.
Now, to be clear, there’s absolutely nothing wrong customer acquisition. However, it’s unfortunate that customer retention isn’t getting the same (if not more) attention from marketers—because retention usually brings in more revenue, at lower cost.
New Business Is Great, but Repeat Business Is Even Better
It’s time for marketers to shift their focus to customer retention and loyalty, instead of putting all their eggs in the acquisition basket. The good news: doing so may actually be easier and far less costly than you think.
Not only is it more expensive to acquire new customers than to keep existing ones (acquisition costs five times more than retention, according to Lee Resource Inc.), but current customers actually tend to spend more than new ones.
And if that weren’t staggering enough for you, consider the Harvard Business School study that found “increasing customer retention rates by 5% increases profits by 25% to 95%.”
Why not crunch the numbers in your own business and see for yourself just how important repeat customers are for your company? Quantify your customer acquisition spend vis-à-vis retention, and take note of the revenue that new customers bring in versus how much your existing customers are spending.
First Step in Retention Marketing: Calculate CLV
Now that you’ve established the significance of retention marketing, it’s time to get started on what you can do to retain more customers. Before you start rolling out customer retention campaigns, though, you need to figure out how much you should spend on your customers to maximize your profits.
The first step in setting a budget for your marketing campaigns is measuring customer lifetime value (CLV). You need to find out how much value each customer brings into your business so you can determine exactly how much you should be spending on them.
You can use a variety of CLV equations to calculate the value of your customers. Management Accounting Quarterly, for instance, shares this formula (PDF), where it incorporates contribution margin, marketing cost, and probability of purchase to calculate CLV.
KISSmetrics, on the other hand, uses three CLV equations and averages the amounts to arrive at a final CLV.
Note that CLV depends on various factors, including business type, the nature of its customers, as well as the industry that the company belongs to; accordingly, there isn’t one universal formula that you can adopt. That’s why you should look into various equations and use the ones that incorporate metrics relevant to your business and industry.
You can also seek the help of companies that specialize in data and marketing and let them create a customized CLV approach for you.
Action Steps to Retain Existing Customers
Once you’ve established your budget, the next step is to decide where and how to spend it. Here are a few ideas to get you going.
The best way to build loyalty with your customers is to make them feel valued. Don’t treat customers like numbers on a spreadsheet. Regard them as individuals by personalizing your correspondence with them (e.g., emails or website greetings that mention their name), or by adding thoughtful touches to your communications with them (e.g., handwritten notes and birthday cards).
You can also customize the offers or website experiences that you provide. Gather as much data as you can about your customers. Track their site behavior, purchase history, demographic information, etc., and use that data to create personalized experiences for them.
For instance, if you know that the person browsing your site is a female who bought shoes from your store in the past, then you should display relevant product recommendations on your site instead of a generic one-size-fits-all page.
The same goes for the discounts and offers you give out. If the data tells you that Person A has a higher chance of purchasing when given a free-shipping coupon, and Person B will appreciate a 20% discount more, then send out a different offer to each customer to increase your conversion rates.
Consider optimizing the timing of your offers as well. Segment your customers according to the time of day that they made a purchase, and reach out to them when they’re most likely to buy.
2. Track and Test
Remember to monitor the performance of your retention campaigns. If you’re sending personalized offers, be sure to take note of the sales that those offers brought in. When you’re personalizing the timing of your offers or messages, track open rates and clicks, then compare them with those of previous campaigns.
Not seeing the best results? Perhaps you need to resegment your customers, change your messaging, or incorporate more data. It could also be a sign that you need to move on to another type of campaign. In any case, the only way to find out is by tracking and testing.
When you’re at this stage, you also need to make sure that you’re setting the right metrics. Getting 10,000 signups in one day may sound sexy, but if those users don’t amount to actual sales, then it probably isn’t worth tracking.
Always be clear on the metrics that count (it could be sales per customer, or rate of repeat purchases, or something else) and monitor only the numbers that matter.
3. Reward loyal customers
The great thing about loyal patrons is that they don’t just give you repeat business, they can bring you new customers as well. Extremely satisfied customers are more than likely to recommend companies to their friends. Encourage this practice by rewarding the people who send new business your way.
You don’t have to create an elaborate referrals program or offer huge monetary rewards to customers if you don’t have the resources to do so. A relevant offer or a token/freebie that you know they’ll love will go a long way.
Be genuine, and remember that simple, yet thoughtful, gestures toward your customers will be recognized.
4. Ramp up your customer service
Providing excellent customer service should be a no-brainer, but some companies don’t seem to spend enough of their resources on their customer support department, instead pouring everything into Sales and Marketing.
Remember, your sales and marketing team can perform a stellar job in bringing in new people, but if your support reps aren’t doing enough to keep those customers, you’re just wasting your resources.
Again, it boils down to showing your customers just how much you value them. Be respectful, treat them well, and go above and beyond to solve their problems. And if you think about it, the bar for customer service is set really low. People don’t expect much from support teams these days, so if you step up and blow them away with amazing customer service, it won’t be ignored.
More corporations are taking some of the responsibilities previously handled by their public relations and advertising agencies back in-house. Regarding PR agencies, it’s no longer breaking news that many clients have taken their social media activities inside. But a recent report by The Association of National Advertisers (ANA) says that the expansion of in-house marketing and marketing communications capabilities includes bringing creative strategy in-house as well – a red flag for ad agencies.
About 60 percent of the clients who participated in the ANA study say they are using in-house marketing capabilities vs. five years ago when 42 percent reported the same;
More than half of the clients polled say they have taken assignments that were traditionally the responsibility of their agencies back in-house;
40 percent brought creative strategy in-house, which as Lee points out “has been a key agency capability and attraction to clients,” and
Almost 70 percent run their social marketing programs in-house.
For those of us experienced enough to have seen the rise and fall of in-house agencies, and now their apparent resurgence … well, it’s been an interesting ride. During my years with once great computer manufacturer Apollo Computer, Inc. (acquired by HP in 1989), I was part of a dynamic in-house marketing communications team that had a level of enthusiasm, sense of purpose, work ethic and urgency as impressive as any agency I’ve seen since.
The team was as big as some small to mid-size agencies and included:
– Up to nine PR pros handling all corporate communications, all media and industry analysts relations and support at events and trade shows. We didn’t call it “content development” then, but the PR team was largely responsible for developing a significant amount of the marketing content, from by-lined articles to white papers and speeches to press releases and customer success stories.
– another half-dozen or so copy writers, designers and other creative people. All sales literature, customer brochures and product sheets, other promotions, themes for trades shows and employee conferences, etc., all done in-house. While there was an advertising agency on retainer, that agency acted as an extension of the internal team.
– a significant events team produced and set up every trade show, from negotiating trade show booth space to overseeing the unions setting up the booths on the showroom floor.
All were part of the same team and reported into the same management. It was a great model that worked at the time. Despite its great run, however, a similar model today would have more disadvantages than it does advantages.
Lee makes the point that an in-house agency works “right at the heart of a brand” vs. agency staffers who are outside looking in. Somewhat sarcastically, he calls power, influence and control the “eternal Corporate Aphrodisiacs.” And he’s right.
But at the same time, in-house agencies can be at risk of becoming too internally focused. For those of us who have spent any amount of time on the client side, we know that the eternal meetings, time spent building consensus, bureaucracy and politics can chew the days and weeks away and relegate the creative process to the back burner.
One of the greatest advantages of working with an outside agency is the broader, external view and opportunity to learn from the campaigns of the agency’s other clients — best practices and also the campaigns that went bust, so what not to do. In addition, agency people make it part of their business to know what’s coming around the next corner, marketing trends and new technology platforms that can help propel a client’s campaign.
And finally, an agency team makes the internal team stronger and vice versa. An ambitious and competitive agency team can push an in-house team to stretch outside its comfort zone, and the best in-house teams will respond in kind.
What do you think? Do external agencies make internal teams do their best work?
This post originally appeared on Forbes.com on Nov. 21, 2013, and is authored by Davia Temin, who writes about reputation matters: crisis, leadership and strategy; and Ian Anderson.
Thought leadership, branded content, content marketing, and native advertising are all stops along the continuum of how ideas are expressed, and products are marketed, over the Internet.
Last week, “Google Search: Reunion,” a mesmerizing 3-minute video from Google India, blazed across social media, gaining over 5 million hits in just a few days. Intensely moving, unique, and believable, it tells a story of two friends separated in youth by war and government partition, who found one another in old age through the help of their grandchildren and Google. It brought most people who viewed it – and believed it – to tears.
One reason it is so very effective is that it feels real, and there is certainly nothing in the clip to announce that it is anything but a true story. But of course it is an ad promoting Google in India and features actors, not real people. It blurs the line between truth and fiction, authenticity and acting on social media – masterfully.
And that is just a taste of what is to come.
Church and State
In traditional media, there has always been a bright line between journalism (unsponsored, objective reporting and analysis that purports to uncover the truth, tell true stories, and be dedicated to the “public good”) and advertising (sponsored messages that have a point of view and benefit an organization, its products, or services). In fact, the Association of Magazine Media used to monitor the line between “church” and “state” closely – making sure that readers always understood which was which.
But this line has gotten mightily blurred in the world of social media. And that is not necessarily a good thing for a credulous, but trust-averse, public.
Unbiased, non-commercial research, commentary, stories, recommendations and reporting still are accorded more value – and trust – than marketing messages. But that does assume the public can tell the difference.
Have the reviews of the book you’re interested in on Amazon been commissioned, or are they authentic? Have the news stories you are reading on a website been written by a reporter, or a sponsored “news aggregator” somewhere overseas? Is that photo that touches you so much real, or Photoshopped?
On social media, most participants are looking for authenticity, but swimming in a sea of ambiguity.
What does content really mean?
And so, how does this affect corporate social media? Content has been proclaimed the coin of the realm in social media, but is that content church, state, or somewhere in-between? How do your viewers react now, and how will that change in the future?
Is the content your company produces, and posts on social media, thought leadership, branded content, content marketing or native advertising? And what is the most effective for your corporate needs?
Perhaps some definitions (and they are not easy to come by) can help illuminate the differences among thought leadership, branded content, content marketing, native advertising, and straight online marketing:
Thought leadership is the platinum standard of content-based reputation enhancement. In its pure form, it is information, research, ideas, expert commentary, and opinion that exist for their own sake, not to prove a direct commercial point.
Thought leadership can also be “viral” in that it provides new and interesting insights that can spark industry change. It can be used to raise brand awareness through sharing articles, white papers, and other thought leadership content with a broad audience.
Branded content is less platinum-standard, but arguably more fun, and effective with larger audiences. According to Wikipedia, it’s a fusion of advertising and entertainment, “intended to be distributed as entertainment content, albeit with a highly branded quality.”
This content might be humorous, entertaining, or interesting. While it doesn’t create the same kind of lasting, game-changing intellectual impression that thought leadership aspires to, it can be innovative in other ways. Much of what we see in online marketing is branded content: from videos, to contests, to hybrid campaigns that involve many different elements.
Branded content is often a bit more subtle than straight advertising – sometimes the content doesn’t have any images of the product itself, but is still trying to sell you something, or sell you the brand. This is the case with many YouTube campaigns that produce highly entertaining videos for marketing purposes.
Content marketing is the broadest category of all, encompassing “any marketing format that involves the creation and sharing of media and publishing content in order to acquire customers.” It includes everything from thought leadership to branded content, but is more direct in its commercial intent.
It is a broad type of marketing that includes the “sponsored or promoted post” advertising found on Twitter, Facebook, Pinterest, etc. Content marketing is often the means by which you “push” the branded content or thought leadership you wish to promote, and try to get your followers to interact. This can come in the form of posts, tweets, and even videos (like the Old Spice Channel, for example).
Straight Online Marketing
Straight online marketing comes in the form of the most basic online advertisement. This is a step below ‘content marketing’ and includes the sidebar ads we see all the time, as well as banner ads, pop-ups, advertisements before videos, and other kinds of online content that we usually consider junk. This kind of marketing can be successful when done very well – much like ads on billboards or commercials on television. However, the public is building up resistance to this kind of content.
Native advertising is a subset of branded content, and the most problematic: it is advertising that masquerades as independently created content.
For example, on BuzzFeed, articles that are sponsored sit side by side articles that are not, and they look almost the same. These are articles that look as though they have been independently written, but were produced to market something. So, the Google Reunion video ad would qualify as native advertising.
As with Reunion, native advertising is often highly successful, with many “articles” gaining thousands of shares and millions of views. But much of the success may be a function of people not looking carefully to see that they are sharing product or brand promotions. Often, people will retweet BuzzFeed’s lists with only a glance at the article, so even if the content is labeled as from a “partner,” folks on social media might not be aware that they’re effectively sharing an advertisement.