There are enough and more conferences, articles, books and whatnot, that expound the importance of marketing to existing customer base over acquiring new ones. It is about 8 times more profitable. One can easily extend this idea to say telecom: why should Airtel acquire customers for its broadband or DTH services from Google and not its internal marketing programs from its Pre/Postpaid customer base? Or take the case of a bank: how should a bank attract customers for its insurance, credit card or loan products? Should it do so from Google? Or from its internal savings and current account customer base?
The reasons are several and here are the top ones: lack of demographic data, transaction data, access to channels of communication, marketing programs, marketing program automation, and marketing analytics leading to robust cross-sell programs.
- Lack of Demographic Data. It is crucial for segmenting the customers to buckets for probable cross-sell. Variables such as demographic data is important to understand the risk profile of a customer.
- Lack of Transactions Data. Helping people ‘Keeping up with the Joneses’ requires transactional data. That is, how can we market products to neighbours of Jones if we have little data about what Jones bought? Insights from transaction data can even overshadow the lack of demographic data.
- Lack of Analytical Capabilities. Having customer and transaction data alone are not enough. The ability to analyse the data (either statistically or otherwise), with a view to understanding who buys what, over what channel, when, etc., requires qualified analytics talent and technology. Both are neither cheap nor easily acquired. The most frustrating aspect is that the software prices range from zero to several millions of rupees. Hence it is important to know what is right for you?”
Top firms have a large swathe of master analytics and direct marketing specialists. They run innumerable campaigns on equally innumerable segments. The benefits are evident. For e.g., a 25-year old large private sector bank runs several advanced analytics initiatives that determines who will buy what and when. That knowledge is combined with marketing capabilities to create enormous value. The bank, having about 50-odd million customers, runs hundreds of campaigns a month. The bank’s net margins have skyrocketed since circa 2005-2008. That is a straight 60 quarters of increasing profitability.
- Lack of Marketing Capabilities. A robust cross-sell program requires solid marketing capabilities: communications, channels, and promotions.
- From a communications perspective, it calls for abilities to craft and design persuasive, customised and personalised email, SMS or WhatsApp content. All the good efforts usually run the risk of going awry if Gmail simply will park them in the promotional folder that no one will open.
- Treating channels in silos. Once the messages are crafted, one also needs to understand how channels interplay. ‘Drip Communications’ a technique that automates changes in communication messages, channel and timing based on customer responses can greatly add power to cross-sell effectiveness.
- From the perspective of the promotion, one needs to craft programs that does not bleed costs but add customers and profits. To believe that India is a deal-crazy nation is just to hide one’s lack of ability to craft meaningful promotions.
- Fear to outsource analytics and marketing. Inability to judge outsourcing partners and fear of sharing data compel firms to make a botched attempt at cross-sell creating a Tower of Babel.
- Tower of Babel: A frenzy of multi-channel communications touting all products to all customers. The truth is that customers hate irrelevant communications and turn a blind eye to all its other messaging.
Thinking beyond: In reality, cross-sell programs are developed keeping organisation sales pressures in mind. But just imagine keeping them all customer-centric. Imagine a bank detecting the fact that your salaries have not been credited to your savings account and offer a quick personal loan? Identifying the timing of the needs is critical to the success of marketing to one’s existing base. That way a firm stays relevant to the customer, who then looks forward to its ‘conversations’, avoids ‘compare-shopping’ and eventually ‘price-agnostic’ – a dream state of every marketer.