Customer Marketing Benchmarking Research: Discussion and in-depth analysis
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Traditionally seen as a "backwater" role, customer marketing is becoming increasingly important now that we're firmly in the "age of the customer." Unfortunately, very little is known about the overall state of customer marketing or best practices as to how it should be done. That's all about to change. Influitive, in partnership with marketing advisory firm Demand Metric, is excited to unveil the first-ever Customer Marketing Benchmark Study report. Jerry Rackley, Chief Analyst at Demand Metric, and Jim Williams, VP of Marketing at Influitive, discussed the results of this landmark study and what it means for marketers as customer engagement, retention and advocacy become increasingly critical contributors to revenue.
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Customer Marketing Benchmarking Research: Discussion and in-depth analysis
- 1. Customer Marketing Benchmark Study Sponsored by: Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 2. Today’s Agenda Customer Marketing Perspective & Landscape Study Results Next Steps Q & A Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 3. Today’s Presenters: Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 4. Jerry Rackley Chief Analyst – Demand Metric Jim Williams VP of Marketing - Influitive Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 5. What’s at Stake Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 6. CMO Demand Inbound Website Programs Field Content Product Opps CMO I want fantastic revenue growth driven by a fantastic brand experience Influitive.com @influitive advocate marketing experts
- 7. Customer Marketing I want to make the customer feel good Influitive.com @influitive advocate marketing experts
- 8. Cloud Apps means you have to earn your customers’ business each and every month. Influitive.com @influitive advocate marketing experts
- 9. and Social Media has given your buyers access to virtually anyone they want to talk to
- 10. Influitive.com @influitive advocate marketing experts
- 12. Study Results Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 13. Study Background What investment is being made in Customer Marketing? What activities are done? How effective is Customer Marketing? What skills are critical to success? Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 14. Survey Categorization Data Type B2B: 77% B2C: 13% Both: 10% Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. Role Executive: 10% Marketing: 74% Sales: 7% Other: 9% Annual Sales $10m or less: 39% $11 to $25m: 12% $26 to $100m: 21% $101 to $500m: 12% $501m to $1b: 3% Over $1b: 13%
- 15. Customer Marketing & Revenue Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. 27% 20% 28% 25% 30% 20% 10% 0% Results or revenue not tracked Revenue contribution is minor Revenue contribution is moderate Revenue contribution in significant
- 16. 27% 20% 28% 25% 30% 20% 10% 0% No/Low Revenue Results or revenue not tracked Revenue contribution is minor Mod/High Revenue Revenue contribution is moderate Revenue contribution in significant Customer Marketing & Revenue Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 17. Moderate/High Revenue Impact - Company Size Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. 52% 45% 72% 80% 70% 60% 50% 40% 30% 20% 10% 0% Small companies Medium companies Large companies
- 18. Customer Marketing Activities 6% 31% 41% Customer and/or user group events Customer reference (testimonial) prog. Online customer community Cross-sell and/or upsell campaigns Customer advocacy program Customer referral program Customer satisfaction program Renewal campaigns Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. 54% 50% 48% 46% 54% 61% 0% 10% 20% 30% 40% 50% 60% 70% Other activities
- 19. Community Goals Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. 29% 33% 17% 52% 57% 44% 60% 50% 40% 30% 20% 10% 0% Customer satisfaction program Customer referral program Renewal campaigns No/Low Revenue Moderate/High Revenue
- 20. Customer Marketing Metrics in Use 11% 15% 29% 27% Renewal rate or churn Customer influenced revenue via referrals/references Upsell and/or cross-sell revenue Number of customer-related campaigns Satisfaction Net Promoter Score Product Usage or adoption None Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. 39% 37% 37% 44% 42% 0% 10% 20% 30% 40% 50% Other metrics
- 21. Metrics Ranking Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 22. Importance of Customer Marketing 2% 3% 10% 29% Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. 56% 60% 50% 40% 30% 20% 10% 0% Very unimportant Somewhat unimportant Neutral Somewhat important Very important
- 23. Satisfaction with Customer Marketing Results Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. 3% 13% 35% 42% 7% 50% 40% 30% 20% 10% 0% Very dissatisfied Dissatisfied Neutral Satisfied Very satisfied
- 24. Satisfaction with Results by Company Size Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 25. Customer Marketing Skills 1. Relationship building skills 2. Communication skills 3. Customer service skills 4. Digital marketing skills Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. 5. Creativity 6. Organizational skills 7. Social media skills 8. Selling skills 9. Event planning skills 10. Other skills
- 26. Skills and Revenue Impact Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 27. Future Importance of Customer Marketing Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. 0% 2% 14% 29% 55% 60% 50% 40% 30% 20% 10% 0% Far less important Slightly less important Staying the same Slightly more important Far more important
- 28. Projected Changes: Budget, Staff or Resources 1% 2% 28% 55% Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. 14% 60% 50% 40% 30% 20% 10% 0% Significantly decrease Slightly decrease Same Slightly increase Signficantly increase
- 29. Revenue Impact and Customer Satisfaction Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. 70% 48% 34% 30% 52% 66% 80% 70% 60% 50% 40% 30% 20% 10% 0% Neutral/Dissatisfied Satisfied Very satisfied No/Low revenue Moderate/High revenue
- 30. Customer Marketing Success Strategy Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 31. Focus on the Right Activities Customer Satisfaction Programs Customer Referral Programs Renewal Campaigns Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 32. Measure your Efforts Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. No vanity metrics Renewal rate or churn Customer influenced revenue via referrals or references
- 33. People & Skills Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. Relationship Communication Digital Marketing
- 34. Exploit Technology Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. CRM Marketing Automation Advocacy
- 35. Resources Demand Metric Research Corporation Copyright © 2014. All Rights Reserved.
- 36. Influitive.com @influitive advocate marketing experts
- 37. For More Information: Demand Metric Research Corporation Copyright © 2014. All Rights Reserved. 888.684.0758 influitive.com info@influitive.com @influitive
- 38. Q & A Demand Metric Research Corporation Copyright © 2013. All Rights Reserved.
- 39. For more information, visit us at: www.demandmetric.com Demand Metric Research Corporation 562 Wellington Street, London, Ontario, Canada N6A 3R5 Demand Metric Research Corporation Copyright © 2013. All Rights Reserved.
- 40. Demand Metric Research Corporation Copyright © 2013. All Rights Reserved.
Editor's Notes
- Customer Marketing – pursuing revenue from existing customers – in many companies is not a high priority. It is done if and when there is time leftover from new customer acquisition activities. The perceived value of hunting for new customers is high, while farming the existing customer base just seems, well, dull. Any firm’s customer base is an asset, and often an underutilized one. With some intentional care and nurturing, the yield from the farm can increase substantially. This “farming” of the customer base involves cross selling, upselling and building better relationships with established customers. It is a proven contributor to revenue growth. Thanks to Influitive, our research sponsor, Demand Metric was able to study the resources and investment that organizations are making in customer marketing, and to learn what they’re getting back. During our time together today, we’ll talk about the importance of customer marketing and the results of this study we just completed.
- Current customers can represent low-hanging fruit from a revenue perspective. But modern marketers can’t just wait for that fruit to fall into organization’s revenue basket. Organizations should have a Customer Marketing strategy that helps maximize the harvest from current customers.
- It’s true to say that almost everyone is practicing some form of Customer Marketing. Just eight percent of the organizations that participated in our study indicated they had no Customer Marketing initiatives. The remaining 92 percent that do have some form of Customer Marketing were first asked to characterize the revenue contribution, and those results are shown in this chart. It’s a very even distribution of revenue contribution, with just over half – 53% - getting a moderate to significant revenue contribution from customer marketing.
- This data serves as a useful filter through which to analyze other results from this study. In some of the subsequent data we share, we will divide the results into respondent groups that I’ll call the “No/Low” revenue group represented by the orange bars, and the “Moderate/High” revenue group represented by the blue bars.
- A good place to begin using this filter is with the size of companies doing customer marketing. Using the “Moderate/High revenue” impact group we determined what relationship exists between company size and revenue results from Customer Marketing. Company size was determined using revenue data from the survey, where small companies are those producing $25 million or less in annual revenue, medium companies are producing from $26 million to $500 million annually, and large companies over $500 million annually. By a substantial margin, large companies are more likely to report higher revenue impact from Customer Marketing than their medium and small company counterparts. It might seem logical to attribute this difference to the fact that large companies are more likely to have larger customer bases, and larger customer bases translate into more Customer Marketing revenue opportunity. However, we took a closer look at this data, and we found that there is no relationship between customer base size and status. Large companies apparently perceive that Customer Marketing is more important and therefore place a greater emphasis on it.
- When comparing these Customer Marketing activities across the high and low revenue groups, the difference between adoption rates for most of these activities was negligible. However, there were significant differences for these three activities, and they have a strong relationship to the revenue status of Customer Marketing efforts.
- This chart shows how study participants that report a greater revenue impact of Customer Marketing are emphasizing certain activities more than those reporting no/low revenue impact. The greater the emphasis on customer satisfaction programs, customer referral programs and renewal campaigns, the more likely it is that Customer Marketing is having a moderate to significant impact on revenue. The relationship between these activities and revenue should force some realizations about where Customer Marketing teams should focus their efforts. The highest revenue impact activities are among the three lowest ranking in terms of adoption. These activities all fall within the realm of customer advocacy, and organizations that want to realize revenue from customer marketing need to put structure or formalize their advocacy efforts.
- Marketing analytics and metrics are getting a lot of attention now, and for good reason: metrics are the key to better performance and marketing process management. Customer Marketing efforts are no exception to this best practice. This study first sought to understand the perception of the ideal metrics for tracking Customer Marketing effectiveness, which metrics are actually in use and compare the differences, if any. This chart reveals which Customer Marketing metrics are in current use by organizations in our study. No single metric is in use by even half the companies we studied. In other words, there is no dominant customer marketing metric. What customer marketing metrics should an organization use?
- A final observation about metrics comes from our analysis of the metrics in use through the “Revenue Impact” variable. When we did this, we found two metrics associated with moderate to significant revenue impact: Renewal rate or churn. The higher revenue impact group uses this metric in 59 percent of cases, compared to just 27 percent for the lower revenue impact group. Customer influenced revenue via referrals or references. The higher revenue impact group uses this metric in 53 percent of cases, compared to just 30 percent for the lower revenue impact group. It’s this simple: when either of these metrics were in use by an organization, it was more likely for their Customer Marketing activities to have a higher revenue impact.
- We’ve looked at several aspects of customer marketing, so let’s ask one of the big questions about it: How important is it? 85% of our study participants rated Customer Marketing as somewhat or very important as a strategy for achieving revenue goals. So, almost everyone considers Customer Marketing an important strategy for generating revenue. In fact, even 77 percent of the study participants in the no/low revenue impact group rated Customer Marketing as somewhat or very important. For comparison, 93 percent of the moderate/high revenue impact group rated it at this same level of importance. Regardless of how well Customer Marketing activities are working to generate revenue, there’s almost universal acceptance that it is strategically important.
- So we understand that customer marketing is important. How satisfied are our study participants with the results of their customer marketing efforts? Almost half of study participants indicated they were satisfied or very satisfied with the results of their Customer Marketing efforts, while the other half rated their satisfaction as neutral or below. While most study participants agree with the importance of Customer Marketing, there is clearly room for improvement in how it is performing.
- When we looked at this satisfaction data by company size, we found that large companies are substantially more satisfied with their efforts in this area that small or medium companies. You might be tempted to conclude that large companies, with presumably greater resources, are more satisfied with their Customer Marketing results because they have more resources and staff devoted to getting them. As intuitive as this conclusion seems, the data analysis shows there is no relationship between the headcount allocated to Customer Marketing and the satisfaction with the results it is producing. In other words, more headcount does not produce greater satisfaction. If satisfaction is not linked to people, then it must be linked to process, the commitment to and discipline of executing the process, and the systems that support it.
- And here. Each of the listed skills are important; the ranking simply provides a prioritized list of what study participants felt was most critical. There is one noticeable “disconnect” in this data when it is compared to the customer marketing activity list I presented earlier. You may recall that the top ranked activity was “Customer events and/or user group events.”
- I found it interesting that digital marketing skills are ranked higher for the higher revenue impact group. This ranking, in my opinion, reflects the way customer advocacy is built, nurtured and grown, which is online.
- We know that Customer Marketing is currently an important strategy for achieving revenue goals. What about the future importance of this function? We asked our study participants to tell us how the importance of customer marketing would change in the next 12 months, and that data is summarized in this chart. There’s no question about which way the importance is going.
- It’s one thing to say something is important, but when companies are willing to commit resources to it, it must be important. Over two-thirds of our study participants are planning to increase their budget, staff or other resources for customer marketing in the next year. Will that investment produce a return? We didn’t collect the data to answer that specific question, but what we did learn about the relationship between the revenue results from customer marketing and the level of customer satisfaction.
- Customer satisfaction is a critical ingredient to brand loyalty, advocacy and of course revenue, so it is a very important characteristic to consider. Does customer marketing relate in some way to levels of customer satisfaction? We found that study participants whose Customer Marketing efforts are producing moderate to significant revenue are also reporting higher levels of customer satisfaction. This relationship is not coincidental, but instead was statistically very strong in our analysis. Those organizations whose Customer Marketing efforts result in moderate to significant revenue impact are almost twice as likely to report customer satisfaction at the highest level. Conversely, those organizations whose Customer Marketing efforts produce no or just minor revenue impact are more than twice as likely to report customer satisfaction at neutral or worse. We know there are many contributors to achieving high levels of customer satisfaction; Customer Marketing isn’t the only piece in that puzzle. But we are certain of this: Customer Marketing is a strong contributor, and its relationship to satisfaction is undeniable. Clearly, effective Customer Marketing efforts and the culture that is responsible for them, can play a key role in producing customer satisfaction.
- The scope of things a Customer Marketing effort could encompass is broad. Anything that customers respond to and favor has value, but our research identified three activities that are linked to greater revenue impact: Customer Satisfaction Programs: formal programs to regularly measure satisfaction, understand reasons for dissatisfaction, and address them. Customer Referral Programs: Implement advocacy programs, systems and measures to stimulate and accelerate the rate at which referrals happen organically. Renewal Campaigns: Proactively manage renewals. Don’t just assume they’ll occur without intervention or encouragement.
- There are plenty of metrics that marketing could use to measure the effectiveness of Customer Marketing efforts – this study has identified many of them. The right metrics to use point to real revenue results and are not “vanity” metrics that merely measure work done or campaigns completed. In this study, the two metrics identified as most related to moderate or significant Customer Marketing revenue impact were: “Renewal rate or churn” “Customer influenced revenue via referrals or references.”
- It’s also important to get the right people on the Customer Marketing bus. Customer Marketing is not just a set of tasks to execute, such as sending out cross selling or renewal email blasts to current customers. It is first a culture that values customers and then a process executed by people with the right skills and attitude. Organizations that are having the most success with Customer Marketing in this study have identified the top skills that are critical to success: Relationship skills, Communication skills and Digital Marketing skills. When staffing the Customer Marketing function, you should screen for these skills and provide ongoing training on them.
- Unless an organization has a very small customer base, it is virtually impossible to consistently execute Customer Marketing processes well without some sort of technology and automation. The ideal combination of technology includes CRM, Marketing Automation and advocacy/loyalty solutions. When these solutions are implemented and properly integrated, its possible to automate many of the core Customer Marketing tasks.