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Routes to Revenue
CMO COUNCIL, December 2008, Pages: 54
A milestone research initiative to benchmark the state of customer revenue realization, encouraging the adoption and the uses of technologies, solutions and professional services that drive deeper interaction and communication with customers. Centered around Customer Revenue Optimization (CRO), this report, sponsored by InfoPrint Solutions Company, drills into targeted strategies and solutions that significantly impact customer acquisition, monetization and ROI while exploring new developments in database, customer insight and print technologies.
The 54-page Routes to Revenue report contains the complete aggregated findings of the Routes to Revenue audit of some 650 senior marketers, features qualitative interviews with four marketing executives, and includes the full case study Precision Promotion in Action: Best Western International, which details results and best practices derived from a pilot program conducted by InfoPrint Solutions Company to measure the effectiveness of TransPromo methodologies.
Despite a depressed global economy going into 2009, a surprising 76 percent of senior marketers believe they are not realizing the full revenue potential of their current customers. In addition, only 46.5 percent say they have good insights into retention rates, customer profitability and lifetime value. This could be viewed as major indictment of the marketing function or a significant upside opportunity for marketers to originate programs that create immediate business value without spending one media dollar.
The Routes to Revenue audit of some 650 senior marketers in 2008, revealed that making communications more personal and relevant, as well as more targeted and timely, was among the top strategies for realizing greater revenue and profitability from existing customers. Other leading strategies included addressing under-penetrated markets or new customer segments, as well as finding new ways to up-sell and cross-sell existing accounts.
This study highlighted three key obstacles and deficiencies for not optimizing the full revenue potential and lifetime value of existing customers. This included:
- Lack of real-time data and analytics that captures insights from across all customer touch points.
- Information not only being selectively gathered, but often inaccurate or incomplete.
- Data being siloed and restricted in its availability and use across the organization.
When it comes to acquiring new business, the Routes to Revenue study showed that global marketers have a much broader and more comprehensive set of strategies. The top six include:
- Testing and launching new products aimed at specific market segments
- Establishing new partnerships and revenue-sharing agreements
- Stepping up demand generation and customer acquisition programs
- Expanding geographical presence and intensifying international focus
- Ramping up eCommerce and customer-direct communications
- Restructuring or expanding channels of distribution
When asked what companies were doing to improve top-line and bottom line performance, 40 percent said they were reducing head count, overhead and/or budgets. Other plans included automating complex and costly processes (38.7 percent), outsourcing more services and function (31.2 percent) and reformulating products or minimizing packaging to contain cost (27.8 percent).
In taking a deep dive into where marketers were seeking more efficiency and effectiveness, almost 64 percent of the survey respondents said they were evaluating all areas of marketing spend to increase yield and accountability. Primary areas of focus included:
- Bringing more discipline and rigor to marketing budgeting and spend (47.3 percent)
- Leveraging existing resources within the organization to enhance customer communications (47.3 percent)
- Exploring new customized communications technologies (40.9 percent)
- Moving more marketing investments to Internet and mobile channels (38.7 percent)
- Improving behavioral targeting of advertising and online marketing campaigns (33.3 percent)
- Driving adoption and use of CRM and sales automation applications (31.5 percent)
According to nearly 60 percent of Routes to Revenue respondents, introducing better segmentation, profiling and targeting strategies topped the list of ways companies are trying to better engage core audiences. Other initiatives included:
- Adding or improving database marketing systems (48.7 percent)
- Acquiring new customer and market analytics capabilities (30.3 percent)
- Personalizing multi-channel communications and customer touch points (29.8 percent)
- Individualizing print, email, text messaging, call center or web interactions (26.4 percent)
- Building online customer communities and interactive channels (25.8 percent)
- Capturing more customer information via the web and at point-of-sale (25.2 percent)
Global brand leaders explored a variety of strategies for driving top-line growth. This included:
- Improved analytics, segmentation and behavioral targeting
- New market entry and geographic expansion
- Adjacent market and derivative product development
- Customer monetization – upsell, cross-sell, repeat and add-on sales
- Strategic account penetration and retention programs
- Reactivation and recovery of lost opportunities or accounts
- Requalification and actioning on dormant or obsolete leads
- Product pricing, licensing and portfolio management
- Channel performance improvements and eCommerce initiatives
- Partnerships, alliances, joint ventures or acquisition
As the economic downturn places escalating pressures on senior marketers, the need for customer revenue realization has never been greater. And, as marketers begin to test and investigate new strategies, technologies and on-demand platforms, there is great opportunity to impact the bottom line.
Coming off a year where 68 percent of marketers viewed their markets as ranging from challenged to unpredictable and volatile, the general outlook hopes for a positive and stable environment, while only 33% of respondents foreseeing a continuation of a depressed or constrained economy.
As can be expected in times of economic strain, marketers will be placing an increased focus on streamlining operations to improve top and bottom line performance. Marketers expect to reduce head count and overhead to shave budgets, but are also looking to automate complex and costly processes to streamline operations. Other top corporate strategies include outsourcing more services and functions and reformulating products or minimizing packaging to contain costs. However, companies seem to be overlooking key strategies that could yield significant savings by reducing the operational costs of printing, shipping, warehousing and delivery by leveraging on-demand print and digital delivery formats. Companies are also overlooking cost savings that can be derived from environmentally friendly practices that can include utilizing existing packaging, communications and channels to engage with customers.
The study also indicates that in tough economic times, marketers plan on reining in regional and business group budgets, choosing to centralize budget management rather than increase autonomy. And, marketers are also looking to deploy systems across the organization that add tighter costing and control. However, as marketers look to improve performance, deploying solutions or hosted services that drive process and performance ranks low on the list of priorities.
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