Historically on this blog, I’ve talked about how businesses can make the most of their existing customers and data. In a perfect world, the success that can be achieved by mining what is currently owned would be able to steer most businesses through these tricky times.
Unfortunately, more often than not, this isn’t enough on which to squeak by. Other activity can be critical. And as the pressure builds on businesses to keep alive in a difficult market, the length of time allowed for a particular strategy to succeed shortens. This is a problem – sometimes a “long tail” payoff far outstrips the initial quick wins. But as businesses begin to strive for immediate results (sometimes to the exclusion of a longer term strategy) are these quick wins doing more harm than good?
A good strategy, now more than ever, needs to be built with different time frames in mind. If structured properly, a strategic plan should incorporate;
- Short Term Goals (Repeat purchases : retention)
- Medium Term Goals (Up-sell or Cross-sell : development)
- Long Term Goals (New Customers / Win-back : activation and re-activation)
As you might expect, the ease with which these goals can be met relates to the timeframe in which they can be achieved. Retention is relatively easy (relatively being the key term!) to implement, re-activation being arguably the most difficult. Yet look at bottom line value of these goals. A repeat purchase, although easy to induce, arguably does little to extend the lifetime value (LTV) of the customer*. Development is more difficult because it takes the customer out of their existing sphere of behaviour, but if successful should allow for an exponential growth in their LTV. And the difficult activations provide a previously non-existing revenue stream.
So, although the quick wins give the business a much needed short term shot in the arm, true growth cannot be achieved without long term planning. Ignore the future at your peril!
*N.B : again, relatively speaking. A customer purchasing twice that you would expect to purchase only once has the potential to double or triple their LTV. However an argument could be made that this is actually a “re-activation”. Historically, a win here refers to a customer with a long-term loyalty to the brand buying a product “out of cycle”.
