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Measure for Success

Boosting the performance of your marketing

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Customer profitability

How important are existing customers to your business? Do you know?

How important are existing customers to your business? Do you know?

Who doesn’t want a good base of individuals or businesses who are loyal, regular, repeat customers. We all do surely, it makes sound business sense.

But do you know how important existing customers are to you business? Are you confident that you are placing enough emphasis on retaining existing customers compared to attracting new customers? Perhaps now is the time to find out by calculating your Returning vs New Customer Metrics.

These metrics will help you understand the real value of these two groups to your business and enable you, as with any good metric, to make decisions on how much time and money you should put into your marketing for the different groups.

• Start by calculating your Total Number of Customers either at a specific point of time e.g. 1st January or over a point of time e.g. in 2018. Now split these into new customers and repeat customers to see your new customer to repeat customer ratio.

• Next work out the Value of an Average New Customer to your business vs that of a Returning Customer over the lifetime of your relationship. We generally recommend it’s worth also considering the costs you incur with attracting new customers e.g. advertising and retaining existing customers e.g. loyalty incentives. You can now see the costs of generating business and how the business generated between the two groups varies over time. Does that value change over the period a customer stays with you?

• Finally look at calculating the Average Time a Customer Remains Loyal to your business. This is a good indicator of your customers views towards your organisation, how good you are at maintaining existing customer relationships and their likely purchase intentions.

What next?

With this understanding conduct a review of what you do to attract new customers and keep existing customers. Think about the time, money and effort you put into these two groups. Have you got the balance right? Should you for example amend your advertising spend or customer relationship management approaches? Should you consider incentives to either attract new customers or keep existing customers? Perhaps if you discover customers aren’t particularly loyal you should consider loyalty schemes or enhancing the quality of your customer service.

Whatever you do with this knowledge you’ll be in a much stronger position as a business to maximise the benefits from both groups and drive your business forward.

About the author

Richard Milton is founder of e-nexus Ltd – a Marketing Consultancy based in Bournemouth specialising in Strategic Marketing Planning and Performance Measurement. He is a career long marketer, holding numerous senior marketing positions throughout his 20 years in the profession. Describing himself as a marketing strategist, performance and measurement specialist, Richard spends time working with business owners, managers and marketers to help them improve their marketing decisions, investments and impact by harnessing the power of data and insights alongside his strategic experience.

Richard’s biggest passion is to help marketers show the value of their efforts and give them the confidence and skills to be able to share the story with their senior managers. Richard helps organisations understand the importance of measurement and metrics as well as appreciate the breadth of data available to them in todays marketing world.

To find out more about e-nexus and the services we provide please visit www.e-nexus.co.uk

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How loyal are your customers?

What do your customers think of your business? Would they recommend you, your products or services to their family and friends? Calculate your Net Promoter Score (NPS) and gauge your customer’s overall satisfaction with your business and their loyalty to your brand.

Net Promoter Score is used by many companies to gauge the loyalty of a firm’s customer relationships and serves as an alternative to traditional customer satisfaction research. What’s more, it’s felt by many that there is a strong correlation between a high Net Promoter Score and company growth. Your NPS can be as low as −100 (everybody is a detractor) or as high as +100 (everybody is a promoter). An NPS that is positive (i.e., higher than zero) is felt to be good, and an NPS of +50 is excellent.

Calculating your Net Promoter Score

To calculate your Net Promoter Score ask your customers, most likely in a simple survey how likely they are to recommend your company to a friend or colleague, using a scale of zero to 10, with 10 being highest. Then work out the percentage of responses that scored your company between seven and 10, then zero and six. Subtract the zero-to-six percentage from the seven-to-10 percentage, and you have your Net Promoter Score.

You can also take the opportunity when surveying your customers to ask some further questions on how and what you can improve to potentially push your NPS even higher.

Measure4Success is the blog for e-nexus Ltd.  We are a Bournemouth based Marketing consultancy specialising in Strategic Marketing Planning and Performance Measurement.  Learn more about what we and get in touch by visiting our website at www.e-nexus.co.uk

Who are your top customers by Profit or Life Time Value?

Have you ever stopped and calculated who are your best customers?  It sounds simple but how often do you identify and rank the customers who drive the most profit for your business?

Ranking these customers from highest to lowest by Profit or Life Time Value lets you see which individuals or groups drive an outsized portion of your business results.  When you can look at a single list and see your main customers you have the power to identify the unique characteristics of your customers and work hard to attract more.  Is it who they are, where they live, or what they buy?

Knowing that answer can be more valuable than just making a sale. By focusing your customer service, marketing, promotions and sales offers you can build the long-term value of these customers.  You can also find more existing and new customers who share the same characteristics as well as empower these customers to become advocates of your business.

Measure4Success is the blog for e-nexus Ltd.  We are a Bournemouth based Marketing consultancy specialising in Strategic Marketing Planning and Performance Measurement.  Learn more about what we and get in touch by visiting our website at www.e-nexus.co.uk

Marketing is so much more than promotion

No matter the size of your business every penny you spend & every hour you commit to your marketing has to count towards you achieving your business goals.

Promotion is an important part in your marketing efforts but ‘effective marketing’, the entire marketing that satisfies the needs of your customers is so much more. You can have a great promotional campaign but if your product or service isn’t wanted or you are charging prices that are above what your target customers will pay then it will struggle to deliver.

To have ‘effective marketing’ you need to consider a wider range of factors than just promotion. Much of it isn’t difficult with the result being that it can transform the impact of your marketing. Here are just a few ideas:

• Start with product. Give customers what they need not what you think they need. Think wider than the actual product – consider the other features that surround your product – delivery methods and times, guarantees, installations, refunds, exchange policies – all of which can make your product or service more attractive.

• Speak to your customers. Ask them what they need and want from you. Find out what they think of your product or service and how it can be improved.

• Ask your customers for reviews. If they are liking what you do then encourage them to share with others what they think of your product and to post reviews on-line.

• Regularly monitor your sector and competitors. Consider how tastes are changing or new products are being launched and adapt where necessary.

• Make it easy for people to acquire your product. That maybe how they can find you or buy your product on-line. Make sure your website is mobile responsive and is search engine optimised.

• Develop your team. Ensure that everyone who works for you has great knowledge about your business and offer. Ensure they also have the right attitude & provide the level of service your customers would expect.

• Be responsive to your customers. Ensure you follow up on enquiries quickly – not many buy products or services from a company they have had to chase or have had to wait a long time to respond.

• Deal with customer complaints well. No doubts you have all had customers who haven’t been completely satisfied but how you deal and resolve their compliant will make all the difference to whether they buy from you again or recommend you to others.

• Measure, measure, measure. If you don’t measure your marketing you can’t understand, control or improve it. Use tools such as Google Analytics to see how well your website is working, monitor your email performance or conduct market research to understand what your target audience think about you and your product or service.

 

FREE Marketing Advice Surgery

Calling businesses in Dorset. Do you have a marketing challenge? Then contact us and book onto one of our FREE Marketing Advice Surgeries.

Either face-to-face, on-line or over the phone we are offering a limited number of FREE one hour long surgeries that focus on specific challenges you may be facing with your marketing. Send in advance your challenge and we’ll use the surgery time to review the issue with you and discuss possible solutions you can implement for your business.

Previous surgeries have covered:

– How to get more from social media
– Boosting the impact of email marketing
– Tracking and tagging advertising
– Using Google Analytics to monitor web traffic

For more information or to book your place contact Richard Milton by emailing richardmilton@e-nexus.co.uk

 

Data, what data?

The digital revolution means that you can now access more data and insight than ever before to understand the impact of your marketing. With so much being available for free and at a click of a button there are now real opportunities for you to better measure your marketing.

Through our day to day work we still support companies that feel they have no or very little data or insight. For many of these businesses we go on a journey of discovery, helping them to think about their needs. We work with them to identify what data and insight they actually have, what they need as well as how it can be captured and stored – and yes at times that includes uncovering all the data and insight stored in numerous note books, diaries, excel spreadsheets, business card holders and even their own heads.

So if you think you are marketing data and insight poor or want to better measure the performance of your marketing consider some of the following to build your knowledge and understanding:

• Website analytics – many websites have some form of analytics platform linked to them so you can understand where your visitors are coming from and how they interact with your site.

• Social media analytics – these will tell you a lot about the types and levels of engagement you are receiving from your posts. Platforms like Facebook will also give you some demographic data so you can be sure you are reaching the correct people.

• Email – platforms like Mailchimp will tell you how many people open your emails, how high or low your bounce rates are and your click through rate to your website. If you A/B test your emails you’ll also get a much clearer idea of what type of content or subject headlines work better with your audience.

• Voice of the customer – such things as feedback from your customers as well as interviews and survey ratings will give you a clear view of what they think of your product offering or service levels.

• Competitive intelligence – It’s important to monitor the performance of others. For example monitoring the social media engagement that your competitors are gaining can be a useful benchmark for the performance of your own social posts.

• Sales data – understanding what and how frequently your customers are buying from you is key. What channels are they reaching you to make that purchase – is it via your website, retail outlet or exhibition stand?

• Customer churn rate – establish how many customers are cutting ties with you over a given time. Monitoring your churn rate is the first step in understanding how good you are at retaining customers and identifying what actions might result in a higher retention rate.

• Your top customers – sounds simple but identify which customers drive the most profit your business. When you can look at a single list and see your main customers you have the power to identify the unique characteristics of this group and work on attracting more.

• Cost of acquisition – calculate how much you spend in acquiring leads and turning these leads into new clients. How does that differ using different channels? The key here is that the fees you charge need to at least cover your associate costs.

• And finally conversations with customers – always a great place to start

Need some help on where to start with your data and insight gathering?

At e-nexus we undertake marketing audits where we’ll work with you to identify your data and insight needs, what you already have access to and how you can begin to fill the gaps. Just email us at info@e-nexus.co.uk and we’ll organise a time to meet.

 

 

 

 

Measure for success: Using the right insight and data to boost your marketing ROI

Our mantra as a business is simple – MEASURE, MEASURE, MEASURE. What you don’t measure you can’t understand, control or improve. But what does that mean? It certainly doesn’t mean measure everything but instead measure the right things so you can combine relevant data and insight to understand and if required amend your marketing activity.

However, before you consider measurement, you must be clear as to what your business goal is and how your marketing efforts will help achieve it. Depending on whether that is an increase in sales, lead generation or simply driving brand awareness, the marketing strategy and thus the approach you take to data capture, monitoring and measurement could differ enormously.

The revolution in digital marketing has meant that we as marketers now have access to more data and insight than ever. We however still meet companies that tell us they have no data but that is rarely the case. For many we go on a journey of discovery, helping them to think about and identify what data they have, how it is captured and where it’s stored – and yes at times that includes uncovering all the data and insight stored in numerous note books, diaries, excel spreadsheets, business card holders and even their own heads.

For some others they find themselves overwhelmed by the volume of data they have to hand. From website performance via Google Analytics, effectiveness of emails and digital advertising campaigns through to data and insight captured in CRM systems and market research. The focus here is to think about and map relevant data and insights to business goal so you can spend your time and efforts on monitoring the correct metrics whilst discarding the rest.

For example do you know what you spend on gaining new customers compared to keeping the customers that you already have? How effective are you at keeping your current customers? With all of the time, resources, and money put into acquiring customers it is important to know that your efforts aren’t wasted when customers don’t remain loyal.

Customer retention rate is a great way to measure how successfully you are maintaining customer relationships. On a more granular level, you also need to know which types of customer you are remaining loyal and at which point in the relationship a customer leaves, so that you can make the necessary adjustments.
According to a study by social media marketing software provider, Flowtown, they found that maintaining existing customers costs six to seven times less than acquiring new customers. A further study by Bain and Company reported that increasing your customer retention rates by just five percent led to an increase in profits between 25 and 95 percent.

Monitor others

Don’t forget to monitor the performance of other organisations be they competitors or great businesses you are aware of. For example social media engagement that your competitors are gaining can provide a useful benchmark over your social posts performance. Don’t just look at the posts but aim to delve deeper by for example splitting the monitoring of both organic and paid posts. If your competitors out perform you on their organic posts then it would suggest that their content resonates better with their audiences thus boosts their reach for ‘free’ and how a modification in your approach could provide real benefits.

And finally

Senior Managers don’t want numbers thrown in their faces, so marketers need to use data to tell a story. An endless stream of data, numbers and metrics are tough to digest and carries less meaning than visual methods of presenting data.

When telling your story, make clear, data-grounded recommendations. For example you may say “You’ve noticed that your business spends 20% of the marketing budget on social media, but you’re not seeing great results. I recommend cutting back and allocating money elsewhere.”

Efficient marketing requires data, but senior managers aren’t concerned with every scrap of it. They want a clear view of how your customers behave and how marketing projects impact the business. To keep your senior managers in the loop without wasting his time, present them with these metrics.

 

Churn rate

churn

Churn rate is the amount of customers who cut ties with your company during a given time period.

The calculation of churn can be straightforward. Take the number of customers that you lost in a period of time and divide that by the number of customers that you started with in that period of time. The resulting percentage is your churn rate.  As an example, a company that started last quarter with 100 customers and lost 3 over the course of the quarter would have a churn rate of 3%. You can also calculate churn based on the number customers lost, the value of recurring business lost, or the percent of recurring value lost.

Regardless of how you choose to represent churn, tracking your churn rate is key. It’s almost always cheaper and easier to retain customers than it is to go through the process of acquiring new ones. Monitoring churn is the first step in understanding how good you are at retaining customers and identifying what actions might result in a higher retention rate

Here’s an example to think through the impact of your churn rate today on your business over the next five years:

If you have monthly recurring revenue of £15000 and that every month you add another £2000 to that. However, you have a churn rate of 3%. If all of that persists for the next 5 years, you’ll end up generating almost £2.6 million. If you’re able to decrease your churn rate by 10%, to 2.7%, that gives you an extra £100,000 in revenue. If you’re able to reduce your churn by 30%, that’s even better. Your revenue goes up to £3 million!

Based on an article by http://www.churn-rate.com/

 

Retention rates

3d  puppet, installing the diagram. Objects over white

Do you know what you spend on gaining new customers compared to keeping the customers that you already have? How effective are you at keeping your current customers? With all of the time, resources, and money put into acquiring customers it is important to know that your efforts aren’t wasted when customers don’t remain loyal.

Your customer retention rate is a great way to measure how successfully you are maintaining customer relationships. On a more granular level, you also need to know which types of customer you are remaining loyal and at which point in the relationship a customer leaves, so that you can make the necessary adjustments.

According to a recent study by social media marketing software provider, Flowtown, they found that maintaining existing customers costs six to seven times less than acquiring new customers. A study by Bain and Company reported that increasing your customer retention rates by just five percent led to an increase in profits between 25 and 95 percent.

Calculating your customer retention rates

Step #1

The first thing you need to do to calculate your retention rate is identify the specific period of time you’re focusing on. Perhaps you’re looking at the last year or maybe the last six months.

Step #2

Next, you need to know how many customers you had at the end of that period of time. If you’re calculating a current retention rate at the end of the period during which you’d like to measure, it might be as easy as determining how many customers you currently have. This number is represented by CE in the formula.

Step #3

You also need to know how many new customers were acquired during the period of interest, so that you don’t include them as retained customers in your final retention measurement. This number is represented by CN in the formula. Now you’re ready to do your first calculation: subtract your CN number (new customers acquired during the period) from your CE number (number of customers at the end of the period).

Step #4

The final number you need to know is how many customers you had at the start of your period of interest. This number is CS in the formula. For your next calculation, you will take the solution to Step 3 (CE-CN) and divide it by how many customers you had at the start of your period (CS). This covers the first part of the equation: ((CE-CN)/CS)

Step #5

Finally, you want to turn that number into a percentage by multiplying it by 100. Your final number is your customer retention rate for your period of interest. ((CE-CN)/CS)) x 100.

Based on an article by on the socious community blog.

http://blog.socious.com/bid/70287/how-to-accurately-calculate-your-customer-or-member-retention-rate

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