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An ongoing challenge for the B2B marketer is to align their marketing efforts with complex customer needs and segment their messaging to key influencers. Many B2B marketers fail to properly identify the customer journey to generate the most compelling experience to capture customers through their marketing mix. And yet for most companies, the Pareto Principle applies: 20% of customers account for 80% of profits. The best investment to make in adverse economic conditions is to find and attract more customers that look and behave like your best customers. The right marketing channel to reach quality new customers may not be the cheapest option available, but the investment will pay off. The presentation will offer best practice guidance and use the DMA’s own B2B marketing and sales strategies to demonstrate how to achieve 400% increase in new business during a recession. The session will look at: Understanding the true value of your customers and what you can afford to acquire them An explanation of a classic approach to lifetime value 3 key improvements that helped the DMA increase membership acquisition by 400%: an overarching value proposition, a clearly defined segmentation strategy and a customer focused tone of voice
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How the DMA achieved 400% growth in new members by focussing on Lifetime ValueB2B Marketing Conference14 June, 2012
Agenda
• Core Principles: lifetime value
• Developing a Value Proposition
• The importance of brand in B2B
• Segmentation and Relevance
• Success metrics
Who are the DMA?
• Membership organisation
• Represent all channels using personal data
• Tri-Partite Membership– Clients– Agencies– Supplier
The value of a customerWhere do you start?
Not all members are equal
Rank these profiles for Value of a member
• Ecommerce company who thinks DMA is mail only• Small mailing house: displays logo/ uses no services• Lapsed member after 1 year, never came back• Large agency who enters and wins DMA awards• FTSE 250 client maximum fee payer, 48 contacts • Mid-fee data supplier who spends £70,000 on
sponsorship, attends every event, chairs a council, refers clients and uses the free legal help desk 3 times per month
Transactional Data
Frequency
Recency
Value
“Lifetime” alters value
• How long to customers stay active for?
• What revenue will they generate per year?
• Work this out for the whole database
• Then for customer segments
• That gives a lifetime value (LTV)
• What about different acquisition source?
Different Metrics, Different Conclusions
• Click-through rate
• New or repeat visitors
• Bounce Rate
• Engagement
• Micro-conversion
• Conversion to Sale
“All of the above is focusing on short term success.
Even measuring “Visitor Conversion Rates” is akin to declaring success
after a one night stand.
Visit based conversion rates promote bad marketing behaviour.”
www.kaushik.net
How about adding these?
• First month sales
• 6 months sales
• 3 years sales
A Hypothetical Example
Best Average Customers Customers
Purchases per year 4 2
Average Order Value £70 £50
Annual Revenue £280 £100
Gross Profit Margin 10% 10%
Gross Profit £28 £10
Acquisition Cost £8 £4
Net Profit £20 £6
A Hypothetical Example Part 2
Best Average Customers Customers
Life Expectancy 3 years 2 yearsRevenue Year 1 £280 £100Revenue Year 2 £220 £ 60Revenue Year 3 £180 £ 0Lifetime Revenue £680 £160Gross Profit Margin 10% 10%Lifetime Gross Profit £68 £16Acquisition Costs £8 £4Lifetime Net Profit £60 £12
»
Looking at the lapsed members:• Average order value: £1,597• Average membership: 4.3 years• Average life time value: £6,867
Looking at the existing members:• Average order value: £2,105• Average membership: 6.1 years• Average life time value: £12,838
DMA Lifetime value
What did they spend on sponsorship?
Did they enter the awards?
Did they buy a table at summer lunch? Attend data conference? Play golf?
Use the legal helpdesk?
Volunteer on a council?
Creating a single view – building a new database
Solve tomorrow’s problems today
• You’re a B2B subscription publisher
• Or an PI insurance company
• You need sales today
• And repeat sales next year
• Better start working on LTV then...
Two lead sources
We pay £50 to lead source A
and £70 to lead source B
You need customers in year 2
• 2,000 customers start Year 1
• 1,000 from source A convert at 10%
• 1,000 from source B convert at 30%
You start Year 2 with 100 customers from Source A and 300 customers from B
Original Acquisition costs...
• I spent £50 on Partner A customers
• £70 on partner B customers
• But I need to go and buy 200 more from A to make up the difference at the start of Year 2
• So, here’s the exciting bit...
Tell this to your Finance Director
• I could have saved £6,000 if I’d spent £4,000 more this year
• For year 2 we’ll have to “buy” 200 customers from Partner A at £50
• That’s £10,000 extra cost in year 2
• If I got them from Partner B in Year 1 it would only have cost me £4,000extra (200 x £20)
DMA growth strategy 2011-12
• Use future value to amortise investment
• Big challenges: 4 years declining membership and relevance
• New Brand identity• New Value proposition• New Audiences • Segmentation of proposition and
content
A Strong Value Proposition
• Clients
• Agencies
• Suppliers
• All have different needs• All have different reasons for joining• How to create a strong value proposition?
DMA - Branding
How do we want people to feel when they see the DMA?
“The DMA is an exciting, vibrant organisation that I must be a part of.”
“The DMA can really help me and my business.”
“The DMA has changed, I need to take another look.”
A strong brand creates lifetime value –an enduring bond
The vision
To be a vital and inspiring partner – always positive, always in touch.
Together, we will create and champion a vibrant future for all our members.
GenuineWe are transparent and honest in all that we do.
In-touchWe are open, intelligent and never lose sight of the needs of our industry and members.
InspiringWe are vibrant, energetic and creative.
HelpfulWe work as a team, sharing goals and supporting all our stakeholders.
Our values
Modern DM is about starting conversations
A simple, flexible mark – representing a conversation, a stamp and a single pixel.
There’s a collective approach and inclusive feel around the use of the word ‘we’.
Genuine. Inspiring. In-Touch. Helpful
The conversation
Delivery: 2011
Create an overarching communications campaign championing the business value of data:
• High profile public relations to be driving force of campaign
• Enlist ‘supporters’ to endorse the campaign• Supported by other marketing to business audiences (social, mail, email, open letter ads, posters etc)
• Member communication campaign and toolkit
Communications campaign
Data
Positioning data at the heart of business success
• Data Protection regulations• Privacy and security• Measurement and attribution• Cookies• Targeting and efficiency• Value of data• Making better business decisions
A segmentation strategy
Overarching• PR• Brand• Bulletin, Legal, Events
Segmented by interest:• Doordrop• Email• Mailing Houses• Social Media
IS IT WORKING?Is it working?
Results so far
• 400% increase in new members
• 31% on multi-year contracts
• 90% retention
• Short term loss in 2011-12
• BUT 1,000% ROI by lifetime
Membership trends
No of members
700
750
800
850
900
950
31/03/2008 31/03/2009 31/03/2010 31/03/2011 31/03/12
FORECAST
New member acquisition
No of new members
0
50
100
150
200
250
2007/2008 2008/2009 2009/2010 2010/2011 2011/2012FORECAST
2010/11 Actual
2011/12 Target
2011/12 Achieved
Enquiries 536 1440 887
Conversion Enquiry to Meeting 37% 50% 52%
Meetings 196 720 461
Conversion Meeting to Member 58% 50% 45%
New Members 114 360 209
Conversion Enquiry to Member 21% 25% 24%
Lead generation 2011/2012
•31% on multi year contracts
•Average contract length 1.57 years
•Average 6.4 contacts per member
•Average 90% renewal
New Member Lifetime Forecast
At 4.3 years: £1,225,500
At 6.1 years: £1,738,500
ROI over 1000% from investment of £150,000
New member lifetime forecast
