Not all customers are created equal when profitability is considered. That’s why it’s important to know your goals, what KPIs will best meet those, and set up a good tracking system for what or whom you’re engaging. So, let’s take a look at the reasons why you might not be able to identify your most profitable customers, and 10 solutions to help you do so:
1. You haven’t defined your lead funnel or scoring
You want to assign value to every stage in the lead generation funnel through lead scoring. As someone moves through the funnel and becomes a “hotter” lead, their value generally increases.
Lead scoring is one way that marketers know when to pass off leads to sales, when they go from marketing to sales qualified. The goal is to not waste the sales team’s time on leads that are less likely to convert, so work closely with a sales team when determining what this funnel will look like.
Watch — How Lead Scoring Helps Optimize Your Sales Funnel:
At each stage of your funnel, you may have different or even several simultaneous channels you’re tapping into — but usually the offers will match the respective “coldness” or “hotness” of the lead level.
Funnels aren’t the same length for all businesses. It may depend how many touches you think your audience needs before they’re ready to convert. Maybe you have more than one funnel depending on the audience or channel — it doesn’t have to be one funnel across the board.
The lesson: if you can find a way to qualify someone faster, it saves you time and money.
2. You haven’t accurately set up funnel tracking for efficiency
Customer Relationship Management (CRM) Platforms
There’s a lot of audience insights to keep track of that influence how you go about presenting an offer an moving people through the funnel. Using a CRM platform or various marketing technologies to leverage your knowledge of your customer base and revenue potentials helps you to really personalize experiences.
A CRM allows for interactive monitoring of your leads, allowing you to schedule emails to these warm leads and giving you real-time notifications to keep you proactive.
Additionally, a CRM can be a hub for a more complete picture of prospects, leads and customers. AdWords and Analytics show traffic, and they do have conversion tracking. But coupled with the lead information from a CRM they’re synced, you can better visualize the journey from traffic to lead to conversion.
Traffic Generation, CRO and Analytics Platforms
Google AdWords allows you to run campaigns to increase site traffic, help gain valuable information about what offers and content resonate with your audience, and develop a relationship with them through retargeting efforts.
When campaigns go to a dedicated landing page, you’ll probably want hidden fields that sync up with your CRM on those landers — so that additional data is gathered about your leads without having to directly request it.
If you’re not using a dedicated lander or if you want an initial baseline to go off of, you can look at how people are currently engaging on your website with Google Analytics. If someone engages with a landing page, bounces and then comes back to your website, you’d still want their activities recorded in some way. With Google Analytics goals, you can assign a value/score to actions and engagements users take on your website. Then, you can analyze behavioral, acquisition, and demographic data against that information.
To provide an example of where this can be useful in determining profitable customers — let’s say that you see visitors coming in through paid traffic carry out several micro-conversions, but not as many macro-conversions (the ultimate conversion) as another channel (e.g. organic). Does that instantly mean that the PPC channel isn’t profitable?
Not exactly. Perhaps, if certain optimizations and refinements were made for those who were still showing interest but dropping off, one might find these visitors complete more macro-conversions than other channels. In short, you’re able to determine funnel leaks and measure effectiveness of your traffic efforts after the fact.
3. Not knowing how to set up attribution models properly
The last section segues nicely into a discussion about attribution models. It’s one thing to acknowledge you need to engage top of funnel activities to keep the pipeline flowing. It’s another to give credit where it’s due with regard to traffic channels or mediums that make up the customer journey. Just like we use lead scoring to score visitor intent, various channels and mediums should be “scored” on their contribution to moving people through the funnel.
For instance, if you’re using the Last Click Attribution Model, whatever channel (say, direct) a person came through right before converting would get all the credit for the conversion. But would that person even go through that channel if they hadn’t first found out about your brand or engaged via another channel (say, email newsletters)? If you ignore all previous channels that might have been drivers to convert, you might see a lot less profitable customers coming in.
4. Spending too much time chasing the wrong metrics
A mistake made early on with businesses is not defining which metrics are truly valuable and basing business decisions off vanity metrics. To be clear, if your goal is increased engagement or brand awareness, likes, comments, and similar metrics are not unimportant.
But I’m going to go out on a limb and say most businesses care more about conversions/sales. You want to pinpoint the channels that bring in more conversions rather than just a high amount of traffic, and you want to find visitors/leads that carry out certain behaviors that historically are tied to conversions.
5. Neglecting high conversion, low maintenance customers
Don’t forget that time is money, so any management or maintenance of a customer post conversion/purchase should be considered in overall costs. Generally, you’ll be looking for high conversion, low maintenance customers that convert quickly, but don’t eat up lots of support hours.
6. Not tracking cost of time for customers to reach conversion
Rolling off of #5, everything comes at a cost, whether it’s servicing current clients or following up with potential leads. Some may have a tendency to run into more issues than others, and some may take more time or energy to warm up and move through the funnel. This means they’ll need more time from your business.
It’s important to establish a method to track this information, whether that’s a customer service ticket system or a timesheet for your clients. Your CRM, that we mentioned previously, can help you track the number of follow-ups for certain lead categories. Then, you can determine if they’re really worth the time.
7. Not getting to know your customer life-cycles
So, this one really brings #5 and #6 full circle (no pun intended).
First, it’s important to note some of the key differences between B2B vs B2C customers:
- B2B customers generally have more than one person involved in the decision making process, which makes the sales cycle lengthier. Account-based marketing to target the right decision maker to build a relationship with and a more personalized approach are often warranted.
- Products for a B2B audience (e.g. SaaS) will generally be a bit more complex and pricier than those offered to a B2C audience. Thus, lot’s of detailed and long-form explanation through demos and depictions of how to use the product can be crucial to making a sale.
- For B2B customers, there’s a longer term of revenue flow, meaning customers often sign a contract for a specific term when opting in to use the product.
- A B2B audience may be more influenced by downstream demands and economic factors (being more rationally driven) rather than merely whims/preferences (being more emotionally driven).
- B2B customers are often more niche than B2C, which means that industry-specific terms and copy tailored for a niche market appeal to them more so.
- The focus is more on retention for a B2B customer, since they product is most likely not just for one-time use. This post-sale relationship nurturing is crucial.
Customer Lifetime Value (LTV) is a metric defined as the revenue a business will generate from a particular customer over the length of the relationship, considering acquisition and retention costs. It can further be segmented into actual vs. potential LTV.
The formula is as follows:
LTV = gross contribution per customer x *early retention rate/1+ yearly discount rate – yearly retention rate)
When evaluating, one might assess estimated number of projects to be help by a particular lead, the expected volume of requested resources, or expected upsurges in customer’s expanded market.
LTV helps prioritize client activities such as disproportional sales efforts spent on leads and current customers, identify underdeveloped accounts, and assist with long-term planning utilizing the predictive and holistic picture of the company’s growth potential.
8. Not evaluating ideal, actual and potential customers
Most inbound marketing strategies start out with experts telling you to define your buyer personas. You create personas that depict what you think your customers will match as far as demographics, behaviors, interests and needs. Sometimes a brand will find their client/customer base varies on this criteria or that more variations of personas need to be created.
This is one of those situations where you question what comes first: the chicken or the egg. In this case, it’s are we marketing for a particular audience and that’s why we end up with that audience — or is that audience truly the core audience for the brand?
There are several ways to position your product and several mediums to distribute content. There may be an untapped audience which currently is unaware of your brand or unexcited by the particular route you chose with marketing that could potentially be more profitable than the ones you’re currently engaging.
It’s common for marketers to find a particular audience and continuously drill into the fine details of that audience rather than seek to expand beyond. It’s not a bad thing to start by casting a wider net and seeing what catch you get before layering targeting and dwindling down. Don’t limit your audience before they even have a chance to find and engage with your product — and don’t assume because they haven’t engaged yet that they’ll never be interested. Sometimes it’s all about timing or that zero moment of truth.
9. Not getting insight from the customer directly
Don’t underestimate the response you get by asking directly. Sure, there’s some debate over whether people will give accurate responses over the phone, but you can use anonymous approaches like polls/surveys and chat boxes.
If you have a customer that just put down for a big purchase of locked in for that annual contract, ask about the journey he/she took to choosing your brand over a competitor’s. A lot of customers will respect the fact that you cared to ask, and that just helps further build the relationship.
Especially, for those who have online and offline channels or locations for visitors to engage with the brand, it can get trickier to just rely on online behavior tracking solely to get insight on the customer journey and where initial engagement began.
10. Not continuously analyzing your customer data
Review your customer data continuously. It’s important to understand that your top customers will change over time and analyzing customer data can ensure you’re making the correct adjustments to serve your top revenue builders. Don’t get blindsided by setting and forgetting.
How Leadspace Audience Data Management gives you control of your data:
How to Move Forward After Discovering Top Performers
One principle that can be applied to your business is the Pareto principle, a reminder that the relationship between inputs and outputs are not balanced. Better known as the 80/20 rule, this refers to the fact that 80% of your outputs (revenues) derive from 20% of your inputs (customers/clients).
I’m not saying that the rest of your customers aren’t profitable — but when you have limited bandwidth, you want to focus your efforts on where you get more “bang for our buck”. So, cut your customer base by 20% most profitable, and determine what offers and channels are aligning with those buyer personas in that 20% first.
You can have a lot of traffic or even a lot of customers and still not be a profitable business if you’re spending more than you’re getting back in the effort. Your business will develop and change — and so will your client/consumer base needs and interests. It’s important to have a strategy to keep your most profitable customers in your line of sight.
Learn how Leadspace’s B2B Audience Management Platform can help you discover, engage and convert your ideal customers:
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