Satisfying Your Existing Customer Base While Expanding to New Horizons

The Girl Scouts have a saying, “Make new friends, but keep the old. One is silver and the other gold.”

This advice doesn’t just apply to childhood friendships. It also applies to marketing. Startups have the luxury of beginning with a clean slate. But established brands face the challenge of trying to satisfy their existing customers, while also attracting new ones. Just like a mix of friends can determine the choice of snacks and activities, a mix of existing and prospective customers can affect experience design, channel selection, planning, budgeting, staffing and technology investments.

Print or digital ads? Catalogs or social media? In an age of digital marketing, these decisions seem like no-brainers. But if you’re trying to cater to the behaviors and preferences of a diverse customer base, the choice isn’t quite as clear. Focusing only on prospects could alienate loyalists. Prioritizing customers over prospects could jeopardize long-term results. You’ll need a pipeline of new customers to sustain and grow the business, especially as existing customers near the end of their lifecycle with your brand.  

So what is a marketing leader to do?

Most marketing leaders attempt to solve this problem by broadening their target audience to include current customers and potential buyers, leading to the well-defined target of “men and women ages 18-54”. This, my friends, is not a target. It’s an attempt to reach everyone, often resulting in watered down campaigns that engage no one. Rather than broadening your target, get even more focused by first figuring out who is and is not likely to be your customer in order to design an appealing.

Yes, it’s possible your product or service has broad appeal. But it’s far more likely there is a profile of your typical customer, or, even better, your most valuable customer. Identifying these people or businesses starts with determining short and long term business goals. Specificity helps. Try this:

“We need to increase/decrease/maintain_____ in order to improve _____. To achieve that, it’s most important that we increase/decrease _____, without sacrificing _____.”

“We need to increase holiday sales over last year in order to reach our annual revenue target. To achieve that, it’s most important that we drive in-store conversion without sacrificing profit margin.”

Then, work backwards from there to figure out what type of customer you need more (or less) of in order to achieve short and long term goals. In the example above, you need customers who convert in-store. Let’s say, for the sake of argument, 60% of your customers only buy in-store, 20% only buy online and 20% shop and buy across both channels. You’ll need to know more about these customers than just their shopping habits. What else makes them alike or different?

Maybe customers who buy in-store and across channels are more likely to live near a physical store. Perhaps those who buy online are more likely to buy specialty items that aren’t available in-store. Use this insight to develop strategies for each segment, aimed at getting in-store and multichannel customers to shop and buy in-store more often and increase the size of their basket. You could also consider ways to get the online shopper to go to the store, perhaps for the first time, but this requires customers to change their behavior, which often takes time and/or incentives.  

As you analyze customer segments, looking beyond superficial traits like demographics, you may find they have more in common than you thought. If so, design and test experiences, campaigns, content and promotional offers to determine if they have the desired effect on both groups, without sacrificing margin. Target each segment with experiences, campaigns, content and offers best suited for them. Or, prioritize the segment that is largest, most valuable or most likely to respond favorably to your efforts. Have you tried offers to drive multichannel shoppers in-store? How has that impacted sales? Margin?

As you prioritize one segment, you are choosing to deprioritize another segment, especially if those groups have vastly different needs and expectations. Before you make that choice, consider the potential business impact. Weigh costs and benefits of focusing on one group over another. Share the results of this analysis and a recommendation with senior executives to ensure top-down alignment to this decision and the consequences. For example, choosing to abandon catalog marketing could dampen sales from loyal catalog shoppers, but if the cost savings exceeds the revenue, it may be worthwhile.

This may all seem like business basics. But, all too often, marketing leaders lack a clear target, often because they’re stuck trying to satisfy everyone, spreading their marketing budget and resources too thin. Instead, focus budget and resources on generating customer and audience insight. Use that insight to guide planning and inform prioritization. Be willing to make the tough decision to strategically support old and new customer relationships or discontinue investments in current customer relationships in favor of investments that will help you acquire or expand new customer relationships.