We are now in a position to see how Velvet Rope Marketing (VRM) can help enterprises double their profits with the twin engines of increasing revenue from Best Customers and decreasing acquisition costs. Think of this as the instantiation of the 200-20 rule that Sunil Gupta had talked about – for 200% profits, focus on 20% of the customers, grow revenues by 20% and reduce media spends by 20%.
The table below summarises the approach that smart marketers should take in this quest to double profits:
The greatest impact can be made by shifting focus from the middle cohort to the Best Customers. Creativity needs to go in crafting the VRM programme – what non-cash experiences can be created that will make the brand’s Best Customers feel like royalty – so that they spend more, stay longer and spread wider.
The foundation can be laid by rebuilding the marketing stack centred around these six elements:
- CDP (Customer Data Platform): to aggregate all customer demographic, behavioural and transaction data in a single place to provide a single unified view of every customer
- CLV (Customer Lifetime Value): to segment the customers into Best (top 20%), Rest (middle 30%) and Test (bottom 50%), and thus lay the foundation for Velvet Rope Marketing
- Martech: to automate all interactions with customers, with a special focus on Best Customers
- +Adtech: to benefit from the integration with martech, acquire more profitable customers, and do 1:1 targeting
- Omni-channel: to ensure reachability to customers across every possible channel (owned and paid) in a seamless manner
- Personalisation: to create a distinctive, unique and memorable experience for every customer, and especially the Best Customers
The growth of devices, acceleration of digital and availability of data makes it possible to treat customers differently and recognise that some are more equal than others. Velvet Rope Marketing is the perfect business transformation idea – for today and forever.
A postscript for CMOs: While everyone else in the organisation is focused on cutting costs and conserving cash, Velvet Rope Marketing is the magic sauce that can transform you into profit doublers – the Chief Profitability Officer!