The path to profits runs through marketing. For most companies, marketing is the largest cost after wages and salaries. Hence, the pressure to cut marketing budgets is going to be intense. It is in this context that marketing needs to be re-imagined for the post-Covid future for the increasingly digital customer.
There are three themes around which the new marketing can be re-organised to drive profits based on the customer segments:
- Velvet Rope Marketing for the top 20% (Best Customers)
- Median Customer Marketing for the middle 30% (Rest Customers)
- Long Tail Marketing for the bottom 50% (Test Customers)
Velvet Rope Marketing (VRM) is the most important because the contribution of Best Customers to revenues is much higher than the other categories. My earlier series and webinar on VRM discuss the ideas in greater detail. In this context, the four most important jobs for a Chief Profitability Officer are:
- Identify Best Customers
- Give them the Velvet Rope Experience
- Acquire more like them
- Help them become Best Customers faster
In this series, we will also dig deeper into how to implement VRM using the ideas of CDP (Customer Data Platform), CLV (Customer Lifetime Value) and BCG (Best Customer Genome). We will also expand on ideas for marketing to the Rest and Test Customers via Median Customer Marketing and Long Tail Marketing, respectively. While their relative contributions to revenue and profits are likely to be lower, they can serve as a fertile ground for identifying future Best Customers.
Tomorrow: Becoming Chief Profitability Officer (Part 3)
