The One Number To Predict Revenue (Part 3)

For me, the search for the magic number for marketing started with the presentations on Velvet Rope Marketing (VRM) that I started doing to CMOs a couple months ago. (As an aside, this is one place where the lockdown has proven very effective. I would probably have not travelled as much for the meetings in India, South East Asia, Middle East and Africa. But here I was, working from home, meeting CMOs and their teams all across diverse geographies. Over the past two months, I have done over 60 VRM presentations with Netcore customers and prospects.)

As I dug deeper into VRM and improved on my pitch with the feedback that I received, I realised I had developed a whole new vocabulary:

  • Power Laws in Marketing: a small percentage of customers account for a large chunk of revenues and an even greater share of the profits
  • Velvet Rope Marketing: to emphasise the focus on the Best Customers
  • Best-Rest-Test Customers: to segment their customers based on CLV (customer lifetime value)
  • Long Tail Marketing: to improve returns from Rest and Test customers
  • Best Customer Genome: the DNA of the Best Customers
  • Chief Profitability Officer: what the CMO and every CxO needed to become

Yet, there was something missing. I was unable to show how the improvements brought about my VRM could be quantified. While I spoke about an increase in profits, I realised that there were many contributors for profits and it would be hard for VRM to be recognised as the main component.

While CMOs liked the idea, I realised that I struggled to show how the VRM approach could be more effective than the marketing techniques they were using internally. I needed a number that could show a before-after impact of VRM. While CLV was good at an individual customer level, it did not help in capturing the overall impact across all customers. Perhaps, the trick lay in aggregating CLV across all of a company’s customers? I had to dig deeper.

Tomorrow: The One Number To Predict Revenue (Part 4)

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