By Mary Tucker, CEIR Sr. Communications & Content Manager
In part one of this series, Predict keynote speaker Dr. Peter Fader explains how the customer centricity model that has worked successfully in the consumer business realm can help business-to-business (B2B) exhibition marketers grow their events. Here, Peter continues the conversation with insights into ways of applying this model to increase the return on investment (ROI) and attendee acquisition efforts for B2B events.
In discussing growth opportunity, you note that the ROI is higher when focusing on the customers that are promoters versus the detractors, yet you don’t want to ignore the latter segment. What factors should marketing strategists stress with their higher-level customers? Alternately, what should they focus on with their less engaged customers?
Peter: We want to become customer centric and say, What is it that makes high value attendees or exhibitors different than the “so-so” ones? And how can we deliver to them? Whether it’s something that you are comfortable doing or not. One of my favorite examples is, what if you know that attendees would like to drop their dry cleaning off on the way to the conference and by the time they leave the show it’s cleaned, pressed and ready for them to pick it up? Then do it, figure it out! If that is something that makes a difference with those high value customers, then figure it out.
That may be a silly example but illustrates the importance of doing whatever it takes for your high value customers. And I’m saying customers, whether they are attendees or exhibitors. The investment in going out of your way for them is nothing compared to the value that they bring you on an ongoing basis. That is being customer centric, figuring out what makes them different and speaking specifically to their needs.
From a messaging standpoint, figure out what is appealing to them. As you are trying to attract attendees and/or exhibitors, have a sense of what you need to emphasize instead of trying to be all things to all people. There are going to be points that resonate more than others, and they will be broadly popular. Distinguish what points are narrowly popular with those higher value customers.
With the “so-so” group, we want to be very careful. We’re never trying to chase people away or say, “you are not welcome here.” Of course not, that’s ridiculous. Keep in mind there is a chance that the higher value customers are few and far between, that we might be wrong, that tastes change, or that there are even better ones out there. This is the paradox of customer centricity.
The more that we zoom in on what we think of the really high value customers, the more that we need the “so-so” ones to keep the lights on, hedge our bets and make sure we’re prepared for the future should things change with the high value group. We don’t want to over-invest but we can find scalable things that keep them coming back without having the illusion, or delusion, that we can turn those ugly ducklings into beautiful swans.
You will have your “one and done” attendees and exhibitors which make it tempting to think, Why should we reach out to them? But there is some amount of customer lifetime value (CLV) in them and there may be more future value in them than you’ve thought. So, let’s not over-invest but keep them on our radar and us on their radar.
You may actually find that even for the lowest tier of potential customers – when you look at them through a CLV lens – you may have been under-investing in them all along. It might be a matter of not only raising the ceiling for those really awesome customers, but that raising the floor a little bit for your “so-so” group may be a worthy investment.
You emphasize the importance and value of measuring the tactics you are applying to the impact on customer behavior. In your research, what has been the most dramatic difference you have seen for companies that successfully connect the dots?
Peter: One of the great things about CLV or customer valuation is that we’re using dollars and cents to measure effectiveness and accepting no substitute – you have to look at everything through ROI. It’s about financial accountability and alignment.
Marketers sometimes hide behind a smoke screen, basically saying, “It’s all about the brand. It’s all about the experience. It’s all about the feeling.” I don’t deny the power of those things but if they don’t end up turning into money, then it just brings financial rigor to tactics and decisions that are not quantified. Marketers will stress that ROI is not always instantaneous, which is fine, that’s why it’s called lifetime value. But as long as ROI will show up over some horizon that we can project, I can get behind long-term impact.
Alignment follows closely in that I find it very troublesome when you have tiny little fiefdoms within the enterprise that are doing their own thing. The acquisitions people are marching to their own beat to bring in new customers and the retention people are doing their thing to save customers from jumping ship. Then you have customer development worrying about what the right thing is to cross-sell and upsell, etc. All too often, the decisions that groups make go against the grain of the others which leads to incredible inefficiency and infighting.
So, let’s agree on using the same metrics to make sure that we can align these decisions and find more synergies across them to the extent that budgets are tight, and we have to make some tough decisions. We have to establish some priorities and we can do it in an apples-to-apples way that will get much more respect from the folks in finance and elsewhere in the organization. What’s ironic is that it might actually be less efficient in the process but if it’s more transparent and aligned, that’s okay.
What kind of difference can it make? We have a very interesting case study on that.
We did a project with a pharmaceutical company that sells a variety of medical products. They faced an interesting set of issues, especially with their one particular product line which requires them to produce very expensive equipment. They have to be selective about which clinics they provide these machines to and receive a licensing fee. The question being, who should they give the machines to? The natural answer would be to the biggest clinics because they have more people getting treatments and, therefore, more revenue.
To their credit, they realized that may not be the best approach. They could have a clinic – in a tourist area, for example – that sees mostly “one and done” patients and there’s no lasting value created there. But there might be a smaller clinic elsewhere that has less traffic, yet those customers are really, really loyal. These are the people that come in week after week, month after month. Even though clinic number one brings in more dollars on a short-term basis than clinic two, clinic two may hold more value in the long run from an ROI standpoint and it would be more profitable to reallocate their resources accordingly.
Once again, we go back to the idea of lifetime value. We bring in more financial accountability. We bring in more alignment to the decisions that we’re making about who gets what and even what kind of messaging to use. And, since they have a loyalty program, let’s adjust the parameters of the program to make sure that we’re incentivizing the right kind of behavior that’s going to have a meaningful, measurable financial payoff.
The end result? We’re working to get that case study released soon because they have a very interesting story to tell with some very real, and substantial, financial results.
On the flip side, I read an article in the New York Times about a hotel chain looking to enhance its customer experience by taking a “surprise and delight” approach. What they’re going to do is give a free upgrade to every 20th guest that checks in, which is going to surprise and delight them. As the person who receives the random discount, is this going to surprise them? Sure, they weren’t expecting that. Is it going to delight them? I’m not sure. Is it going to convert over to lifetime value and consistently make them choose this chain over another? I’m not sure. Show me the money.
Rather than implementing random initiatives, I’d rather engage customers in a more targeted way. As each person checks in, I would prefer to instantly look up their lifetime value and other meaningful behavioral metrics about them, then make the decision about whether we give this person an upgrade and so on. And do it as a formal, controlled experiment. For example, let’s give half the upgrades to high value customers to see if it makes them even more valuable. Let’s measure over a long term how it impacts their ongoing behavior.
I can pretty much guarantee you that the hotel chain didn’t do any of that. They just did this “1 in 20” special, hoping to get some favorable buzz about it, maybe having people make TikTok videos when they win a free upgrade. Ultimately, though, they are merely giving away random upgrades and have nothing to show for it every month.
So, you have to really think through these things. Again, it doesn’t make the incentives any harder to execute but makes them easier to justify in the long run and gives you much better information to work with.
