Insight/ Tools

Forgetting To Target Current Customers Is A Costly Mistake


by Andrea Fishman
Principal, BGT Digital Experience Solutions

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Article Highlights:

  • Many businesses forget about what made them successful to begin with: their current customer base.
  • When targeting existing customers, marketers must be more precise with their messaging.
  • The challenge for marketers is to find the right balance between connecting the dots in terms of past behaviors and not overstepping boundaries.

Struggling to drive revenues and "show the value" of their marketing investments, many businesses become so concerned with improving conversion rates and one-time transactions that they lose track of the bigger picture and forget about what made them successful to begin with: their current customer base.

Companies that overdirect their focus on targeting new prospects, forgetting that engaging existing customers may require less guesswork on preferences and can actually provide more effective conversion rates, are missing an opportunity to broaden their sales funnel and improve overall growth rates.

Targeting existing customers provides the opportunity to acknowledge your insight on their interests and needs; and when done effectively, it also can be a very powerful tool in building a long-term relationship. When I'm looking for a boot similar to the ones I loved last season, Zappos immediately has three options to suggest based on my past behavior and pricing thresholds. Amazon, long considered the pioneer in delivering custom recommendations and suggestions, provides similar guidance based on past behavior and its data on how segments buy "like" items.

Investments in technology that identifies not just associated products, but recommended products based on a complex history of buying patterns, keywords, and profile data can often yield results competitive to investing in a new campaign or branding initiative, often with faster payoff.

When targeting existing customers, there is an increased burden on the marketer to be more precise with their messaging. While targeting current customers keeps them engaged with your brand, they will expect that messaging to them is based not on broad campaigns, but what you know about them. If you are a financial services firm, then this could be as simple as ensuring the banner ads on the post-login account pages reflect the product mix in the account. For grocers, if a user has previously ordered catering for Passover, then messaging around Easter ham specials is probably not an ideal suggestion. Companies lose customers along the way, but one of the reasons shouldn't be due to irrelevant messaging and product promotion.

There are times, however, when targeted marketing can take on the same "creepy factor" that is associated with traditional display retargeting. Just as we don't love seeing ads for a product we just viewed follow us around through our email and other sites for months on end, there is a slippery slope when marketers make assumptions based on changes to buying habits.

As we recently saw with Target, a young woman received a mailer from the company speaking to an upcoming pregnancy--based not on any indication or registration for maternity goods, but on the products and pages she viewed or consumed. The tricky part of Target making this connection based not on obvious buying indicators, such as the purchase of diapers and onesies, but through a more subtle change in buying habits is that it may be wrong or at least complicated to explain. In this case, the woman had not yet shared this news with family, making the mailing a surprising and rather awkward experience for all involved.

The challenge for marketers is to find the right balance between connecting the dots in terms of past behaviors and projecting that insight into offers that may be valuable, without overstepping boundaries. Targeting based on actual behavior and not implied behaviors may provide the marketer with a middle ground that's likely to be more effective than nontargeted efforts, but doesn't cross the line.

Fundamentally, targeting current customers offers the ability to deliver an experience and set of personal and relevant offers that should improve conversion. But that also needs to be delivered in a contextual and subtle manner.

About Andrea Fishman

Andrea Fishman (@andreafishman) is an advisory principal with PwC, focused on accelerating digital and technology impact to create unique customer experiences. A 2012 Stevie Award Winner as Best Executive in Advertising, Marketing & Public Relations, Fishman is a nationally recognized expert on interactive marketing.