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I was chatting with one of our clients last week. This is a £20m+ b2b service provider. They have a core service that’s low margin, but gives them a platform to sell add-on services that are high margin. In looking together at their three-year plan, we were exploring what tightening their marketing systems would mean in bottom line impact. Here’s the key question I ask when exploring this with a client… what kind of growth do you want? Lifetime value, margin or volume. Let me walk you through it. ~ Bryony Thomas, Author | Watertight Marketing
Watertight Marketing as a methodology is essentially a process of wiring the ‘marketing brain’ within your business. It connects the neurons (people) with a common language to collaborate, and then uses a series of frameworks and models to assess, sequence, and enact great marketing decisions.
When a business tells us they ‘want to grow’ there’s a clarification process we take them through to work out which of our tools and frameworks to pull out of the tool bag. We split a sales or decision journey into three phases, and within those we have identified thirteen Touchpoint Leaks™ . The type of growth you’re after is one way of determining where in all this you need to focus.
Growth marketing: Where to focus?
We don’t follow the received wisdom of the marketing funnel. It far too simplistic. More than that, it distorts the view of marketing such that people choose short term gain over long-term profit and scalability.
It’s part of our process to build from the bottom up, you’ll see the compounding benefit of this as we explore it further. (With all credit to Eric Morecambe) we often find that our clients have all of the right marketing ideas, they’re simply addressing them in the wrong order.
Marketing to grow customer lifetime value
There are a few ways to increase how much return you get directly from a customer relationship:
- Put your price up (see margin below).
- Keep them buying from you for longer.
- Get them to buy additional things from you.
- Reduce how much it costs to do business with them.
You can get indirect value from this relationship by:
- Them referring other customers to you.
- Them appearing in your marketing so that it’s more convincing to prospective customers.
- Them giving feedback or trialling new things for you.
Within the Watertight Marketing framework, there are three marketing projects that enhance this specifically and sit alongside your customer service team (within the Bucket, pictured above), and a further three that contribute significantly (within Funnels & Filters, pictured above). Let’s look at the first three:
- Leak 1 – Forgotten Customers: Marketing that builds loyalty and deepens the relationship so that they stay longer, become easier to service, and are receptive to sales invitations.
- Leak 2 – Poor On-Boarding: Marketing that supports you in welcoming new customers on-board, so that they quickly get value from what they’ve bought and can visualise the positive impact of working with you. This reduces churn, meaning people stay longer. Reduces service costs, as they’re using what they’ve bought effectively. Increases loyalty, the great first experience means the loyalty activity you then move onto will be well received.
- Leak 3 – No Emotional Connection: Marketing that creates an emotional connection with clients. This creates a sense of inertia, and ‘being on your side’ which reduces customer churn, and makes them receptive to the effort of on-boarding, and open to the loyalty activity.
These are almost always the first projects we’ll focus on with a client. It’s often not what they thought they needed, but the bottom line impact is greater and longer lasting than they’d imagined too. These are the marketing projects that will increase lifetime customer value.
Marketing to grow your margin
The work you do on loyalty will have the additional benefit of increasing margin overall, because you don’t have all the cost of acquiring brand new people. But, there are also specific marketing techniques that really focus in on increasing the profit margin (that is, more money for less effort). Margin increases when:
- You don’t waste energy talking to people who aren’t going to buy.
- You’re able to position your higher margin products, or make proposals for longer or deeper client engagements.
- The work you’re doing is fun and energising to deliver, this means you keep good people on your team.
- You’re in high demand, which means you can confidently turn down work that’s not that profitable.
The specific marketing projects we would work on for margin growth sit alongside your sales function. These also have the knock on effect of increasing likelihood of loyalty through the highly positive sales interaction. The focus area for us on this is what we call Funnels & Filters:
- Leak 4 – No Gateway: Creating tools and activities that filter out the wrong kind of work, and mean your sales people are only spending time with great prospects, then equipping them with engaging tools that top and tail the sales conversations to increase the initial order value, and the rate at which you convert.
- Leak 5 – No Critical Approval: Marketing that gets critical third parties, or critical inner voices, on-side. This increases their commitment to the relationship, and usually increases their confidence to spend more with you.
- Leak 6 – No Proof: Preparing a living library of compelling evidential materials, formatted for the way your prospects’ minds work. These make the case for why you are a great choice for them, and increase their trust in you. This will mean you win more of the deals on the table, and increase the customer’s trust to spend more with you.
Oftentimes, our clients have highly skilled sales people in role. What these projects do is to put powerful repeatable tools & processes in the hands of these highly skilled people. This gives you a double bubble, and has the added benefit of reducing the sting if a key salesperson leaves. These are the marketing projects that will improve your margin.
Marketing to grow the volume of customers
This is what most people think of as marketing. In our model, it’s the Taps (as pictured above). This is everything that everyone else in ‘marketing’ talks about. This is the marketing that increases volume, i.e. reaching more people, generating more inbound enquiries, etc. it’s the obvious stuff. Takes skill: Yes. Is important for volume growth: Yes. Is your top priority: Highly unlikely!
Here are some thoughts on Taps:
- Where the Funnels & Filters and Bucket projects are often things you invest in significantly every few years and then use repeatedly, Taps have a cost for every minute they’re running.
- If you don’t have the downstream items, you are definitely wasting money if you have the Taps running vigourously… a leaking bucket needs constant refilling.
- The content for first six of the Touchpoint Leaks™ comes from you, these projects cannot be wholly outsourced. You need to dig deep to catch and systemise the knowledge, which can then be shaped and polished by a marketer.
- Taps activity can be almost wholly outsourced, particularly when you’ve done the work on 1-6.
Most ‘marketing’ suppliers are selling Taps. What we do is work with you, from the bottom up, to select and sequence exactly what marketing you need to underpin healthy sales flow.
Healthy means fun. Healthy means profitable. Healthy means sustainable. Healthy means scalable. Healthy means long term.
Does your marketing support healthy sales flow?
We’ve developed a 10-minute assessment to help you quickly pinpoint if your marketing operation is truly supporting the long-term health of your business:
The compound value of doing this backwards
By working through this the Watertight way, you layer each of these growth types. You first ensure that you have no hole in your Bucket, you then ensure that you’re Filtering out those that will drain you, and Funnelling those they will energise & resource you, and only then do you turn the Taps on. And, for many, when you get to the Taps stuff, you find that don’t need to do nearly as much as you might have imagined. You need fewer leads if you convert and keep more of the ones you already get!
Let’s run some scenarios:
- High Volume + Low Margin + Low Lifetime Value = An exhausting business
- Low Volume + High Margin + Low Lifetime Value = A lumpy business
- Low Volume + Low Margin + High Lifetime Value = A small and slow growing business
- High Lifetime Value + High Margin + High Volume (in that order!) = A very healthy business
It’s really very exciting when you get this right!
By Bryony Thomas, Author – Watertight Marketing
Author & Founder, Watertight Marketing
Bryony Thomas is the creator of the multi-award winning Watertight Marketing methodology, captured in her best-selling book of the same name. She is one of the UK's foremost marketing thinkers, featured by the likes of Forbes, The Guardian, Business Insider and many more, and in-demand speaker for business conferences, in-house sales days and high-level Board strategy days.