As we embark on what will surely be another year of economic uncertainty, Janet Titterton, Business Planning Director at Collinson Latitude, looks at the ways in which marketers across every sector will need to look toward incremental revenue opportunities and capitalise on the online customer journey if they are to maximise growth in 2010.
This will undoubtedly be the year in which the true value of the online user experience is demonstrated. It has never been more important for brands to use their online offering to both engender customer loyalty and maximise revenues, and failure to do both will separate the strong, survivor brands from the weak.
The big question then is: how can brands capitalise on their online presence to ensure growth in 2010?
The key lies in looking beyond a brands’ core offering to products and services that both compliment the brand and are relevant to its customers. For years, brands have recognised the potential of incremental revenue and cross-selling products and services that enhance their core offering.
Indeed, over the past five years its importance has increased significantly. Ryanair recently announced that profits from ancillary sales now account for 22% of group revenues – almost £550 million. Similarly, the Financial Services sector has a long history of up-selling products, as part of a monthly account fee. It is estimated that these added value products generate over £800 million a year to banks in the UK.
What then it is the key to a successful online incremental revenue model and what should brands’ consider before implementing such a programme?
A brand must first be able to understand what specifically it is aiming to achieve from its incremental revenue strategy – and it should be strategically driven, not short term tactical activity.
What is the objective? Is it to differentiate from competitors? Is it to improve customer satisfaction? Is it to increase profits? Is it to gain a better understanding of customers? Once prioritised, businesses are then able to define the propositions accordingly.
This can take many forms for example: providing bundled packages of added value products designed to enhance your core offering and offer added customer value; introducing profitable and engaging online reward programme extensions with established affiliate connections; or bringing traditional offline promotions to an online audience to drive behavioral change and cost savings.
Once the objectives are clear, it is essential to look at the customer. Boosting both profit and loyalty starts with viewing the customer journey as a whole.
Focusing on additional products and services that will add to and improve the customer experience and satisfy customer needs in a holistic manner across multiple touch points is fundamental; Value products can include content that appeals to customer aspirations and reflects lifestyle enhancements, not just offering products that relate directly to the brands core product.
Understanding the entire customer journey, including all the touch points where you could add value puts the brand in a position to also identify revenue opportunities. This should translate offline too - look at the customer’s physical journey once they arrive at the airport, bank, hotel or store.
Recognise what else a customer might need or be interested in whenever there is an interaction with them. Use insight from existing customer data, particularly buyer behaviour to identify what types of products or services will incentivise them and encourage loyalty.
This is best achieved through extending partnerships and providing additional online content- so look to partners who can provide this content and manage the additional relationships for you.
Also look to partners who are innovative in approach, who can adapt to the ever changing online environment and who can offer a revenue share model so there is a genuine commitment from everyone to make this strategy work.
It’s obvious to say that profits are generally the main metric; however an incremental revenue strategy run well, with the customer at the centre can deliver these profits and enhance customer satisfaction.
Brands should continue to segment their customer base and tier their offering, as this can ensure greater customer relevance, and in so doing greater revenue.
An incremental revenue strategy can be used as a great tool to engender loyalty in the long term. It should be used to enhance, not exploit, the relationship with customers.
In such a commoditised market place, brands need to offer something unique to stand out and ensure that customers stay loyal, and online incremental products do just that.
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