{"id":6544,"date":"2021-05-12T11:24:41","date_gmt":"2021-05-12T11:24:41","guid":{"rendered":"https:\/\/dkmarketing.gr\/?p=6544"},"modified":"2021-05-12T11:47:36","modified_gmt":"2021-05-12T11:47:36","slug":"%ce%b7-%ce%b1%cf%80%cf%8c%ce%ba%cf%84%ce%b7%cf%83%ce%b7-%ce%bd%ce%ad%cf%89%ce%bd-%cf%80%ce%b5%ce%bb%ce%b1%cf%84%cf%8e%ce%bd-%ce%b5%ce%af%ce%bd%ce%b1%ce%b9-%ce%b7-%ce%bc%cf%8c%ce%bd%ce%b7-%ce%b2%ce%b9","status":"publish","type":"post","link":"https:\/\/dkmarketing.gr\/en\/%ce%b7-%ce%b1%cf%80%cf%8c%ce%ba%cf%84%ce%b7%cf%83%ce%b7-%ce%bd%ce%ad%cf%89%ce%bd-%cf%80%ce%b5%ce%bb%ce%b1%cf%84%cf%8e%ce%bd-%ce%b5%ce%af%ce%bd%ce%b1%ce%b9-%ce%b7-%ce%bc%cf%8c%ce%bd%ce%b7-%ce%b2%ce%b9\/","title":{"rendered":"Customer acquisition is the only viable growth strategy in B2B"},"content":{"rendered":"

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The majority of B2B marketers believe brands grow through customer loyalty rather than customer acquisition, but that couldn\u2019t be further from the truth, according to a major new study by Ehrenberg-Bass Institute\u2019s Professor Jenni Romaniuk.<\/em><\/h4>\n

By Michaela Jefferson,<\/span><\/span><\/p>\n

Think you\u2019re going to grow your B2B brand by focusing on customer loyalty? According to the law of double jeopardy, you\u2019re wrong, and that has implications for everything from growth KPIs to marketing strategy.<\/p>\n

A major new study by Ehrenberg-Bass Institute\u2019s Professor Jenni Romaniuk, Professor John Dawes and Sahar Faghidno for the LinkedIn B2B Institute confirms the marketing law of double jeopardy applies to B2B brands just as much as B2C, and therefore the only clear path towards growth for B2B brands is through customer acquisition.<\/p>\n

It also outlines how B2B marketers can apply these lessons practically to their growth strategies.<\/p>\n

The law of double jeopardy, which was first discovered in the 1960s, reveals that loyalty is largely a predictable function of market share, increasing as brands grow the size of their customer base. It is therefore normal for smaller brands to suffer twice as much compared to their larger competitors, by having fewer users who are also less loyal.<\/p>\n

While previous research has shown the law of double jeopardy does apply to B2B brands, Romaniuk\u2019s study further illustrates the phenomenon with new examples of the law taking effect across two B2B markets \u2013 UK business banking and US business insurance.<\/p>\n<\/div>\n

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 <\/p>\n

The research focuses on loyalty metrics for UK banking and defection metrics (the probability of a customer switching away from the current brand at next renewal) for US business insurance.<\/p>\n

In both instances, brands with fewer customers have lower loyalty or higher defection levels (see tables above and below).<\/p>\n

In the UK, Barclays serves 42% of potential B2B customers, the highest penetration in the market. Some 27% of those customers are \u2018solely loyal\u2019, using Barclays for all banking products, while 31% say it is their favourite provider.<\/p>\n

At the other end of the spectrum, Metro serves 11% of potential B2B customers. Just 3% of those are solely loyal, while 15% say it is their favourite.<\/p>\n

 <\/p>\n

What double jeopardy simply says is that we can\u2019t engineer loyalty, and focusing on loyalty isn\u2019t the route to sustainable growth.<\/strong><\/p>\n

Jenni Romaniuk, Ehrenberg-Bass Institute<\/strong><\/h6>\n<\/blockquote>\n

In the US, Allstate is the leading provider of B2B accident and health insurance, reaching 15% of customers. The brand has an average likely defection rate of 2.1. Meanwhile, AIG reaches 7% of customers and has an average likely defection rate of 3.4.<\/p>\n

Based on this evidence, claims that brands can grow through cross- or up-selling, or through customer retention, are part of an \u201cimagined world\u201d dreamt up by \u201cfanciful consultants\u201d, Romaniuk argues. The \u201creal world\u201d shows that the only path to growth is getting more customers to buy from you.<\/p>\n

\u201cWhat double jeopardy simply says is that we can\u2019t engineer loyalty, and focusing on loyalty isn\u2019t the route to sustainable growth,\u201d Romaniuk tells Marketing Week. \u201cIt gives us a clear strategic path of how brands grow, and that\u2019s what its power is.\u201d<\/p>\n

Moreover, she dismisses the idea that any brand can have already extended its customer base as far as it can go.<\/p>\n

\u201cSo you\u2019re saying it\u2019s saturated the market and it\u2019s got 100% market share? That\u2019s called a monopoly and usually there\u2019s governments that get in the way,\u201d she says.<\/p>\n

\u201cSometimes people talk about this over a long time frame and they go, \u2018well over a year everybody buys us so we can\u2019t grow on penetration\u2019. That\u2019s because you\u2019re looking over a year. What about over a quarter or over a month? Penetration and loyalty are time-bound metrics and so it really is a matter of how you look at them.\u201d<\/p>\n

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The double jeopardy pattern does not just apply to B2B services, the paper points out, with previous research having observed its presence in concrete and airline markets.<\/p>\n

There are some deviations to the rules, as seen in the tables above. But these are rare, the study finds. Usually, a company with \u2018excess loyalty\u2019 is suffering from a deficit in penetration, which means it is neglecting or cutting some category buyers out of its potential acquisition base and putting a \u201cceiling\u201d on its growth potential.<\/p>\n

With this in mind, Romaniuk says marketers are setting limits on company growth by pursuing a loyalty-first strategy, as the data shows a business can only get so much out of its existing customers. She worries, however, that marketers will be too afraid to let loyalty go.<\/p>\n

\u201cThere\u2019s just so much opportunity out there for those who are willing to be ambitious. I think a lot of loyalty marketing is fear. Fear of losing what you\u2019ve got,\u201d she says.<\/p>\n

\u201cThat fear is even more poignant in B2B because there is a contract breaking, \u2018sorry we\u2019re not renewing\u2019, type of relationship. I think often it\u2019s easier to take that more personally and be more fearful of that happening, than [worrying about] someone who forgets to buy Colgate and Colgate doesn\u2019t even notice at the individual level.\u201d<\/p>\n

Psychologically, she hopes this new data will help marketers take a new perspective on growth and to also understand that in growing a brand and gaining new customers, they\u2019ll also likely keep the customers they have.<\/p>\n

\u201cIt\u2019s not an either\/or trade off. Going for acquisition doesn\u2019t mean your customers are going to start walking out the door. It just means more will be walking in,\u201d she says.<\/p>\n

<\/h2>\n

Practical application<\/h2>\n

There are a number of ways in which B2B marketers and brands can take the lessons of the double jeopardy law and apply it practically to their growth strategies. Most importantly, they must identify and remove any barriers to acquisition, whether mental (what you are salient for offering) or physical (where, how or what potential customers can buy from you).<\/p>\n

Marketers should also rethink the metrics they track and move their focus away from loyalty metrics, says the LinkedIn B2B Institute\u2019s other global lead, Jon Lombardo. \u201cAll the evidence here says you need to grow your customer base. That\u2019s the number one thing you should be tracking,\u201d he says.<\/p>\n

\u201cSo don\u2019t focus on loyalty, don\u2019t focus on retention, don\u2019t focus on churn, until you have first focused on growing the size of your customer base, or your market penetration.\u201d<\/p>\n

Weinberg adds that in order to effectively grow their customer base, marketer should make sure their targeting is broad and skewed towards net new customers, not towards existing customers.<\/p>\n

There\u2019s just so much opportunity out there for those who are willing to be ambitious. I think a lot of loyalty marketing is fear.<\/strong><\/p>\n

Jenni Romaniuk, Ehrenberg-Bass Institute<\/strong><\/h6>\n<\/blockquote>\n

This could mean advertising in an industry magazine to reach a different set of non-customers, rather than sending out an email from your existing marketing database. It could also mean switching out one in four calls to existing customers to targeting non-customers.<\/p>\n

\u201cI also think there\u2019s an implication for sales teams not just marketing, which is that sales teams should definitely be trying to talk to net new customers versus existing customers,\u201d he adds.<\/p>\n

And when it comes to those loyalty metrics, using the law of double jeopardy can help marketers to ensure they are setting realistic targets, as it reveals clear boundaries for the loyalty that can be expected for a company based on the size of its market share.<\/p>\n

Romaniuk explains: \u201cWe can predict what is normal in loyalty and if we can predict something, you know that then it\u2019s bounded in what it can be. So setting goals that would take you to a loyalty that was out of those bounds, is really not a feasible objective.\u201d<\/p>\n

Without the knowledge the law of double jeopardy offers, marketers may set themselves up to fail by choosing loyalty targets that aren\u2019t realistic, Weinberg adds.<\/p>\n

\u201cMarketers, in some cases, get to set their own objectives, and if they\u2019re setting a totally unrealistic loyalty objective that they\u2019re not going to hit, it\u2019s not going to reflect well on them personally,\u201d he points out.<\/p>\n

However, Romaniuk warns that one risk with pursuing growth through any means is that you can make short-term gains for long-term damage, and advises marketers to pursue sustainable growth.<\/p>\n

\u201cYou can do some pretty awful things and get a short-term bump in sales, and [then] move on quickly to your next job,\u201d she notes. \u201cBut it\u2019s what you leave behind and the legacy of your marketing and that\u2019s often not thought about in that context.\u201d<\/p>\n

Source: www.marketingweek.com<\/p>\n<\/div>\n

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