Lessons From Loyalty Marketing

Eric Canada has studied the impact of existing companies on job growth in communities. His data suggest attraction generally accounts for only 15% of jobs and capital attraction compared to 76% from existing businesses and 9% from entrepreneurial start-ups. In fact, in an interview with Canada he noted, “If I could only implement one economic development strategy, it would be an existing business strategy – and I am a marketer! Why? Simple. First, the odds of success increase dramatically. Second, attraction will never give you an opportunity to boost existing business – probably just the opposite. But, working with existing business can generate opportunities including expansions, joint ventures, spin-out entrepreneurship, and attraction.”

Eric Canada Chart

Yet, most communities invest limited promotional dollars preferentially in company attraction activities operating under the assumption companies already operating in the community do not require the same level of attention.

The unfortunate fact is the companies already in a community not only represent a higher upside job growth potential, they are also at risk of being recruited (poached if you prefer) by competing locations if unattended. And, in an interdependent global economy, many of these companies are at increasing risk of consolidation when headquarters rationalize operations or at risk of being acquired.

The lifetime value (direct and indirect economic impact) of an existing company can be significant.  An important strategic goal for economic development organizations is to realize as much of that value as possible by building positive barriers to leaving the community.

Relationship Marketing is one way to think about how to maximize the potential for a community to enjoy the lifetime value of existing companies.

Adaptation of The Ladder of Customer Loyalty – The Ladder of Company Loyalty

Ladder of Company Loyalty

The ladder of company loyalty characterizes the different types of companies in a community. The aim of relationship marketing is to retain companies, as it can cost a community significantly in loss of jobs and tax dollars that would be exceptionally difficult to make up through attraction of new companies.

There are five steps in this ladder. Starting with:

Suspect – A suspect is a CEO who comes across your community’s promotion. You have their attention. They are a potential suspect for your community’s attraction efforts.

Prospect – If the Company CEO is interested in your community they become a potential prospect. Ideally you’ve made them a lead in your CRM system.

Customers – A customer is a CEO who decides to invest capital in your community.

Clients – Clients are CEOs who have expanded their capital investment in your community.

Advocates – Advocates are CEOs who proactively promote your community. They are so happy about living and working in your community that they tell others.

Power Questions

  • Where do your top employers fall on the Ladder? How many of your employers are customers, clients and advocates?
  • What is the satisfaction level of employers at each level? Are your clients at risk of leaving or are they on the path to becoming advocates? Do you know how to effectively measure satisfaction?
  • What does it take to move a customer to become a client and a client to become an advocate?
  • What programs do you have in place to facilitate the transition? Are they effective?
  • What are your conversion objectives at each level for the current year, next year and five years out? Is your EDO resourced to achieve the objectives?

Advice

In my years managing brands at P&G, one of the most important strategies I learned was to focus on ensuring your core business was always competitive and growing. It is easy to get distracted with introducing flankers and line extensions. But, if your core brand offering was compromised, growth on the balance of the franchise was rarely sufficient to make up the top line sales or bottom line profit losses.

The lesson is equally relevant in economic development. Your community’s equivalent of a “core business” is the companies driving current economic prosperity. New companies and industries you are pursuing with attraction efforts are the conceptual equivalent of line extensions and flankers intended to strengthen the community’s economic portfolio’s core.

It is easy to take your existing companies for granted and invest most of your time and resources chasing capital attraction. But, just as I learned managing successful brands, you ignore the health of your core at the risk of your community’s economic prosperity.

Consider conducting a lunch & learn with your colleagues to evaluate where you are currently investing your resources. Use the Three Moments of Truth model as a guide to bucket the work.  Once you’ve completed this task and have a list of tactics plus resources identified for each bucket, try to answer the power questions provided above.

If your Organization is typical, you will likely have the following four observations:

  • You are over invested in winning the First Moment of Truth (chasing line extensions and flankers).
  • You are under invested in winning the Third Moment of Truth (supporting current companies).
  • You do not have enough reliable information to answer the power questions even for the largest employers in your community.
  • You will realize your community’s economic core is at risk and you need to make different strategic choices to address the challenge (even if it is simply to gather the data needed to better understand the satisfaction level of the company CEOs currently in your community).

Talk about what changes to your current program might make sense based on what you just learned, and then execute the few you believe will have the biggest impact.

PAY IT FORWARD

If you liked this blog post forward it to a friend. If you have a Facebook account, become a fan of Strengthening Brand America. If you are a LinkedIn user, join the Strengthening Brand America Group. If you like twitter, follow BrandAmerica to keep track of updates on this website.

What do you think of this post?
  • Awesome (0)
  • Interesting (0)
  • Useful (0)
  • Boring (0)
  • Sucks (0)

3 Comments  |   Forward this to a friend Forward this to a friend   |   Number of emails sent: 545

Category Place Brand Building, Strategy

Bookmark and Share

You can follow any responses to this entry through the RSS 2.0 feed.

3 Comments so far

  1. Ken Wessel

    April 3, 2011

    Ken Wessel • My understanding about branding began with my role as lead designer of the P & G Manufacturing Center in Lima, OH and continued in my role as Manufacturing Brand Manager as leader of operations for six years and as member of first three Brand Leadership Teams.

    My role in designing and leading manufacturing operations that established ERA and liquid laundry detergents (following direction from Steve Donovan our team leader) developed a solid base of branding theory and practice that has become essence of The Leadership Development Forum, my internationally regarded approach to developing leaders.

    Essential elements of LDF include:
    -Being true to core values and investing them in creating an attainable vision.
    -Leading design of a high performing business organization (Lima is #1 in this category.)
    -Creating stakeholders (employees, customers, owners, society and suppliers) and direct engagement with them to understand true needs that sustain a viable existence.
    -Design and implement value adding processes and value chains that meet needs of the system of stakeholders.
    -Establish a boundary/interface that excludes entities that distract attention, and extract energy, resources, talent and innovative approaches from VAP’s and value chains and network with sources of value that enable the enterprise.
    -Initiate and establish change as a cultural norm.
    -Learn from own experience as means to understand and master leadership subjects.

    Covey’s “Feedback is the breakfast of champions” is a bit off the mark, a more viable principle is; “Create a process of shared influence in establishing standards, goals and metrics that track them and partner in measuring conformance and initiating corrective actions as needed.”

  2. daigoumee

    April 25, 2011

    Superb blog post, I have book marked this internet site so ideally I’ll see much more on this subject in the foreseeable future!

  3. Helena Rein

    November 4, 2014

    A great study has assessed the relationship of relational marketing tactics and customer loyalty in retail banks. http://www.ibimapublishing.com/journals/JMRCS/2014/724178/724178.html

3 Responses to “Lessons From Loyalty Marketing”




XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

By submitting a comment here you grant Strengthening Brand America a perpetual license to reproduce your words and name/web site in attribution. Inappropriate comments will be removed at admin's discretion.

SBA Blog