Driving Revenue Growth via Sticky Strategies

Sales and marketing strategies (as described in my previous blog) focus on spending money to drive new customers to buy product. Sticky strategies are designed to increase the lifetime value of each existing customer (called CLV, customer lifetime value). These strategies include concepts such as (1) upselling, where you make efforts to convert customers buying lower priced goods and services into those buying higher priced goods and services; (2) enhanced customer experience, so fewer customers cease being customers (i.e., the goal is to raise retention rate), and (3) rewards programs, to reward customers for frequent purchases.

Freemium pricing is a special case of upselling in which you offer some services for free and entice a subset of them to upgrade to a richer set of features at a premium price. The philosophy is three­fold: (a) once some customers see how great the subset of features are, they will want the full set, (b) once customers experience what a great company it is, they will want to do (real) business with you, and (c) you have access to the non-paying customers’ eyeballs and contact information, and so you can carefully “sell up” to them.

Treacy and Wiersema [TRE93]’s concept of customer in­ti­macy is another technique for maximizing long term value of customers, as opposed to deriving the most out of any one transaction with customers. Start-ups can create strong customer loyalty by implementing cus­tomer intimacy as one of their core practices. Established companies with this strategy include the Broadmoor Hotel, Nordstrom, and Whole Foods.

The above extracted from my latest book, Will Your New Start Up Make Money? Buy your copy in Kindle or paperback format at http://www.amazon.com/Will-Your-Start-Make-Money-ebook/dp/B00JOOZQNE.