Usage-Based Marketing - Anything New Here?

This article was forwarded to me by Terry Ribb at Relevens. See my comments in the summary below.

Marketing's New Frontier: Intelligence After the Sale
by David Edelman, Partner Leading Digital Marketing Strategy Practice, McKinsey & Company

I was just speaking at SAP's impressive Sapphire Conference, a massive gathering in Orlando of their customers and partners. What struck me as I listened to the other presentations was how much everything in the technology field is becoming real-time and on-demand. So much of the software that’s now going to the cloud becomes data that can then be analyzed to understand usage, see trends, or target marketing messages. The implications are immense. With the customer decision journey lens I usually use, this trend means more resources and emphasis will finally shift towards helping customers after purchase by finding opportunities through "product data analysis" to further build satisfaction and engagement with the brand.

For example, if a company is able to track how customers are or are not using features of their software, they can immediately launch programs to help people make better use of their services, e.g. send a prompt to try a feature that someone has not used yet or offer a promotion to someone whose usage has slipped. Going further, an NFC tag on an item that activates an app on your mobile phone when tapped could change when the item is on a store shelf versus after it is purchased. Once home, tap the tag and it shifts from hyping the product to now providing a video on how to use it. Tap it a few months later, and your phone shows new ways to use the product that others have posted.

When done as a way to enhance the customer experience and build loyalty – i.e., done in a way that isn’t spam or like creepy spying – then marketers can build real and helpful connections with customers. For software companies, this opens up massive opportunities for CRM programs that have just not been there before. For sales and service partners, this opportunity will create a lot of complexity as the ownership of the customer relationship becomes less clear.

An important implication of this development is that marketers need to be involved in the software development process to highlight those “tags” that need to be added in order to generate the necessary data. And legal has an important role, of course, to balance the needs of privacy. As data keeps flowing after the sale, instead of stopping at the sale, there are new opportunities for touchpoints throughout the journey.

How much are you investing in usage-based marketing? Is it paying off in higher satisfaction, loyalty, and advocacy?

One part pre-sale marketing, plus one part post-sale marketing, plus two parts technology and you have Mr. Edelman's recipe for "usage-based" marketing. Other than the use of technology, how is any of this really new and/or different? Sure technology helps collect, sort and analyze pre- and post-sale data, but the importance, need and value of marketing towards customers post-sale has always been present and considered by many a best practice. Do the terms cross-sell and up-sell come to mind? In my mind, all of this boils down to how bad a company wants to build retained business, referred business, long-term customer loyalty and positive word-of-mouth. Yes, Mr. Edelman's scenario sounds slick and makes perfect sense but, in reality, it's Marketing 101, or should be.

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