Continuity Programs Create New Revenue StreamsWith more companies seeking to maximize return on their marketing investments in this sluggish economy, executives should consider continuity-marketing programs. These programs can cost-effectively help a company generate recurring revenue as well as build customer relationships and loyalty.
In general, continuity-marketing programs involve persuading a customer to agree to receive regularly scheduled shipments of a company's products, such as collectibles, literature or food. Often, a customer's credit card is automatically billed for each purchase.
In addition to generating revenue, continuity marketing makes financial sense. According to recent reports by research firm Gartner Inc., the cost of keeping a customer is only 20 percent of the cost of finding a new one. For a customer, continuity marketing provides a chance to pay for a product in installments rather than a lump sum.
Most continuity offers are closed-ended, in which a company sends a specified number of its products during a predetermined period of time, or open-ended, in which a company ships an unlimited number of products on a predetermined basis until the customer cancels the agreement.
Other continuity offers involve a negative option, a concept engineered by the founders of the Book-of-the-Month club, in which a company sends an announcement of a forthcoming book along with a slip that lets the customer return the book or request a different one. If the customer misses the deadline for submission of the return, he or she must keep the book - a step that typically doesn't fall under the classic definition of continuity marketing.
The challenge is getting a customer to keep and buy the highest possible number of its product shipments. The first part of the challenge, however, is simply to get the product in the hands of that prospective customer for consideration. This is growing increasingly difficult for several reasons.
Most significantly, the Internet has created a more competitive marketplace by increasing the number of communication channels that companies can use to reach potential customers. Furthermore, it has created a more mature customer by providing access to a multiplicity of options for purchases.
The manner in which a company positions its offer and the tools, the words and even the number and type of reply choices it provides can make or break a sale. To ensure a continuity program's success, a company should follow some basic guidelines:
· Give the ability to apply by mail, phone or Internet. The more options a company provides, the greater its chance of a sale.
· Include interactive, creative elements such as stickers or scratch-off pieces that customers can use to request a premium or accept an offer.
· Avoid using the phrase "order form." Instead, refer to the form as a claim certificate, reservation ticket or claim voucher.
· Include a quality product sample or gift.
· Make the first shipment free or low-cost.
Continuity marketing can generate recurring revenue and build customer relationships and loyalty. As the marketplace grows increasingly competitive, companies that do will be positioned for continued growth and success.