Here’s an article I wrote for Cool Marketing Stuff:
Prolific podcaster, writer, and all around nice guy, Joseph Jaffe recently released his third marketing book entitled Flip the Funnel. This book mainly focuses on the idea of flipping the sales funnel to focus marketing on existing customers. The reasoning for this shift in marketing strategy is sound: existing customers are far less expensive than acquiring new customers and highly satisfied customers can become a powerful sales force that will attract new customers.
My Review of Flip the Funnel
This book provides a solid argument changing your marketing strategy, although I found it somewhat tedious to read because Jaffe would often switch between straight talk to a overly complicated and corporate-like writing style. I personally think this book could have cut out a hundred pages and been equally effective. I would say about half of the case studies have been beaten to death, but there are also some fresh case studies that you probably haven’t heard of like how CEO Bill Marriott’s blog has earned more than $5 million for Marriott from people who clicked through to the reservation page after viewing his blog.
Shift marketing spend from acquiring new customers to wowing existing customers
Jaffe describes the current norm where disproportionate amount of marketing dollars is going toward acquiring new customers, even though existing customers account for about 65 to 75 percent of revenue. For example just 12 percent of shoppers account for 80 percent of Coke sales. Jaffe writes:
“We pull out all the stops to woo a stranger to sample our wares, yet we ignore the very people who essentially fund our acquisition efforts”
Enthusiastic customers often increase new customers through their recommendations, which could be a more effective acquisition strategy than what Jaffe calls “fishing with a wide net that is full of holes”.
Reward customers for generating new customers
Jaffe advocates rewarding customers who provide referrals or spread the word about your business. This can be a monetary reward or a virtual currency like points. Jaffe writes:
“For the most part – the existing investment into customer referrals has until now been essentially zero.”
“You’ll need to figure out ways to formalize structure and ultimately incent people who are inclined to talk about you.”
Customer service should have its priority elevated
Customer service is often neglected and treated as a cost center even though it is one of the best opportunities to have a direct conversation with your customer. Jaffe talks about the remarkable insurance company USAA, where 95 percent of customers plan to be lifelong members. One employee worked 600 hours of overtime in a year and customer service reps have been known to help customers with totally unrelated issues.
“Give them [employees] the freedom and confidence to go beyond the manual or playbook” to describe how companies can improve their customer service.
Full disclosure: I received a review copy