OK, so you’ve made all the right moves and built a strong, recognized brand Now what? Don’t make the mistake of many companies who rely on existing brand recognition to carry them forward. Rather take your recognized brand equity and leverage it into new strategic partners, broader and deeper customer relationships, and new products and services.
The fastest path from brand recognition to brand dominance is to continue to advance your brand by venturing or partnering with other companies who can help you increase revenue and customer satisfaction with a short time to market considerations.
Once you establish a solid distribution channel with a loyal customer base the best thing that can be done is to use the already existing distribution channel to drive new products or services to your existing customers. Why expand existing relationships vs. secure new ones? Following are the two biggest reasons why leveraging existing customers makes more sense:
1. A lower cost of acquisition: It is much less expensive to sell to existing customers than to develop new business. You already have identified them and established credibility with them. This level of recognition will dramatically shorten your selling cycle when contrasted to the cost and time frame associated with securing new customers.
2. Deepening customer relationships creates competitive barriers to entry: I recently audited a marketing class at my daughter’s university and during the class, it was mentioned that existing customers “pay, stay, and refer” which I thought was very well said. The more touchpoints and positive experiences that a customer can have with your company the less likely it is for a competitor to take them away.
It is not as difficult as you may think to create line extensions. You don’t necessarily have to create a new product or service offering on your own as you can always utilize strategic partners or joint ventures to shorten your cycle time. The good news is that with a recognized brand it is much easier to create these relationships than if you have a brand in stealth mode or a brand in decline.
Consider Starbucks A brand at the top of its game, but yet the company is not resting on its laurels. Starbucks recently announced (June 1st) the hiring of Alan Mintz as its new vice president of content development for its entertainment division. Mintz a former entertainment attorney and music executive (and I presume a big coffee drinker) is charged with creating exclusive content agreements in the music and film business so that Starbucks can sell additional products to its existing customer base. Starbucks has already inked exclusive content deals with popular artists such as Bob Dylan and Alanis Morissette and recently entered the movie business, working with Lionsgate Entertainment Corp. to promote the film “Akeelah and the Bee.”
Further examination of Starbucks strategy shows that they are very tuned-in to their customer base. By understanding segmentation, reach, pricing, demographics and other key metrics Starbucks was able to leverage the strength of their brand into other business relationships that spawned the creation of additional products and services.
All it takes to create a solid venture around the concept of line extensions for your company is mirror the above example set by Starbucks. Take the time to really understand your customer base. If you are in touch with their needs and desires it will be easy to find a partner who can help you add new products or services which in turn will increase customer satisfaction as well as your brand equity.
