For marketing leaders, it’s essential to demonstrate commercial acumen, by having an awareness and understanding of not only your role and department but that of the wider business and its financial growth.
Particularly in the world of retail, which is continually evolving, marketers are hard-pressed to keep up with what their customers what, need and desire. Although competitive pricing and irresistible offers can attract new customers, it can also create a ‘race to the bottom’ – which no business can win.
But by stepping outside of the established marketing channels, secondary revenue streams generate a clear return on investment and open new touchpoints for existing and potential customers.
Similar to how the airline industry turned to sell baggage, car hire and insurance to boost their bottom lines, the retail industry is adopting secondary revenue streams. Seeking additional income outside of traditional revenues, retailers are now selling advertising on their websites, offering loyalty and affiliate marketing programmes as well as premium third-party loyalty programmes.
This trend is not new to the retail industry or the marketing profession, as research from our Beyond the Core II report has shown that 46% of retailers now generate at least 10% of their turnover from secondary revenue sources. It also highlighted how successful these additional streams are – with 75% of companies with a defined secondary revenue strategy experiencing a growth in their profit margins.
A good example of this is fashion retailer Boohoo, which started selling its products through Asos to raise its brand awareness and generate additional income. Providing benefits for both businesses – Asos which gains a referral fee, and Boohoo that reaches a new audience – the secondary revenue stream has been in place since an initial trial began in 2015.
Another interesting use of secondary revenue technology can be seen in the restaurant industry, where the Karma food waste app helps restaurants reduce their food waste but also generate a valuable new form of income. The app offers discounted meals to customers that would previously have been spoiled and wasted.
Not only in the retail and restaurant sectors, secondary revenue streams are also used by hotels and gyms to provide conference facilities and host specialised fitness classes. Both use their existing space and facilities to offer a new experience for customers and generate extra revenue. These methods require very little investment by the businesses and offer a clear return on investment.
Of course, these partnerships and other secondary revenue methods, such as loyalty programmes, require the extensive knowledge of customer behaviours and values, and are therefore linked closely with the role of the marketer.
With the marketing team playing a crucial role in developing and monitoring the progress of secondary revenue streams, their success can be evaluated and recorded, similar to ancillary revenue in the airline industry.
Adding real value to the bottom line of a business should be the focus of all marketing professionals keen to demonstrate their value to a business. By implementing successful secondary revenue streams, they can showcase their commercial skill set and support the growth of the wider business to help drive the company forward.
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