I frequently cite the statistic that only 13% of marketing leaders are working to retain and grow customer relationships through improved customer experiences. But now, we exist in the Engagement Economy—a new era, a digital world where everyone and everything is connected—and keeping customers is quickly becoming more important than acquiring them.
This is because the Engagement Economy is rife with business models where the cost for the customer to switch is low. For example, look at ride-sharing apps or even your banking options. Lyft and Uber constantly compete for attention and brand affinity. Meanwhile, Bank of America and Wells Fargo know that, for the right offer, a consumer will change an entirely new financial institution with virtually no headaches. Although it’s on a larger scale, the same paradigm applies to the B2B world, too, where an organization can switch out cloud-based applications with minimal long-term commitment.
Retention Marketing Is Outdated
So what can you do? Smart brands must understand that in order to compete in the Engagement Economy, they must rethink their approach to engaging with their customers. This begins with getting rid of the phrase “retention marketing.” It’s a complete misnomer. Instead, you should think of retention as an outcome of smart marketing across the entire customer lifecycle.
This starts with acquisition—the kind of outreach that you and a majority of marketers are probably already comfortable with—but from there encompasses adoption, cross-sell, and advocacy.
Marketing leaders must strategically market—allocating people and program dollars—across each stage of the lifecycle in order to thrive today and in the future. Let’s take a closer look:
It’s Time to Implement Adoption Marketing
After a person buys a product or service, marketers are prone to two major missteps:
- Immediately trying to market additional products or services
- Entirely stop marketing to their new customer
Either of these errors is a classic case of a brand forgetting that it needs to put the customer first.
The happy medium between these two extremes is adoption marketing—continuing to market to customers in a way that ensures their success, and continues to create and deliver value. This starts with each one of your customers getting the most value out of what they have purchased.
How can you do that? Start by understanding the current state of adoption for each solution/product/capability that a customer has purchased. You can usually get to this understanding through technology—for example, you could use the insights from customer success software, your CRM, and your marketing platform. From there, design a programmatic way—via direct communications, customer communities, education programs, marketing nurture, and more—to provide personalized tips, best practices, and case studies to maximize their value.
Not only is it a nice thing to do, it’s just smart business; the more your product becomes indispensable to someone, the less likely they are to replace you with the competition. And it costs far less to keep existing customers than it does to acquire new ones.
Without some form of adoption marketing, attempting to sell a customer anything else–be it another product or the renewal of a service–is a fruitless pursuit.
Cross-Sell Takes On More Importance
Once a customer is fully adopted (and happy), this is when you can begin to think about selling additional products or services. Cross-sell marketing shouldn’t be something you think of only when you have a new feature or product to announce. It is an integral part of the customer journey and like acquisition, it requires dedicated resources—people and budget. In the Engagement Economy, cross-sell becomes even more important because retention increases when a customer has adopted multiple products.
At its core, the act of cross-selling is rooted in behavior marketing: you need to listen to what your customer does with a product or service, learn what else they need to do their job more effectively, and engage with them by offering them complementary products or services that will provide further value.
A great example of this is Kaspersky Lab, a multi-billion dollar enterprise security software provider (and a Marketo customer). Kaspersky created a Loyalty Behavior Score for each of their customers in order to understand the health of every customer at every stage of their lifecycle based on their adoption. They then use this score to measure their cross-sell and upsell opportunities, engaging with the best customers at the best times to offer new products and services. The net result: they have increased their cross-sell revenue and increased customer retention.
Advocacy—Going from a Customer Like to Customer Love
So you’ve gotten your customer to successfully adopt your product. Happy customers are more likely to advocate on behalf of your brand.
Here are two important criteria for identifying your brand advocates:
- Never confuse customer loyalty with advocacy. We can be loyal to a brand without advocating for it, and this can be due to “locked in” loyalty through airlines, cable providers, software providers, etc.
- Never assume a strong correlation between the most lucrative customers and your best brand advocates. The brand advocate who goes “over the top” to showcase passion for the brand may not be making the big dollar investment, but providing huge value in other ways.
The average company has a very small pool of advocates to choose from. I think of it like the “1 Percent Rule” that applies to content consumption on the internet. In terms of brands with established or fast-growing customer bases, 90% of customers are lurkers, 9% of customers are likers, and 1% of customers are lovers.
Lurkers use a brand’s product or services. As an organization, you have little insight into how the lurkers truly feel about the product because their engagement with the brand is low. These are the customers who are most likely to swap your product for a different one. You’re also not going to get much value out of these customers because it will be difficult to sell them on new products or services.
Then there are the likers. This 9% generally enjoy using your product but do little to advocate on your behalf. Likers provide value to your brand in that they are a more reliable source of revenue, but are untapped potential because they could be (and should be) advocating for you.
The trick is to convert these likers into the final group, the “one percent” of customers, which are the lovers. Lovers are your all-star brand advocates. Not only are they happy using your product, they’re ready to shout it from the rooftops and engage in advocacy activities—from customer references to media opportunities to online reviews. And, in an age where review sites like Yelp carry significant weight, having someone willing to sing your praises is invaluable to your business. If you can move even 1% of your likers over to the lover category, that’s a 100% advocacy increase!
Customers for Life
Keeping the customer for life is essential, but that means that you must engage with your customers at every step of their journey, and do it in the ways that they most prefer. In the Engagement Economy, by approaching customer marketing in the right way, you have a chance to build lasting relationships and win the ongoing battle for the heart and mind of the customer.
Interested in learning more about the Engagement Economy and how it will affect you and how you market? Join me at the Marketing Nation Summit, April 23-26.
This post is adapted from The New Customer Marketing Lifecycle in the Engagement Economy published on MarTech Today.
Published at Tue, 28 Feb 2017 16:00:21 +0000