- What is customer marketing?
- What are the benefits of customer marketing?
- How do you create a customer marketing strategy?
- Step 1: Defining Your Customer Marketing Objectives
- Step 2: Understanding Your Customers
- Step 3: Developing Your Customer Marketing Strategy
- Step 4: Implementing, Measuring and Refining Customer Marketing
What is customer marketing?
Customer marketing — also known as relationship marketing and one-to-one marketing — seeks to retain and grow profitable relationships with existing customers as opposed to acquiring prospective ones. As such, it places the customer at the center of marketing initiatives and focuses on programs that build retention and loyalty to grow long-term, profitable customer relationships.
Customer marketing is a multi-faceted discipline, incorporating an array of tools, tactics and channels, including:
What are the benefits of customer marketing?
Specifically, customer marketing offers some tangible, profit-related advantages compared to focusing on acquisitions. For example:
- Keeping a current customer is anywhere from 5 to 25 times less expensive than acquiring a new one.1
- Increasing customer retention by 5 percent can yield profit boosts of 25 to 95 percent.1
- A current customer has a 60 to 70 percent probability of buying from you versus just 5 to 20 percent for a prospect.2
- Repeat customers may spend as much as 60 percent more per transaction than newcomers3
How do you create a customer marketing strategy?
The process you follow to develop a sound customer marketing strategy and supporting campaigns can also inform your new customer acquisition plans. It all begins with these four steps:
Step 1: Defining Your Customer Marketing Objectives
Most customer marketing initiatives center on one or more of the following strategic objectives:
- Increase customer engagement and loyalty
- Increase customer retention (and decrease customer attrition)
- Manage your customer lifecycle from consideration to purchase and onward
- Promote usage, cross-sell and/or up-sell of products or services
- Identify and leverage trigger moments in a customer’s lifecycle or purchase journey
Step 2: Understanding Your Customers
The first step of the customer marketing process is to understand your customers using research and analysis. The main goal of this step is to gain customer insight so you can turn that insight into action.
A great place to start is with customer satisfaction research. For instance, review results from your customer satisfaction surveys to uncover common points of friction that may be affecting customer retention — or uncover new product opportunities. You may find a recurring issue related to customer service or spark ideas to enhance the customer experience.
Customer research can also help understand your customers’ needs. That will allow you to better inform engagement, retention, lifecycle, loyalty, cross-sell, up-sell and trigger marketing strategies.
Customer data — such as names and postal addresses, email addresses, purchase history, etc. — is another potential source of insight. You can use customer segmentation on your data to divide customers into groups based on shared characteristics.
A basic segmentation of customers might involve recency, frequency and monetary (RFM), grouping customers based on how recently they’ve made a purchase, how frequently they’ve made a purchase and how much they spend.
Customer segmentation can also involve more sophisticated techniques like clustering algorithms and predictive modeling. Clustering algorithms, for instance, statistically cluster like customers together in groups so that they share the greatest number of variables in common (i.e., age, income, purchases, purchase channel, etc.).
Hundreds or even thousands of data variables can be employed to help create unique customer segments. Creating a persona or profile to describe each segment can be very helpful to make segments more “real” and actionable. Below is an example of two persona overviews.
Data mining techniques such as predictive modeling can also be employed to help you find customers most likely to take a particular action — such as their most likely next purchase, based on their past purchase history. For example, a home improvement store could use predictive modeling to identify customers who appear to be embarking on a kitchen remodel and predict what their next purchase might be.
All this research and analysis work can form a solid foundation as you craft a retention and cross-sell strategy. For instance, it can give you the insight needed for targeting your messaging and offers, as well as increasing personalization — both proven tactics for increasing customer engagement.
Case Study: Proflowers — Enhancing Lifetime Value
Proflowers.com recognized early on that it needed to retain customers to ensure long-term profitability. The company turned to CCG to help it design and implement a customer database solution as well as analyze its customer base, create customer segments, determine lifetime value and develop strategies to grow and retain this critical base of business.
CCG worked with The Great Indoors to develop more profitable customer relationships through the use of detailed transactional analyses and data mining techniques. To achieve these goals — for example, those customers whose transactions indicate they are working on a significant home project or remodel.
Step 3: Developing Your Customer Marketing Strategy
Your specific customer marketing strategy will depend on your objectives. The following table provides examples of strategies and tactics for common customer marketing objectives:
Step 4: Implementing, Measuring and Refining Your Customer Marketing Strategy
Finally, you’re ready to deploy your customer marketing initiative. But that doesn’t mean it’s time to sit back and relax. Rather, it’s time to track and measure the performance of your initiative going forward — then use that data to continually refine and improve your customer marketing strategy.
Without tracking and measurement, you can’t objectively define what’s working and what isn’t. It can help with everything from budget allocation, to offer development, benefits mix and much more. As time goes on, your data will give you year-over-year insight that can allow you to make data-driven plans rather than relying on what you did in the past, gut instincts or competitive pressures.
Add some testing into the mix, and you have yet another tool to help you zero in the best ways to keep improving your results. For instance, you can lay the groundwork for determining the impact of your customer marketing strategy by employing test and control groups. Your test group will be comprised of customers to whom you send all related customer marketing campaigns. Your control groups will be a “hold out” group of customers who do not receive the marketing.
Keep Your Customers to Keep Growing
No one will ever question the need to keep bringing in new customers. But if you aren’t also keeping those customers, your base (and your business) will never grow. At CCG, we are dedicated to pursuing this cause for our clients. Simply put, we have a passion for helping you create long-term, profitable customer relationships.
1 “The Value of Keeping the Right Customers,” Amy Gallo, Harvard Business Review, posted Oct. 29, 2014, https://hbr.org/2014/10/the-value-of-keeping-the-right-customers, accessed July 27, 2017
2 “Customer Marketing,” Influitive.com, https://influitive.com/dictionary/customer-marketing/, accessed July 27, 2017
3 “The Importance of Customer Loyalty in Retail,” Rami Karam, Lightspeedhq.com, posted Sept. 16, 2015, https://www.lightspeedhq.com/blog/2015/09/the-importance-of-customer-loyalty-in-retail/, accessed July 24, 2017