What is Customer Marketing and How Does it Relate to Customer Success?
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Customer marketing refers to any marketing activity that is directed to your current customers instead of new prospects. The goal is to strengthen customer loyalty and their LTV (lifetime value) through choosing the best approach for each individual customer.
To provide some examples, you could create an online community where existing users can interact with each other or hold educational seminars to share your expertise and help users get better results.
Though the term “customer marketing” has been popping up more these days, the concept of targeting existing clients is not anything new. Still, there has been a growing focus on this business model that aims to lengthen the LTV of each client through cross-selling and upselling, in which customer marketing is key.
Popularization of the subscription model
The subscription market has expanded rapidly with the spread of music and video distribution services. Throughout the pandemic, especially, the number of subscribers to some of the most famous subscription services, like Netflix and Spotify, grew exponentially. And this new wave of subscription-based services is not limited to B2C, but is also being utilized in B2B services, like Slack and Salesforce.
When it comes to these subscription models, the user can stop using the service or switch to a competitor’s tool at any time. This is why the service-provider has to put even more effort into maintaining customer relationships - to prevent churn.
The key to business growth with subscription models is to promote repeat purchases, by upselling to more expensive plans or cross-selling additional products. This is another reason why customer marketing - focusing on current users and marketing to them regularly - is a critical element to the success of subscription services.
Customer retention costs less than lead generation
Have you ever heard of the 1:5 rule? This principle states that the cost of acquiring a new customer is five times the cost of retaining an existing customer. There is also the 5:25 rule, that claims by improving customer churn by 5%, you can increase profit margins by 25%.
Generating new leads and turning them into paying customers takes a lot of time and effort, on top of the costs of ads and other marketing costs. On the other hand, it’s much easier to receive a new purchase from an existing customer who you have already built a relationship with, and at a much lower cost. Considering this logic, whatever your business may be, customer marketing is an important component to incorporate into strategy.
Many people may think of customer success when they think of spending time and attention on existing clients. Customer marketing is closely related to customer success, but let’s take a moment to consider this relationship.
What is customer success?
Customer success refers to the system and organization that accompanies customers in achieving the objectives of introducing a product or service.
The mission of a customer success team is to follow-up on customers after they integrate a solution and guide them in their usage, to make sure that they reach their goals and get results.
And to actually build up strong customer marketing, you need to first gain the customers’ trust in your company through customer success. You need to show them that your company delivers results, and actually form real human relationships with each individual customer.
Next, to help you picture customer success more easily, let’s go over the most common methods used in the onboarding process.
Customer success methods
Customer success is typically broken down into three different models: high touch, low touch, and tech touch. Often, companies will choose a hands-on method, like high-touch, for the VIP customers with the most likelihood for future purchases, and a more distant approach, like tech-touch, for customers that are farther from their ideal target.
The high touch model refers to when the customer success team meets with clients to provide them with 1-1 guidance throughout the whole onboarding process. This method takes the most amount of resources (such as a full team to handle all your customers), and is typically reserved for the customers who bring the most value to the company, like your loyal repeat customers.
Next to high-touch, low-touch onboarding is the 2nd most common method. Low-touch is exactly what it sounds like- a low level of personal contact with customers. However, there still is some level of interaction, but in more of a group setting, like through seminars, workshops, and other educational events.
If you have a large number of customers, low-touch is a good way to progress their onboarding without having to expend too many resources. However, you should still offer some form of 1-1 service, like by handling questions or technical issues personally.
The tech touch model is similar to low-touch, but refers more specifically to handling the onboarding process with no human guidance. Your customer success service is offered digitally, through video tutorials or a community online where questions can be easily asked and answered.
With tech-touch, you can follow up with all of your users, even if you experience a sudden boom in new customers. Also, you can easily combine tech-touch methods with high-touch, by making only certain parts of onboarding achievable online, like setup.
Higher customer retention rates
One of the benefits of customer marketing is that it solidifies customer loyalty. When customers become loyal and attached to a certain service, that they’re actively using it every single day, they are much less likely to switch to a competitor’s service.
To go one step further, you can say that if customer loyalty is increased, the value of each customer grows, and you can expect them to have more repeat purchases and to have a higher LTV.
Word of mouth promotion
Customer marketing can also have the effect of attracting new customers. By increasing customer loyalty, you’re essentially generating fans of your brand who are likely to leave good reviews online and on social media, giving you free exposure.
Also, rather than anonymous reviews, people tend to find the reviews of people close to them to be more trustworthy, and can easily lead to new customers.
Sales cost optimization
You can earn more sales revenue by selling to existing customers rather than starting from zero and advertising to attract new prospects. Sales to existing clients who you have developed a relationship with have a higher success rate, as you might expect.
Build an online community
One of the most effective methods in customer marketing is to build a community online, as in a place where real users can interact with each other freely. Whether it’s your official forum or just a reddit page, if you can create this sort of space then users can share helpful information, solve eachothers problems, and suggest improvements to your service.
You can also strengthen the community even further by setting up events in real life, like a conference or a local dinner party, and build truly strong and lasting relationships with your customers.
Offer free seminars
Plan and host regular seminars to help your customers learn how to better utitlize your services. When customers struggle to use your solution and get frustrated, they may give up and decide to end the contract. Seminars can prevent this from happening by providing each customer with the opportunity to gain the knowledge they need to master your service and get results.
Listen to the VOC
To center your business around your customers, it's essential that you constantly listen to the VOC (voice of the customer), get feedback, and then take action to respond to it. For example, you could receive opinions and complaints at call centers and send out surveys through email. Also, take advantage of social media as a way to interact with customers and show them that you're listening and care about their thoughts.