Initially, marketing was about acquiring new customers. Then, it evolved to acquiring and retaining them. But now, it’s about how far you can go with the customers you already have.
Your business can only survive if you adapt your marketing methods to the changing times. Gone are the days when all you had to do was to bring a new customer on board and leave the rest to your customer support team. Customers have evolved, and so have the times.
Say hello to customer marketing, the marketing formula that all businesses of today need to know.
What is customer marketing?
Customer marketing is a form of marketing that targets your existing customers rather than targeting potential customers. So, it functions throughout the entire lifecycle of the customer.
Here are a few ways customer marketing can come into play:
Let’s say a new customer has just bought a product from you. You might promote other products and services that the customer could also be interested in. Or, you could share upgrade options for the product they have.
You realize that some customers love your brand so much that they recommend it to their friends and family. So, you figure starting a formal referral program, where they’re incentivized for recommendations, is a great way to promote your brand to a wider audience.
You also consider consistently engaging your existing customers, so they view you as more than just a brand. Use customer marketing correctly, and customers will love interacting with your content and helping you develop and refine products.
This, in a nutshell, is what customer marketing is all about.
How can customer marketing help your business?
Customer marketing can help your business grow in several ways. Depending on the campaigns you run, it can:
○ Foster customer loyalty. Make your business so engaging that customers will want to stay with you and keep purchasing your products or services – more in the next point.
○ Encourage repeat purchases. Increase the value of your business in your customers’ eyes by promoting (or adding) more products and services that your customers might like. Or, encourage customers to purchase upgrades and enhancements to already purchased products.
○ Keep customers up to date about new products and recent brand developments. Customers feel important when you generate buzz or discuss new products and brand developments with them. It makes them feel included and valued by your brand. Take things up a notch by including your customers in the development process. Ask questions or send surveys. What could be added or improved? What would they like to see more of?
○ Turn customers into advocates. When customers promote your brand, it feels more natural, and therefore more genuine and trustworthy, compared to messages that come straight from your brand. When customers function as advocates, your products will find a new audience among their friends, family, and peers.
To foster customer advocacy, you can formally ask customers for referrals in exchange for incentives (provided your customers are genuinely happy and are eager to share about you).
Why leverage customer marketing?
Why should businesses spend time and money marketing to existing customers when there’s plenty of fish in the sea? While attracting new buyers should always be a part of your business strategy, you should also leverage customer marketing to mobilize your existing customers.
Here are some compelling reasons why:
● Customer retention leads to higher profits. A 2% increase in customer retention has the same effect on profits as cutting costs by 10%. So, customer retention rates have a serious impact on your bottom line.
● Existing customers drive more sales than new customers. 80% of your future profits will come from just 20% of your existing customers. Your repeat customers generate around 65% of your sales. And returning customers spend 31% more on average than first-time customers.
● Existing customers are more easily convinced. It’s easier to convince current customers to buy again than to convince new leads to buy for the first time. Current customers are also more willing to try out new products, upsells, or cross-sells as they’ve already bought from you and have an in-depth understanding of your value.
● Customer advocacy is highly trusted. If an existing customer recommends your business to a friend, their recommendation is trusted more than ads that come straight from your brand. People would rather hear reviews and feedback from others just like them. In this sense, customer advocacy is deemed to be a lot more genuine than direct brand messaging.
● Loyalty is a given with referred customers. Referred customers tend to be more loyal than other customers. They have followed your existing customers into the fold, because the trust has already been established. So, it makes sense to have existing customers bring in new customers for you.
● Referred customers have a higher lifetime value. Referred customers spend more and have a higher customer lifetime value. On average, that lifetime value is 16% higher than non-referred customers for the same demographic type and time of acquisition.
● Higher ROI with less effort. Selling to an existing customer can achieve a success rate of 60-70%, while selling to a new customer, on average, achieves 5-20%. And in the realm of referrals, it costs less to bring in new customers via your existing customers. Also, if customers are persuaded to share on social media, one share may reach many potential customers, increasing your customer base – for free.
Types of customer marketing
Based on our research, we’ve identified seven different ways you can leverage customer marketing for your business:
1. Customer loyalty programs
As the name suggests, customer loyalty programs are about rewarding your customer for staying loyal to your brand. “Loyalty” goes beyond just purchases, though. It refers to any brand-building actions that you’d like customers to take to promote your brand, whether that’s through repeat purchases, social shares, or positive reviews.
By completing these actions, customers can earn points to redeem towards incentives of their choice. Often, these incentives are free products or store credits. But in some loyalty programs, points activate insider perks, such as early access to products and sales, exclusive deals, free shipping, or premium membership upgrades.
Sephora’s Beauty Insider customer loyalty program is an example of a tiered structure where the rewards stack up based on how much has been spent:
2. Mass brand updates
Mass brand updates are when you send messages to all your customers and followers at once.
A great example of a mass brand update is your brand’s newsletter. You can use a newsletter to provide product updates, introduce new product or service options, discuss special offers, or promote the latest deals. Or, instead of a comprehensive newsletter, you might focus on sending sales emails and shorter updates instead.
Social media posts also count as mass brand updates, since every customer who follows you can see them. They’re a great place to share sales and make big brand announcements.
Sales offers, deals, and upcoming discounts motivate customers to stay vested in your brand and can also result in repeat purchases.
MOO’s mass sales email looks simple. But it’s effective. The email leverages FOMO by appealing to urgency, and encourages existing MOO customers to take advantage of the sale before it’s too late.
3. Targeted email marketing
Targeted email marketing is a more exclusive version of the mass update method. With segmentation, you can separate customers into targeted shortlists based on certain values or qualities.
For example, you can have one list for people who are on your free membership plan, and another for your mid-tier paid plan. The sales messages you send to each list need to be adapted to seem personalized for the clients on the specific lists. So if they’re on the free plan, you can send promotional emails showcasing the benefits of being on the paid plan or incentivizing them to upgrade through an exclusive limited-time discount.
Depending on the segment, you may also promote add-ons to enhance the product they already have, or upgrades to their product or service plan.
Higher category members, or the VIPs on your list, can be offered exclusive sales deals, discounts, and early access to new product updates.
Buffer’s email is an example of how a SaaS brand can sell an annual plan by making the content wholly customer-centric. The email talks about how the switch can benefit the customer in terms of costs, as they’re already purchasing a more expensive monthly plan.
4. Customer referral programs
A customer referral program encourages your customers to recommend your products to friends and family directly. Ideally, you want to create a formalized customer referral program using referral software, so you’ll have a way to manage and track your efforts. Plus, it will make the overall experience user-friendly for your customers.
Using the software, you can create trackable referral links for your customers, so it’s much easier for them to refer their friends. These links will record which customers are responsible for each referral, and automatically reward your customers when their referrals are successful.
Starting a referral program, and promoting it to existing customers, should form a vital part of any customer marketing strategy.
Sock brand Bombas provides clear, easy-to-follow instructions on how to sign up for their referral program and get benefits. Customers can sign up simply by clicking the “Refer a Friend” button.
5. Customer-ambassador programs
Customer-ambassador programs are a more focused version of a referral program. Most elements are similar, except that customer ambassadors benefit from specialized training on showcasing your brand on social media (or even offline). Training typically involves social media briefings and a review of brand guidelines.
Customer-ambassadors will engage in social media advocacy where they show how they use and why they love your products (beyond sending referrals). So, for example, they’ll embed brand links on their website or within their social media posts. This works similar to referral links.
You’ll want to invite VIP customers who have purchased or shared the most to be your ambassadors, as they’re the most vested in your brand. The purchase pattern is evidence that they enjoy your products and keep coming to your brand as their first preference.
If you have a referral program, the ambassador program should offer more valuable rewards than the referral program. The ambassador program is a more “exclusive” version of the referral program, after all.
Check out Yelp’s ambassador program below, reserved for their top reviewers.
6. Encouraging user-generated content
User-generated content (UGC) is content that’s created by your customers featuring your brand, which they post on their social media channels. When current customers create user-generated content, they highlight your brand among their friends, family members, and everyone on their network. It’s a simple but effective way to get your brand in front of a new audience with very little marketing spending.
You can encourage user-generated content by asking fans to share branded hashtags and offering to feature the best content on your core business pages with creators’ permission. You can also kick off contests to encourage sharing, where the winner or winners get a valuable prize.
Starbucks deployed a similar content strategy for their #WhiteCupContest campaign. Users were asked to decorate Starbucks cups and share the images on social media. The prize offered was a $300 gift card.
7. Encouraging reviews
Positive reviews are one of the biggest indicators of brand love. You want to make asking for reviews a habit at all the touchpoints of the customer journey. For example, you might ask after a sale, or after customer support helped a customer through a problem or concern.
Reviews also have another benefit in terms of Google rankings. They add to your relevance for customers who are searching for products and services similar to yours.
Ask for reviews when your customers are at their happiest. That’s when they’ve given you some positive comments or if they keep making repeat purchases.
You can automate the process of asking for reviews with email templates that are triggered once a specific action has taken place. Here’s an example from Etsy, requesting a review from a customer right after the item was received: