The Business Case for Customer Marketing
The data you collect from your loyal customers is an untapped goldmine. Utilizing it systematically can make a real difference to your brand’s bottom line.
Customer marketing has the power to transform businesses and change bottom lines. It is a powerful and timely growth tool and a strategic asset in today’s volatile consumer landscape. Leading business consultants such as Gartner and Forrester consider customer loyalty a top priority for marketing decision-makers worldwide.
And the best news is that the foundations for customer marketing already exist within each and every business: data and information about existing customers is constantly collected and stored in the company’s databases. Utilizing it systematically can make a real difference to a brand’s bottom line.
Why Market to Existing Customers?
- They bring in more revenue: “Companies that focus their marketing on existing customers see a 20% increase in revenues.” (Gartner)
- They represent top marketing ROI: “Increasing your customer retention rate by just 5% can lead to an increase of 25%-90% in profit.” (Bain & Co)
- They’re more responsive: “The probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is only 5-20%.” (Marketing Metrics)
Existing customers are a critical driver of every company’s success. Their loyal relationship with the brand means that they make more and larger transactions than new customers, and are responsible for a significant percentage of revenues. In an environment of extreme competition, nurturing these customers is crucial.
According to a cross-vertical study, 60%-80% of top companies’ revenues come from their existing customers. Across all verticals, existing customers have a 13% higher average transaction value. They account for 3.7X more monthly transactions than new customers. Not only that – happy existing customers are the best acquisition strategy out there: most people choose word of mouth as the most important factor in deciding which brands to purchase. The road to acquisition passes through retaining happy customers.
The Challenges for Customer Marketing
Despite its promise and relative ease of implementation, many companies fail at executing efficient customer marketing, or don’t even try. Recent Optimove research reveals that 54% of companies spend more than half their budget on acquisition, versus only 13% who spend more than half on retention. This shows that many companies still lack a systematic methodology for how to best address existing customers and fail to transform the data they have into tangible, actionable insights around which marketing activities can be structured.
Many companies still conduct their customer marketing without the use of appropriate technology. The result is often crude communications with existing customers, with slow execution cycles and rudimentary segmentation and messaging. In these cases, customer marketing depends on BI analysts and data scientists that do not report directly to Marketing. This results in cumbersome marketing execution cycles, where sophisticated campaigns take an exceedingly long time to implement and execute.
To simplify these processes, Marketing often avoids personalization, leading to mass emails that cater to no one’s needs or tastes and end up as marketing clutter. In addition, the wrong metrics are being measured: open-rates and click-through rates are poor proxies for true business performance measurements, and deliver little actual business value.
Getting Started Collecting Loyal Customers’ Data
The data you collect from your loyal customers is an untapped goldmine. Everything you need to conduct cutting edge customer marketing is already within reach. Your customers’ behavioral, transactional, sociographic and browsing behavior data is all stored in your existing databases. Tapping into this data will allow for accurate segmentation, targeting and personalization that is the bread and butter of customer marketing.
Instead of the guesswork you’re accustomed to today, you can segment your customers into small and meaningful groups, allowing you to communicate with each group according to its members’ preferences, tendencies and wants.
The Solution for Customer Marketing
The differentiating factor between lackluster customer marketing and customer marketing that really works is software: it is built from the ground up to nurture your existing clients and turn them into a business and revenue growth engine. Your customer marketing software should bridge the gaps between data, insights and strategy-driven marketing actions. The combination of advanced customer modeling, rapid ideation-through-execution work cycles and accurate marketing performance analysis is what enables automated, personalized, effective and scalable retention marketing.
Best-of-breed customer marketing solutions make good use of predictive analytics, allowing businesses to target the right users with the right message at the right time. Machine learning enables brands to continuously increase the segmentation resolution and personalization of their customer targeting. A centralized marketing hub gives marketers full control of all channels and messaging, including realtime capabilities and perfectly orchestrated multi-channel campaigns.
Getting to know your customers through predictive analytics and machine learning will enable you to improve your communications tenfold and reap the benefits of a loyal, engaged customer base for your brand.
If you’d like to see how we solve this challenge, get in touch!