We've seen a surge of articles talking about a pervasive problem with marketing strategies: overemphasis on acquisition and lack of focus on current customers. But is it true? Are marketers really overlooking current customers?
A recent Regalix survey indicates that they probably are. The survey found that the top marketing goals for 2016 are increasing revenue and generating more leads, while goals surrounding current customer engagement fall lower on the list of priorities.
Bringing in new business is and always will be important. However, marketing does not end when the ink is dry on the contract. Many companies are leaving money on the table if they don't continue marketing to customers once they make an initial purchase.
Engaging current customers positively impacts overall business goals in several ways, including increasing revenue by generating opportunities for sales of additional products and services. The problem is that not enough companies connect these top goals with customer marketing.
Why Smart Businesses Market to Current Customers
Top performing businesses understand that when the right marketing messages reach current customers at the right time they can have a measurable impact on revenue goals and customers' lifetime value. While every business is unique and the things that people want their customers to do after they become customers can vary from organization to organization, there are three main reasons behind marketing to existing customers.
Reason #1) To Increase Retention
When done right, marketing to current customers can increase retention by reminding them of your company, its products, and their value. Being at the forefront of your customers' minds reinforces your relationship with them, making them more likely to stay with your company.
Retention is further improved when you illustrate your value by including educational material in your marketing messages. This material should be tailored to each customer and relate to their current investments in your company. If a customer purchased software, send them information on overlooked features and tools within the software that they could use.
According to research from the Gartner Group, existing customers want to receive this kind of marketing content and advice on how to get the most out of their purchases.
By providing your customers with educational material on best practices, you open the door to additional marketing messages. The research shows that as long you provide educational material first, 72% of customers actually want you to follow up with additional, customized marketing offers.
Reason #2) To Increase Revenue
Current customers are generally more reliable buyers than new customers. As you increase upsell, cross-sell, and other marketing offers to existing customers, they're more likely to purchase new products or upgrades. Research from Bain & Company also shows that existing customers are also more likely to spend higher amounts of money on this kind of repeat or additional transaction.
As current customers receive educational messages that motivate them to stay loyal and make additional purchases, you increase revenue. Do this right, and you could see a 20% increase in revenue just by marketing to existing customers
Revenue can increase so significantly because current customer purchases have higher margins than those of new customers. With new customers you need to spend time and money explaining your company, your offers, and your value.
You can skip this step with existing customers because you have already established a relationship with them. They already know you, and hopefully they already trust you. Consequently, any sales you make to existing customers cost you less than sales to new customers, which leads to higher overall revenue.
The key is to continue to focus on what customers have already purchased. Presumably, they went through the purchase process to help achieve a specific set of goals. Your new offers should be upsells, cross-sells, upgrades, and add-ons that build on the customer's current products. Improvement and enhancement offers interest your customers the most, and are more likely to result in both improved retention and additional sales.
Reason #3) To Increase Acquisition Through Customer Advocacy
The final reason behind marketing to current customers is their power to influence your prospects. By inserting happy customers into your sales and marketing processes, you can attract prospects, convert them into leads, and even nurture them until they become customers. This begins as satisfied customers spread the word about your company to their networks and business circles.
Current customer advocates are often willing to tell their success story with your products in blog posts, interviews, video testimonials, and at conferences. These testimonials provide social proof, and help both draw new prospects into your lead funnel and give buyers confidence in your solution as they make their final selection. In your online community platform, customer advocates can continue interacting with leads throughout the decision-making process, helping you close a new customer.
When your organization begins to focus on marketing to current customers and providing them with fresh offers, you also provide current customers with new information for these advocates to discuss with their friends. The combination of success stories, new products, and conversation creates a compelling purchase environment for your prospects.
Effective customer advocates have a big impact on your lead generation and acquisition. By owning this environment and process, you can more easily connect customer advocates with prospective customers.
Marketing to Current Customers Takeaway
Relationships and communication with existing customers have a tremendous effect on your organization. You can increase revenue by focusing more on marketing to existing customers, improving customers' lifetime value as well as tapping into a powerful source of business growth.
To get the most from this group, start by gathering customer purchase and activity data, then use it to create a customized marketing plan. Tailor each marketing message to contain educational material relevant to each customer, and make sure that new offers relate to past purchases. You'll nurture repeat business, sales, and advocacy as you do so.
Remember, getting existing customers to convert on actions that are important to your company is easier than marketing to prospects. And the results of effective marketing to current customers will help you fulfil core goals such as increasing revenue and improving customer retention.