Bringing in new business is and always will be important. However, marketing doesn’t end when the ink is dry on the contract. Where are you focusing your efforts after that initial sale?
Your new customers shouldn’t disappear into a black hole, never to hear from you again – that initial transaction should be the start of their defined customer journey, complete with strategic touchpoints for success.
You might be familiar with these oft-quoted stats:
- It costs 5x as much to obtain a new customer than to keep an existing one [Invesp]
- Increasing customer retention rates by 5% can increase profits by 25% to 95% [research by Frederick Reichheld of Bain & Company]
As made clear, many companies are leaving money on the table if they don't continue marketing to existing 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. Let’s explore three reasons why you should hone in on marketing to your existing customers.
Why Smart Businesses Dedicate Resources to Customer Marketing
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. But transforming customers into loyal advocates is a delicate job that relies on various departments (including customer marketing, success, and support) working together effectively.
Customer marketers play a vital role in this initiative. Their tasks are tied up with lead generation goals, net promoter survey results, customer education initiatives, support ticket resolutions, case study interviews, marketing email lists, and so much more. That being said….
We should all stop for a moment to give customer marketers a big round of applause.
They’re key to encouraging customer renewal, increasing upsell revenue, and increasing new customer acquisition, so it’s important to allocate resources to them.
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 you should be marketing to existing customers. Let’s explore how to:
- Increase retention
- Increase revenue
- Increase acquisition (through customer advocacy)
1. Increase Retention
Retaining your customers involves a lot of components, but customer marketing 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.
When you can illustrate your value by including educational material in your marketing messages, you’ll help improve retention. The best-case scenario is that material would be tailored to each customer and relate to their current investments with your company. This might mean sending customers who purchased one type of software information about overlooked features and tools within the software they have.
This sounds hard to do manually, right? Right. Engagement tools like online community integrated with your CRM help your customer marketing team get the data they need to send out personalized communications to each specific customer segment. After you get the data, another engagement tool hops in (marketing automation) to help your team create those personalized nurture workflows for each customer segment.
By providing your customers with educational material on best practices, you open the door to additional marketing messages. I mean, just consider this finding from Gartner Group research:
- Nearly two thirds of surveyed tech buyers they said they would purchase more from existing providers if they saw value from their initial investment being clearly demonstrated.
(Wow. Well, that was a nice segue into our next point: increasing revenue.)
2. 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.
Back to that research from Bain & Company we quoted earlier – it’s also more profitable to upsell current customers than to acquire new customers.
Why? 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, but you can skip this step with existing customers since you’ve proved yourself to them.
Consequently, any sales you make to existing customers costs 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 up-sells, cross-sells, upgrades, and add-ons that build on the customer's current products. Customers tend to be most interested in improvement and enhancement offers, which are more likely to result in both improved retention and additional sales.
3. Increase Acquisition (Through Customer Advocacy)
The final reason to do customer marketing? Customers’ power to influence your prospects. By involving happy customers in your sales and marketing processes, you can attract prospects, convert them into leads, and 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 also often willing to tell their success story with your products in blog posts, social media posts, interviews, video testimonials, and at conferences. These testimonials provide social proof and help to draw new prospects into your lead funnel as well as give buyers confidence in your solution as they make their final selection.
If you have an online community that’s open to prospects, customer advocates can continue interacting with leads throughout the decision-making process, helping you close a new customer.
You don’t want to ask customers to be your advocates out of the blue. It’s like popping the question. You should be sure this is where the relationship is going before getting down on one knee.
Your solution? Engagement tools. They provide the crucial data you need to understand how engaged a customer is. Have they opened and interacted with your automated email campaigns? Did they just recently post an angry message in your customer community? How many support tickets do they have open? The more data you have, the more empowered your customer marketer is to select the right advocates.
Effective customer advocates have a big impact on your lead generation and acquisition. By owning this environment and process, you can more easily showcase your customer success stories to prospects.
What’s the Takeaway? Invest in Customer Marketing
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, and tapping into a powerful source of business growth.
Marketing to your current customers is a game changer for companies who want to tap into these benefits, ranging from a higher retention rate to increased revenue to more customers. Don’t leave that money on the table.
If you’re struggling to maximize the value you know is there, maybe it’s time to enlist help. Engagement tools like online community software can provide you with the data you need. Check out our free eBook: Transform Your Customer Marketing with Online Community to learn more.
Editor’s note: This post was originally published in April 2016 by Julie Dietz. It has since been refreshed to make sure we’re bringing you the latest and greatest.