We are all obsessed with the top of the funnel. Bringing people in the door and acquiring new customers. We’ve always been this way inclined. Haven’t we? To some extent, you can understand why. After all, we can measure the return on advertising spend (ROAS). In fact, we’ve become obsessed with this, and in my mind, it has been to the detriment of taking a longer-term view of customer lifetime value and promoting our brand values.
How To Manage Your Relationship With Your Customers
The funny thing is, we’ve been talking about customer relationship management (CRM) and personalisation for as long as I can remember. But here we are in 2022 and how many brands that you buy from are making any real attempt or any attempt whatsoever, to build a relationship with you?
Make a purchase online and you will be quite literally spammed with daily emails trying to sell you more stuff. There is almost zero attempt to create meaningful engagement driven by more personalised communications.
Now don’t get me wrong, I fully accept that no business can survive in the long run without new customers, however, retaining existing ones is your best chance of a profitable and sustainable business.
However, to achieve this, we need to move from push to pull communications. As mentioned above, when you buy from a brand today you get nothing but endless emails trying to sell you more stuff. No added value, no ‘we know who you are and what you like, therefore…’ – it’s push – push – push communications all the way. This doesn’t just happen in retail.
Why when you’ve been to a restaurant is there no real effort made to bring you back? Or to encourage you to eat there more frequently. Why when most of us buy cars on contracts, do we not hear from the car dealer until a matter of weeks before our contract is up? If indeed we hear from them at all! In fact, why do car dealers never make an effort to find who else is in our life that they might sell a car to? After all, I have a wife and two kids, all of whom drive.
This all seems contrary to what from my perspective is a common-sense approach.
Advantages of Taking a Customer Centric Approach
There are so many advantages and benefits of focussing on existing customers. Here are just a few:
It costs up to seven times more to attract a new customer than to keep an existing one.
Room for improvement
Feedback from existing customers can be used to improve your offering and overall performance and levels of service.
Better conversion rates
Existing customers are repeat customers and they will likely buy from you again. Your current relationship with them allows you to be familiar with their needs.
Existing customer sales are less price-focused. And, since you have established trust with your current customers, it’s much easier to upsell and cross-sell to them. According to the Harvard Business Review, a 5% increase in customer retention will lead to a 25% to 95% increase in profitability!
With current customers, there’s no need to push aggressive marketing at them since they already know you and the nature of your products or services. This will ultimately reduce your cost of marketing.
Existing customers drive acquisition
Word of mouth and what other customers say will always be trusted more than your own marketing activity. You need to leverage existing customers more to spread the word about your brand.
The obsession with ROAS and acquisition marketing has to my mind dumbed down how we communicate, and we’ve forgotten the importance of extolling our values as a brand. What we stand for, as well as why we’re different from anyone else. And if we really want to move the needle and turn customers into fans then they need to know who we are, how we behave, what we believe in and why they should see us are more than a brand that just wants to continually sell them new stuff.
Examples of Customer Centric Marketing
Brands that recognise the importance of building relationships with customers also look to surprise and delight customers sometimes with random acts of kindness. I received a Levi’s branded face mask early in the pandemic when I bought some jeans online. This wasn’t promoted, I wasn’t expecting it. But it was a very thoughtful and timely gesture.
Look at brands such as Patagonia. They don’t have customers, they have fans. They don’t start by trying to always sell you more products. They start by promoting the causes they care about in relation to the environment and sustainability. They walk the talk. They recently donated the $10m in sales they took on Black Friday to different entities focussed on improving sustainability.
One of their most effective marketing campaigns was when they ran an ad that said, “don’t buy this jacket.’ They were promoting their common threads initiative that spoke to the longevity of their products, the fact they help customers to repair their existing Patagonia gear, they help find a new home for Patagonia products they no longer want and to recycle their Patagonia gear that is worn out.
This is a brand whose values can never be questioned and whose actions support what they stand for. Find me a brand that has a better customer lifetime value in their sector. I doubt very much there is one.
Learn How To Become A Customer Centric Business Today
This article was written by Martin Newman. If you want to know more about Customer Centric Marketing and how being a Customer Centric business can future proof your business as well as increase profit and customer and employee engagement sign up for our Mini MBA in Customer Centricity in partnership with Martin Newman.