What Is Customer Marketing? Growth Strategies for Increasing Retention

Founder of Orchid Agency
Mariya Finkelshteyn I
September 20, 2021

The first phase of your startup is a success. You created an innovative product and earned the trust of VCs and investors with a strong team behind you eager to get the momentum going. Now it’s time to put your focus on your customers. 

Most startups, in some cases even mature companies, put all their focus on acquiring new consumers. Indeed, this is a much faster way of achieving sales targets in a short period of time. But what about your existing customers? When is it time to start your customer marketing efforts? 

Customer marketing is building retention and loyalty within your existing customers. It is a long-term investment where the goal is to have a customer devoted to your brand. More importantly, they vouch and advertise for your company at zero cost. 

Frederick Reichheld, author of The Loyalty Effect and creator of the Net Promoter System, concluded that the cost of acquiring new customers is 5 to 25 times more expensive than keeping an existing customer. In fact, a 5% increase in customer retention can yield up to 75% in profit.  

As a startup, while it may sound premature to invest in existing your customer marketing efforts, it’s best to build the foundation as early as possible. In fact, the ideal time to set your customer marketing strategy should start when you have reached the 2 digit mark or over 10 paying customers in your stream 

Who drives your customer growth strategy?

A study shows that 82% of customer marketing efforts are spearheaded by marketing teams in an organization. However, there are several online and on ground efforts you can implement for your Customer Marketing efforts that will involve a multilateral function in the organization.


 

However, establishing customer brand loyalty and building an effective customer marketing strategy does not fall in one team alone. An effective customer growth strategy involves a collaboration amongst teams with a thorough analysis of the roles, resources, and relationship of each function with the customers. Ultimately, this will drive a deeper & more personalized effort to build a profound brand-consumer relationship and loyalty. 

 

Customer Growth Strategy

According to a research conducted by Influitive Research on Customer Marketing , the top 5 most widely used customer growth strategy are:  

·       Gathering customer References/Testimonials – 62%

·       Holding Customer User Groups / Events – 45%

·       Sending out Newsletter – 41%

·       Using Advocate Marketing – 37%

·       Joining online Customer Community – 37%

 

Source: Influitive State of Customer Marketing Report


This has come a long way since its publication 5 years ago. Now more than ever, companies are driving a cross functional and tactical approach in applying their activities to penetrate customers. Employing a 4-phase approach in breaking down activities into segments, engage, satisfy and grow. 




  • Segment – relationship building begins in segmenting the customers to determine relevant points of interaction to employ for newsletters or online customer communities
  • Engage – this stage engages the customer into demonstrating your product value through customer user groups, events, or advocate marketing
  • Satisfy – here is where you seal the deal. By assessing the satisfaction of the customer through surveys and referral programs
  • Grow – here lies the potential of driving more revenue by developing efforts for up-sell, cross-selling or renewal campaigns.


Guides and Metrics for your Customer Marketing Campaign

  1. Identify your baseline to know whether your existing customer base is growing or Retention Rate. This shows the calculation of the customer base retained by a company over a period of time.
  2. Formula: Retention Rate = (Number of Customers at the end of a period) – New Customer Acquired over set time) / (Number of Customer at the Start of the Period) x 100
  3. Who do you target for your customer marketing campaign? While you would want to reach all your existing customers, remember that it is better to allocate your resources to the people who will most likely vouch for your company. 

 

By now, you might have encountered this question in countless surveys: “How likely is it that you would recommend [brand x] to a friend or colleague?” The NPS Survey is a simple and proven effective way to distinguish the people who are most likely to be loyal to your business. Net Promoter Score measures a customer’s desire to recommend a product or a service.

 

Formula: NPS= Percent of Promoter – Percent of Detractors

 

In analyzing your would-recommend results, categorize your data into 3 clusters to identify the right people to target for your customer marketing efforts. On a rating scale of 1-10, we have the Promoters (9-10),  Passively Satisfied (7-8), and Detractors (0-6).

 

Find out the value of your existing customer base by thru Net Dollar Retention. NDR calculates the percentage of recurring revenue retained from existing customers over time.

Formula: NDR= (Starting MRR + Expansion MRR – Contraction MRR – Churn MRR)/Starting MRR x 100


o   Starting Monthly Recurring Revenue – monthly revenue from total paying users

o   Expansion Monthly Recurring Revenue – additional revenue generated from existing customer base (subscription upgrades, add ons, reactivation, etc.)

o   Contraction Monthly Recurring Revenue – loss due to downgrade of existing customer base

o   Churn Monthly Recurring Revenue – revenue lost due to cancellation of customer base

The road to customer loyalty is long but a journey with a great payoff for both customer and the company. The end goal will always go back to having a happy and satisfied client who will vouch for your product. More than ever, it requires a deeper dive into your customer journey in order to personalize your customer marketing efforts. After all, this is also a sacrifice for your customer. Vouching for your product also means that their reputation and credibility is also on the line. 

By investing in a customer-centric growth strategy within your startup, each function can collaborate in formulating a deeper and more significant conversation with your audience.

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