April 20, 2020, 0 Comments
Know The Customers : A Guide To Marketing Lifecycle
I have 27,275 unread emails in my inbox. Most of these unread emails are trying to sell me credit cards when I already have one or are trying to sell me plane tickets and holiday packages when I have absolutely no holiday or travel plans on the horizon. The emails I actually read are the ones containing some useful information on the products I am using or the daily transactional emails. The companies, whose emails get left out in my inbox, do not follow the simple mantra of ‘Know Thy Customer’. They simply send out offers and promotions without knowing what the customer desires or which stage of the buyers lifecycle the customer is in. The art of lifecycle marketing is not easily mastered but if one does it master it, it reaps immense benefits. It can be used to attract new customers, boost conversions and retain existing customers. In order to understand lifecycle marketing, one must first understand what the buyers lifecycle is.
The buyer’s journey is divided into three stages namely, Awareness, consideration and, decision. In the awareness stage, the buyer recognizes what that he/she has a problem/need and proceeds to identify what the problem/need is. In the next stage, the consideration stage, the buyer tries to search for options that will solve his/her problem or fulfill his/her need. The buyer clearly identifies all the options he/she has. In the final stage, the decision stage, the buyer actually selects the product that he/she deems as most suitable and the final purchase is made.What companies must realize is that the same communication should not be sent at each step of the buyer’s lifecycle. It is pointless to send a person in the awareness stage an aggressive sales pitch and a person in the decision stage an introductory guide. Sending the prospects the correct communication which is in accordance with their position in the buyer’s lifecycle is the essence of lifecycle marketing.
According to Smart Insights, a leading company in the field of lifecycle marketing
“ Lifecycle Marketing is the process of creating a managed communications or contact strategy to prioritise and integrate the full range of marketing communications channels and experiences to support prospects and customers on their path-to-purchase using techniques such as persuasive personalised messaging and re-marketing.” The number of customers in each stage continues to decrease from left to right. This is like a traditional marketing funnel, except the goal is to keep all the customers in the active stage. The customer acquisition funnel consists of the click and convert stages. Encouraging the customer to make his/her first purchase is the goal here.
This requires you to reach out to the customers you don’t know through various promotional channels, educating them about the brand and finally giving them an incentive to purchase. The customer retention process is represented by the One-Time, Active, At-RIsk and, lost stages. This means, encouraging a customer to make a repeat purchase. It also means giving a customer who is disengaged, a reason to buy again. Further in this article, we will discuss the different stages in the customer lifecycle and the appropriate marketing actions that need to be taken at each stage.
- Customer acquisition
Customer acquisition is all about finding new customers at a cost lesser than the value that customer brings to your business. It consists of two stages, click and convert.
This life cycle stage is all about reaching out to new and potential customers and getting them to click on your website. This can also be classified as the reach stage. The idea here, is to reach out to as many customers as possible. The lowest possible cost of a click can be zero. Hence it is essential to spend some quality promotional time on free channels first and then move on to paid channels. These channels include creating Facebook & Linkedin groups, creating social media pages or reached out to friends and family. If customers are acquired through these channels, the customer acquisition cost(CAC) is zero and the customer acquisition goals have been met. It is advised, however, to invest a bit of money on social media marketing in the process. I can personally recommend one marketing company, that I’ve had a good experience with thusfar. All my start-ups’ social media were taken care ofby The Marketing Heaven and the effects of their work were really good.
After the potential customer has visited your website and has acquired information about what you have to offer, the goal is to convert them into paying customers by encouraging them to make their first purchase. Maximizing the likelihood of conversion is the clear goal here. Conversion is a net result of brand trust, social proof(reviews etc) and an intent to purchase. Research has shown that it can take upto seven interactions for a person to build trust in your brand. Only then do the customers gain enough confidence to buy from you. An interaction can take the shape of an email, a retargeting ad, an influencer featured on your website or a magazine feature. There are two kinds of customers in the convert stage. There are customers about whom you will not know anything. They will take the form of a Cookie ID or a Session ID. Then there are customers about whom you will have some relevant information like email or phone number.
Both these type of customers can be converted through techniques like retargeting and on-site recommendations With customers that are known to you, you have an extra channel to do A/B testing with in order to determine which kind of messaging builds the most trust, value and purchase intent that in turn maximizes conversions. The key idea behind maximizing conversions is to identify the conditions that must be satisfied in order for a customer to consider the purchase. For example, you might find that customers who know your brand well, have read the FAQs and have seen celebrities use it are most likely to make their first purchase. In this case, including your band values, FAQs and pictures of celebrities using your product will increase the conversions on your website.
Putting Click and Convert together
As discussed earlier, the goal of customer acquisition is find customers where the cost of acquiring the customer is lower than the lifetime value of the customer. CAC(Customer Acquisition Cost) can be calculated from the CPC(Cost Per Click) and the CR(Conversion Ratio). Below mentioned is a simple formula for calculating the Customer Acquisition Cost when we know the CPC and the CR. Customer Acquisition Cost (CAC) = Cost Per Click (CPC) / Conversion Rate (CR). In order for a business to be profitable, the CLV should at least be two to four times the cost of acquisition.
The first order size gives a fair idea about the customer lifetime value but it shouldn’t be considered as a stringent measure. It is always a good idea to use a CLV prediction tool. Also, experimenting with different channels like Facebook or Google and different keywords is always a good idea. This way you can find out which channel generates the best CLV and the lowest CAC. Another best practice of maximizing conversions is to keep a track of your buyer persona’s. Your target segments can be divided into different kind of customers with different temperaments and tailoring your marketing messages according to each buyer persona is an effective way of generating conversions.
2. Customer retention
After the customer has completed his/her first purchase, the goal should be to retain them. These sort of customers fall into one out of four categories, One-time, active, lost and, at risk. Your objective does not end at getting the customer to make his/her first purchase. One time customers make up the largest chunk of your known customers and upto 70-80% of the total paying customers of a brand. This means that converting one time customers into active customers is an excellent opportunity in customer retention. And, this is exactly why one-time customers should be treated in a careful manner. With one-time customers, the objective is to craft such a message that encourages them to make their next purchase. Such messages will serve to
- Motivate the next purchase (e.g. recommendations based on previous purchase)
- Ask for social proof (e.g. request a review)
- Build brand cognizance and value (e.g. remind them about your core values)
Active customers are the customers who have purchased more than twice from you. Such customers are considered as loyal and engaged customers and the ultimate goal is to make every customer as an active customer. The simplest way keeping these customers engaged is to send them receipts. Sending receipts for customer purchases is the first personalization goal that you must aim for. The easiest automated action you can take on active customers is receipts. In fact, receipts are the first thing you should personalize because they apply to every purchase that is made in your store.
Along with the receipts, in order to motivate them, below are a few good ideas
- Recommendation (e.g. ask them to refer a friend for a cash voucher)
- Ask for social proof (e.g. request a review)
- Request Feedback
The at-risk and lost lifecycle stages represent customers who feel increasingly disengaged. It is an excellent idea to try and win these customers back because in order to reduce customer churn. At-risk customers can broadly be defined as customers who have a less than 50% chance of purchasing from you in the next 24 months and lost customers can broadly be defined as customers who have a less than 10 % chance of purchasing. The best time to win back a customer is when he/she is in the at-risk stage. You shouldn’t wait for the customer to reach the lost stage before you send out a refresher. Proactively sending out refresher mails to customers before they reach the lost stage helps reduce churn and build loyal customers. Apart from the above, there are a few other things like recommendations and abandoned carts which do not fit into any particular lifecycle marketing stages but are very important becuase they can be applied across stages.
Recommendations improve the chances of conversion by showing content that is relevant to the customer. Recommendations can be done on the page or through SMS or email campaigns. It is a very useful tool for moving a customer across stages to the active stage and winning back dormant customers.
Abandoned carts are carts where the customer has added items but has forgotten to check out. An abandoned cart email is perhaps the most useful of all emails because it serves a very crucial purpose. It is also the email where you can the most bang for your buck. Automating abandoned cart emails goes a long way in building relationships with new and existing customers.
Mobile Lifecycle Marketing
Lifecycle marketing always is in sync with ‘mobile moments’ Addressing the needs of the customer and not the advertiser is the core principle of mobile lifecycle marketing, which puts each customer at the nexus of marketing activities. Using the right tools, a lifecycle approach to mobile marketing can be implemented, which puts the customer at the center of your marketing efforts. Your campaigns will measure more on the lines of relevance and responsiveness thereby adding more value to your customers and producing better results for your business.
Mobile moments or micro-moments refer to moment when a person reaches out for one of his/her mobile device. When they do this, they expect on-demand, on-the-go satisfaction. Whether it is information they’re looking for, or entertainment, transportation, communication or whatever—it all translates to billions of marketing opportunities. And not just advertising opportunities, but the ability to target precisely what the customer is looking for—at that exact moment. By leveraging proprietary end-to-end solutions, marketers can deliver more value to more users, boosting mobile metrics (and sales!) exponentially. Each of these lifecycle touchpoints present unique challenges and opportunities. That is the idea behind mobile lifecycle marketing, different strategies, for different customers at different times. The lifecycle stages are further discussed below.
Onboarding : Soft-ask push permissions / Onboarding reminders / Optimize tutorial screens
Engagement : One time user activation / Milestone notifications
Reactivation : Dormant user re-engagement
Conversion : Cart recovery / Optimize purchase / Funnel
Loyalty : App store rating / Reminders
This is your first impression. This is a valuable initial touchpoint and can help new users grasp your value proposition. A useful tactic in this stage would be ask the customer to enable push alerts and use it to send out onboarding reminders. Another useful tactic is to use tutorial screens to guide the user through the features of the application
After a user has downloaded your app, you need to keep them engaged. You need to deliver compelling and personalized messaging—based on timing, shopping patterns, location and more—with surgical precision. Delivering more value to users leads to increased app usage and product evangelism. A good tactic is to send push notifications to users who have used your application once but haven’t returned. Another great idea is to send users push notifications with the right information at the right time.
Registration, sign-up, purchase etc are all examples of conversion. Conversion is especially important for the E-Commerce sector because the cart abandonment rates are 90%. Conversion is the lifecycle stage that you should aim for with all your customers. A good tactic to do this is to send out push notifications to re-engage customers who did not complete the check out. Another useful trick is monitor where users are dropping off and optimize the shopping funnels to drive a higher conversion rate.
If users are not satisfied your application, they will just move on to the next application and that is why engaging dormant users is very important. It is a good idea to reactivate them with push notifications of newly launched features or new content. Engagement needs to be maximized to retain such users. Retaining them is important because acquiring new customers is always more expensive than retaining present ones. Automatically sending a notification re-engage users gives your app a top of the mind recall.
Keeping a track of your most loyal and avid users is a very good idea. They are the ones who purchase most frequently from you and will keep on doing so. Keeping them engaged through offers and promotions is also a very good idea. In order to enhance the brand image and reduce customer acquisition costs it is a good idea to ask users to rate your app when they are displaying loyal behavior.
Content Marketing as a part of lifecycle marketing
Content marketing is an integral aspect of lifecycle marketing and plays a very useful role in certain stages of the customer lifecycle. The first stage where content marketing plays a major role is the attract phase. Sending out blogs, whitepapers, webinars and other useful information adds value to the customer by helping him/her in identifying the problem and a viable solution. Another form where content is useful in the attract phase is keywords. Content written with specific keywords in mind attracts traffic from people searching for those keywords thereby leading to addition of value to the customer search.
Content also plays a major role in the delight stage of the customer lifecycle where we try to surprise and delight an already existing customer. It can be done through content such as customer satisfaction surveys and personalized content such as manuals and usage guides about the products he has already purchased. Smart content in the delight phase means having smart CTA’s(Call To Actions) and presenting different offers to different people based on their buyer persona. In order to build a robust sales funnel, companies need to have a lifecycle marketing strategy in place. Having such a strategy in place means having continuous and ceaseless flow of leads that eventually convert into customers. It also means the maximization of a customers lifetime value. For any company, this ultimately means great brand value and unhindered growth.