The Paradigm Shift of the Acquisition Model: The Best Customers Are the Ones That Last a Lifetime
Companies spend the majority of their marketing budgets on customer acquisition, but once acquired, those hard-won customers tend to languish. Marketers invest their hard work and precious dollars in pay-per-click ads, online promotions, and electronic coupons in an effort to get customers to make that first purchase, but once those customers are in the door, they’re left largely to their own devices. And this is particularly prevalent with companies marketing exclusively to consumers.
Yet, nurturing customer relationships is a crucial element of marketing, and budgets need to start accounting for this. One of the biggest trends I see happening now is that companies are finally starting to emphasize this over acquiring new customers. Now marketers are turning their attention to investing in the customer lifetime value (CLV): acquiring new buyers, growing their lifetime value, and converting them into advocates. And thanks to advances in technology, marketers can listen and respond to customers at every stage of their journey, keeping them engaged and helping accelerate them toward purchase decisions.
A Strategic Shift Is in the Air
Companies pour money into attracting new customers with creative campaigns. But up until now, for a lot of companies, the ensuing retention marketing strategy has largely consisted of a lazy combination of phoned-in loyalty programs and generic discounts (10% off for signing up for your daily newsletter? No thanks). Even automated emails have traditionally been one-size-fits-all.
Quite frankly, a lot of this has had to do with the lack of good tools. But as better customer nurturing technology has hit the marketplace with advancements in marketing automation, it’s driving a more intense focus on engagement marketing strategy. In the great nurturing versus acquisition debate, it’s largely about metrics. Today, marketers can finally justify their investments in nurture campaigns because we can measure and track the results of these efforts precisely. That allows marketers to shift focus from just the first click to the entire relationship lifecycle.
Email Is Your Best Retention Ally
One of the biggest drivers of this new focus on the value of the entire customer lifecycle is the introduction of more sophisticated email marketing tools over the last few years. Why the fixation on email marketing? Because it works. When it comes to building relationships with customers over time, email marketing trumps social media: 91% of US consumers use email every day. Furthermore, email has been proven to prompt purchases three times more often than social media—and the average order value is about 17% higher, according to McKinsey.
Email is the perfect medium for retaining customers and nurturing relationships—if (and it’s a big if) done right. With the right tools, email marketing allows you to create custom content series, respond in real-time to customer behavior, and offer each individual customer deals and information about products and services he is looking for at that moment. While other digital marketing mediums can do these things too, email remains the singular medium for marketers to reach consumers when it’s most convenient for the consumer.
Marketers may argue that mobile trumps email these days, but we found in a recent survey that 30% of people disable all mobile push notifications and 50% of people only allow push notifications from apps they love. So while mobile should be a core component of any customer engagement strategy, email still wins as the best place to start.
Over time, the right answer is to combine your nurturing efforts across email, mobile, the web, paid media, and social. Email works best when combined with mobile push notifications and web messages to deliver true convenience for the customer. Almost half of marketing emails are opened on a mobile device—and that number is sure to grow—so optimizing both emails and landing pages for mobile is no longer an option but rather a necessity. Consumers have no patience for poorly-performing pages. They’ll simply switch brands in a heartbeat if they can’t reach a page on their smartphone.
Happy Customers = Loyal Brand Advocates
It’s far easier (and cheaper) to sell to happy, existing customers than to find new ones. When you gain the loyalty of a current customer, you don’t just reap the rewards of continued purchases from that person; you also get his vocal advocacy as he endorses your brand to his peers and social networks. Every “Like” you get on Facebook is potentially viewed by that person’s entire social network, acting as a digital stamp of approval.
The takeaway: it’s not acquisition versus engagement. It’s acquisition as a first step to better engagement. Shift your mindset away from having to choose between these two paradigms, and instead start focusing on the big picture, and you can have it all.