Your Customers are your Greatest Asset: The Ignored Side of Marketing

Your Customers are your Greatest Asset: The Ignored Side of Marketing

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Too often we think of marketing as getting people in the door the first time – however, for many Ecommerce businesses, the great untapped opportunity lies in engaging customers who have bought before. These customers already have personal experience with us and can be much more cheaply and effectively targeted than potential customers – and they also serve as an incredible word of mouth marketing resource. 

This post will walk through strategies for expanding your marketing to tackle the complete customer lifecycle and give you 4 great ways to get started right away.

[  Maybe a road? Someone on a journey? ]

The Importance of the Customer Lifecycle

The customer lifecycle is how marketers describe a customer’s complete relationship with a company – from day 1 (when they first hear about you) to the day they disappear forever. The customer lifecycle involves every interaction with your business, whether that’s reading your emails, visiting your website, telling a friend about you, etc – not just purchases.

Why is the customer lifecycle so important? As a quick example, let’s compare the differences in value of two customers – one who buys once and another who buys several times and recommends a friend.  Say you make $20 of margin per purchase but it costs you $10 of marketing spend to get that customer the first time. Here’s how the economics work out:

·      John (makes a single purchase): 

o   Purchase 1: $10 ($20 in margin minus the $10 in marketing spend)

o   Total: $10

·      Sam (makes three purchases and recommends you to a friend):

o   Purchase 1: $10

o   Purchase 2: $20 (no marketing cost)

o   Purchase 3: $20 (no marketing cost)

o   Recommending a friend: $20 (because you don’t have to pay the marketing cost)

o   Total: $70

As you can see, the value of Sam (who bought three times and recommended a friend) is 7 times greater than John (the one-time customer) because we don’t have to pay any marketing cost to acquire him as a customer for the 2^nd and 3^rd purchases or the friend’s purchase. Said differently, having a single Sam generates as much profit as 7 John’s, even though Sam only made two more purchases than John. For most Ecommerce stores, this size of gap is typical – if not understated. Your best customers are worth far, far more than your one-time customers, and there is tremendous opportunity in focusing on your customer lifecycle to turn more of your one-time purchasers into excited, loyal, frequent customers.

Building a Healthy Lifecycle

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The term “lifecycle” makes you think of plants and biology – and this is a good fit for how you should approach your customer relationships. In the perfect world, a customer would find your store, purchase the first time, then come back repeatedly and ultimately start to recommend you far and wide without you needing to do anything; however, in reality, there’s more to it – customers disappear, they stop engaging, they don’t recommend you to others, or they just plod along but never grow their spending or purchase frequency.

This is where the plant analogy fits particularly well. By sending emails targeted to different places in the lifecycle, you can nurture your customer relationships based on the needs of each customer. If a customer just bought last week for the first time, you likely want to engage with them differently than a customer who used to buy frequently but hasn’t in the last six months.

Identifying your Customer Lifecycle

A good starting point for any Ecommerce business is to think about what your customer lifecycle looks like right now. Say I heard about your business today, and that I ultimately make a purchase:

·      How long (and how many visits to your site would it take) before I buy for the first time?

·      If I buy, how likely would I be to come back and buy again and when would that be? 

·      If I do come back a second time, how likely am I to become a frequent customer after that? 

·      If I do shop regularly, will I tell my friends about you?  Will I start to spend more over time?  Will I start to shop more frequently?

By mapping out what you’d like me to do (say buy once, come back 6 months later for a second purchase, then start to tell my friends about how great you are) and then comparing that to what actually happens, you start to get a sense for where your biggest opportunities are for influencing the customer lifecycle.

4 Places to Start Tackling the Customer Lifecycle

[  a thank you note / something about VIP’s ]

As with any analysis (or blog post for that matter), you haven’t accomplished anything until you’ve sent the first email or taken the first action.  While helping companies improve their lifecycle marketing at Klaviyo, we’ve seen that the number one barrier to beginning lifecycle marketing is sending the first email. To that end, here are four ideas for targeting customers at specific lifecycle stages and emails to send them.

1.     New Customers: Send a personalized thank you email to first time customers.

Because we know that there is a huge value in making sure customers come back after their first purchase, putting in the extra effort early on to make customers happy and excited about you can have a tremendous impact. Given that they will have just bought, you’ll likely want to measure the impact of this email on engagement metrics like email clicks, website visits, etc both immediately and over time.

2.     One-time Customers. Reach out to customers who haven’t purchased recently and give them a special offer.

This idea may seem obvious, but we’ve seen our customers use this tactic to drive thousands of dollars in revenue with very little work. Too often, customers who haven’t purchased in awhile just need a bit of encouragement to re-engage.

3.     Holiday Purchasers: Re-engage last year’s holiday purchasers.

The holidays are the perfect time to take advantage of your customer lifecycle by reaching back out to all customers who bought gifts from you last year.  Rather than focus on the high traffic email days that will overlap with everyone else, draft a more personalized campaign just for these customers that thanks them for holiday shopping last year and highlights great gift ideas for this year. 

4.     VIP Customers: Send your most loyal customers coupons for their friends.

If customers are already purchasing from you frequently, they clearly like what you have to offer. Make it easy for them to share their love for you in a way that makes both them feel good about sharing but also gives their friends a positive introduction to your store.

Seize the Day

Ignoring your existing customers is bad for you and bad for them.  By taking a lifecycle approach to your customers, you can build lifelong relationships that give you a strong foundation that keeps paying back. It’s a great time to get started.

This is a guest post by Ed Hallen. He’s the co-founder of Klaviyo – an easy yet powerful platform for customer lifecycle marketing for Ecommerce. You can learn more about how to get the most value out of your customers on the Klaviyo blog or from their handy free e-book.