I appeared on a podcast with Bryan Reynolds of Sure Oak to discuss the impact of customer marketing on upgrades and upsells.
What is Customer Marketing
Before we even talk about what is customer marketing, let’s discuss a little about why it has become so important.
In the subscription economy, you cannot take a customer for granted. Everyday, they look at new products and compare with their existing technology suite. They have the choice of switching platforms overnight. And you as a SaaS business want to retain customers because recurring revenue is more important than ever.
You are asking for a stream of revenue and they are asking for a stream of value.
Customer Marketing is marketing to your existing paying customers with the aim to do the following:
- Identify users who love your product and develop them into advocates / evangelists by providing recurring value
- Retain customers
- Identify opportunities for upgrade or upsell
What are the key differences in the “Old Way” of managing customer relationships (high effort and high churn) as opposed to new methods that are available that can deliver real value and increased retention?
Earlier, it was all about calling or visiting your customers and getting feedback. And that wasn’t the wrong way either. In fact, I still believe there is no better way to get feedback or build a customer relation. But it was all reactive. You made a call or sent an email, got the feedback and then reacted to solve a problem. Plus in a lot of cases, you would not even come to know of the problem until the customer churned out.
But as the importance of customer retention and LTV increases, customer marketing is popping up in more and more marketing discussions.
The Harvard Business Review found that a personalized marketing experience can deliver “five to eight times the ROI on marketing spend, and can lift sales by 10% or more.”
And marketers are realizing the benefits of customer marketing campaigns, ranging from early feature access to nurturing email campaigns to inviting product champions to a roundtable discussion.
What has really changed is the availability of technology.
You can now monitor product usage, customer engagement, and even the tiniest of details like which user has stopped using a particular feature in the last three days.
Why ask, when you can measure?
Now, 2003 was all about NPS and it evolved over the years. But in 2019, we are leaving so much digital footprint that the mantra should be, “Why ask, when you can measure?”.
NPS is a lagging indicator and not a leading indicator. And the question being asked is “What will you do to change your NPS proactively?”
You can use a suite of tools for session recording, for product analytics, for engagement, for NPS, or you can use a customer success software such as CustomerSuccessBox to bring all the insights in one place. These insights are helping marketers and customer success managers or account managers to talk about just the right things when they call the customer Point of Contact.
Customer marketing is first about proactive campaigns, retention, upgrades, upsells, and then about referrals and reviews.
How do customer marketing practices for upgrades and upsells differ from new customer acquisition?
In the SaaS world, new customer acquisition is all about marketing the features and benefits of your product to solve a customer pain point and then getting MQLs for the sales team to close.
Customer marketing is about helping your customers derive the maximum value out of your product. You continue to market value, new features, so that they keep benefiting as they grow and you grow with your customers.
So that they will renew the contracts, buy more licenses and even move to a higher pricing plan in the future.
But more importantly they will become your advocates and start talking about you and referring their customers or contacts to you which is the ultimate customer marketing win in my eyes.
Now before you ask who should own customer marketing, remember, just like customer acquisition is a journey, customer marketing is no different. You have to experiment, A/B test every day. And hence, marketing should own customer marketing till it becomes a specialization.
What are some of the most common mistakes marketers make when marketing to increase upsells or upgrades and customer lifetime value?
This could be a whole other blog but let’s discuss the top 5 mistakes.
- No alignment with sales: Sales and Marketing are usually at loggerheads over leads, attribution, quality of leads, and so on and so forth. However, to build a robust customer marketing program, these two have to become the best of friends.
If customer marketing is not aware of why the customer bought the product in the first place, it will not be able to come up with the right upgrade / upsell campaigns to nudge the customer into buying more.
And with customer success becoming a key cog in the machine, marketing will need to align with them to be able to run the campaign at just the right time.
- Measuring usage but forgetting about value delivered: Always remember that every login is not value. That means a customer could be logging in every day but if they are not using your product for the right outcome, it’s not value delivered. And that means they are most likely not ready for an upsell.
On the other hand, even if a customer is logging in once a week but is getting the outcome which they desired when they bought the product, they are ready for an upsell campaign.
- Bundling features instead of first segmenting the customers: Understand the need for upsell / upgrade and segment your customers accordingly instead of running a feature campaign for everybody.
- Trying to upsell ahead of time: How many times has it happened that you have sent a campaign to an existing customer and they have gone AWOL? Monitor the data and be sure they are using the existing plan to the fullest before you run an upsell campaign.
- It’s a continuous effort, not a one time campaign: If you have achieved upsells with just one campaign at the time of renewal, it was a coincidence. Upgrades and upsells are usually a result of continuous effort from customer success and customer marketing to provide desired value to the customer.
Track customer data and keep running regular campaigns to provide recurring value to the customers so that when the time comes, they will be ready for your upsell campaign.
What do you think or see will be the future of marketing to customers?
High growth companies have already started forming customer marketing teams who take care of building customer communities and creating champions. The future is Customer Success Marketing where marketing and customer success teams will work together. Customer Success will use customer success technology to forecast upsells and upgrades, and Marketing will use these insights to run personalized customer marketing campaigns.
If you enjoyed this article, feel free to hit that clap👏 button a few times to help others find it 😄
— — — —
The original blog was published here.