Marketing is often synonymous with one thing: acquiring new customers. However, it costs anywhere between 5 and 25 times more to attract a new customer than it does to retain an existing customer. Big data and analytics systems are allowing companies to personalize individual customer experiences. Across every industry, companies are aiming to predict a new customer’s next move or purchase with this information. It’s getting increasingly competitive.
But what’s more valuable than being able to predict a customer’s behavior is using insights to build customer relationships. However, a report from DemandMetric suggests that just 20 percent of marketers are actively marketing to customers throughout the customer lifecycle. What’s the business case for building real relationships with your customers, and what steps should marketers take first?
Where Insights and Outreach Come Together to Grow the Bottom Line
In today’s fast-changing business landscape, customer relationships have more value than anything else – including brand equity. One analysis published in the Harvard Business Review showed that while the value of brands declined over a decade, the value of customer relationships nearly doubled in terms of business valuation. As a result, marketers are increasingly getting a better understanding of what customers want, and then using those insights to develop relationship-marketing strategies. Whether you’re investing in customer intelligence to better understand what your customers need, or customer relationship management (CRM) solutions to streamline your internal process, better relationships increase both sales and retention.
Investing in full lifecycle marketing and better analytics can be expensive and require a long-term strategic focus. What’s the payoff? Better relationships with customers that increase profits. Research from Bain and Company found that increasing your company’s customer retention rate by just 5 percent can boost profits anywhere from 25 percent to 95 percent.
How Marketers Can Build Deeper Customer Relationships
Integrate technology for stronger insights: While relationships focus on the customer, the right technology can streamline relationship management and let your company achieve high-value relationships at scale. An integrated marketing and analytics solution reinforces customer relationship building because it helps companies distill what customers truly want. McKinsey advises that consistency – which is much more easily achieved with a streamlined solution – is a cornerstone of building customer relationships and satisfaction.
Position yourself to meet evolving customer expectations: As Forrester Research has noted, today’s customers expect experiences that are personalized, convenient, and that come directly to them. As a result, the authors write, “Companies need to deliver experiences that are natural, adaptive, and anticipatory.” Investing in long-term relationships with customers helps gather the information and cultivate the context to make organic, meaningful experiences possible.
Meet the needs of shifting demographics: Every generation is different, and as millennials and Gen Zers become highly desirable consumer segments, it’s important to meet their needs. Millennials control $200 billion in annual spending power, and it’s estimated that Gen Z already represents $43 billion in spending power. Both generations expect brands to proactively cultivate the relationship over time. In one study, for example, 87 percent of millennials wanted to be proactively contacted by the companies they work with.
Ultimately, marketers need to shift an increasing amount of attention and resources toward relationship building. From data gathering to marketing outreach, your efforts shouldn’t focus just on acquiring new customers. Instead, move toward a more sophisticated strategy that connects with customers throughout the lifecycle to help increase retention. Not only will your bottom line see an immediate boost, but you’ll be positioning your brand to thrive as today’s customer base, expectations, and marketplace continue to evolve.
Liz Alton writes about digital marketing and her work has been featured on USA Today, Forbes, Inc, Harvard Business Review and Entrepreneur. Her specialties include all things marketing, technology, B2B, big data/analytics, cloud and mobility. She holds a Bachleor’s degree in journalism from University of Massachusetts, Dartmouth and an MBA from Western Governors University. She is currently pursuing a Master’s in Journalism from Harvard University.