Customer Lifecycle Marketing to Drive Loyalty & Lifetime ValueAn Interview with Anthony Nygren
Today’s best SaaS companies engage their prospects through value-driven, segmented marketing communications, which are crucial to convincing and converting them. And the best Customer Success organizations understand that, after the sale, ongoing engagement throughout the customer lifecycle is paramount for driving retention and increased customer lifetime value (CLTV). Once a prospect has funneled through marketing and sales and is now your customer, what principles and best practices should guide customer communications, and how can you effectively influence your customers to broaden their relationship and increase loyalty and advocacy?
Frontleaf 50 to Follow honoree Anthony Nygren is an expert in doing just this — uncovering the underlying drivers of customer behaviors, then using that knowledge to develop programs that deliver customer retention and increase lifetime value. As Marketing, Customer Experience and CRM leader at EMI Strategic Marketing, Anthony leads engagement teams that provide marketing strategy guidance and sales-oriented relationship marketing solutions to clients in software and financial services. Anthony and Frontleaf’s Tom Krackeler recently chatted about best practices for customer lifecycle marketing, including how to earn trust and build customer loyalty and CLTV.
Tom Krackeler (Tom):
For starters, what is Customer Lifecycle Marketing?
Anthony Nygren (Anthony):
“Customer Lifecycle Marketing,” which we might sometimes also call “Relationship Marketing,” represents a communications program targeting customers with a goal of influencing and deepening/broadening relationships with them. The thing that’s often missed by people outside of the world of Customer Success is that customers don’t just stick around and expand usage and feel loyalty on their own — you’ve got to earn all that and invest in capturing those positive outcomes. At this point, most companies recognize the need for content marketing and lead nurturing pre-sale; that same mindset needs to be applied once the contract is signed.
What in your experience is the impact of Lifecycle Marketing programs on key customer metrics like retention rate and lifetime value?
Intuitively, Lifecycle Marketing simply makes sense. Almost everyone is familiar with retail communications that present offers based on what we’ve bought or read or clicked on in the past…and in fact, those tend to be the emails to which we pay the most attention because they are the most relevant. But moving beyond the intuitive to the empirical, we’ve seen Lifecycle Marketing programs deliver a 40+% increase in loyalty, a 45+% increase in retention, and a 70+% increase in lifetime value. Again, that comes from delivering messages that are relevant, timely, and demonstrate a commitment to and understanding of customers.
Any specific examples you'd like to point out where Customer Lifecycle Marketing is being done well?
It seems like that question would be easy to answer, but the more I think about it, the more I realize that I honestly don’t really have anyone that I’d hold up as a model for good Lifecycle Marketing. There are companies that do a nice job with recurring communications — Evernote, for example, strikes a nice balance between highlighting new and unexplored features and trying to sell me accessories; Central Desktop is a company that I hold up a lot for their e-newsletter, which I think is a great example of strong value-added content marketing. But even Evernote doesn’t really leverage the data they have about my usage to tailor communications to me.
I often like to go outside of the narrow band of SaaS industry communications to get inspiration, but when I think of communications from my gym, my cable company, my subscription-based bike rental company, none of them really does a good job leveraging the data they have about me to create a program that influences my behavior. I think that there are two reasons why something that seems so intuitive and obvious in theory so often fails in practice: resource limitations and concerns about incremental ROI.
For companies that have actually started investing in customer communications, there are likely not a lot of spare internal resources to devote to the analysis, planning, and execution of a lifecycle program. Even if some time can be squeezed out of available resources, there’s an initial hurdle of questioning whether putting in that effort will produce enough of a lift — in loyalty, retention, lifetime value — to make it worthwhile. In both cases, my answer is that this shouldn’t be seen as an all-or-nothing proposition. There’s no reason why you can’t start small and pilot something, learn from the results, and expand if you find success.
How do you go about planning a Lifecycle Marketing program?
The starting point has to be with the customer lifecycle itself: what are the stages of the lifecycle, and for each, what should the focus of communications be. For example, initially, the focus of communications is likely to be the onboarding process, then driving adoption and time-to-first-value. After initial value, many customers will then enter an expansion stage; here, communications might focus on nurturing a deeper relationship through value-added content, or fueling advocacy, or introducing new features.
[Click to Tweet:] As you get into the details of planning, it’s really important to recognize that Lifecycle Marketing isn't just about sending messages customers might like — it’s about positively influencing their behavior. Consequently, part of the planning process must be analyzing current customer behavior patterns to identify gaps and opportunities — places where a change in behavior could have an impact on lifetime value. So in the example above, the communications focused on options for the expansion stage shouldn’t be viewed as multiple choice — you need to pick the one that has the greatest potential to improve results and increase CLTV for the specific customer receiving it.
What are some rules of thumb for how frequently to communicate with existing customers?
When it comes to email frequency, it's really dangerous to work with assumptions...but you have to start somewhere. Ideally, you might gather some input from customers as you're in the planning phase. This input could be structured, like a brief survey, or could be somewhat anecdotal, like simply asking a few of your closer customers. With or without that input, it's still advisable to start slow and add, rather than to start blasting a few times a week and be greeted with a lot of unsubscribes and complaints.
Is it important to base communications on what actions a customer takes (or fails to take) within your product, or is it better to make communications calendar or milestone-based?
To me, the middle course is actually best: a combination of triggered messaging based on action or inaction AND a few ongoing, planned communications. Triggered messaging is incredibly powerful and almost always delightfully successful because people respond to relevance. The more a communication relates to who the recipient is and his/her interests and needs, the more likely it will be read.
That being said, if you only communicate based on behavioral triggers, it can result in a very inconsistent flow of communications — none for months then several within a few weeks — that can undermine performance. Everyone is so over-saturated with communications that if you haven't already demonstrated yourself to be a trusted, valuable communicator, your messages — even those based on behavior — are likely to get ignored and deleted before even being read because you haven't earned the right to make it past the split-second triage step ("am I going to take an extra few seconds and actually read this or just put it immediately in the trash"). And with email, it's vital to keep deliverability in mind: email server filters and spam blockers are often set up to flag "random" messages from a sender that has little or no established communication history.
In past companies I've seen a distinction made between "marketing communication" and "customer service communication”, where the former is oriented around "selling" and the latter around "solving". What's the right tone to strike in communications, and what team should be in charge of the content?
The first question is easy to answer — you need balance and a comprehensive communications strategy. Nobody wants communications that always "sell" — promote new features, introduce new services, remind about renewals. In fact, I'd go as far as to say that most people don't want those messages at all. Think about it — when was the last time you were excited about a work email that was trying to get your money? You have to earn the right to deliver "selling" communications through a history of delivering communications of value. That's why an integrated strategy — one that mixes "selling" and "support", in the form of best practices, tips and tricks, case studies — is the most effective. And why a recurring newsletter that effectively brings all those things together should be on every SaaS company's to-do list.
My answer to the second question is "it depends" or "it doesn't matter." The key thing isn't who does it, but that it's done, and done with strategic intent. To me, regardless of who is executing the communications, the Customer Success function should be responsible for defining and optimizing the Customer Lifecycle Marketing strategy, since that's where the broader relationship management strategy should reside.
Anthony Nygren is Executive Vice President at EMI Strategic Marketing, and is known as a "customer whisperer". His expertise is in gathering customer knowledge and building an understanding of the drivers of customer behavior, then using that knowledge and understanding to create programs that measurably build awareness, maximize customer lifetime value, improve sales efficiency, optimize lead generation efficiency and effectiveness, and increase customer retention.
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