Outside of start-ups, every company has them. They’re the source of a company’s income, and the best resource sales and marketing has.
Understanding a company’s customers is vital, allowing a company to target the people they work best with. An approach to understanding a company’s customers is to segment them into different categories. This approach can help streamline customer marketing efforts so that the right messages go to the right people.
Customer Categories
When segmenting existing customers, The Digital Connection Agency (The DCA) suggests these categories:
How to define a New Customer:
A contact who has just made their first purchase.
Things to know:
Tracking and engaging new customers and welcoming them on board, can encourage a second sale and a loyal customer. New customers should be defined as:
A customer that has made their first purchase within the last x amount of days depending on the company’s sales cycle. (First six months maximum)
The DCA advocates running specific welcome campaigns for new customers to wow them and get a second sale early.
How to define Novice Customers:
These are customers who are in the process of implementing the product. *Customers in this category can fall into other categories as well*
Things to know:
A little bit of handholding or extra “how-to” information can go a long way. Building engagement and developing an advocate.
How to define Active Customers:
Customers who have made one or more purchases from a company, and are currently active, i.e. they’re within the “average” recency and frequency range of purchasing.
Things to know:
At this point, these customers usually with one or two purchases, are invested. Putting these customers into nurture campaigns is the best opportunity to grow them.
How to define Repeat Customers:
These are ideal customers – those who have made multiple purchases and are buying at their expected purchase frequency.
Things to know:
Reward their loyalty to turn them into loyal customers. These are the customers a company needs to try and keep. They’re also prime candidates to drive them to be upgraded to more valuable customers.
How to define At-Risk Customers:
These are the customers who have passed the average time to next purchase, based on the average purchase rate for other repeat customers.
Things to know:
Coming back to the average purchase frequency rate, any customer who has gone over the average, are at-risk. Careful application of re-engagement strategies should be looked at to get them back on track.
How to define Lapsed Customers:
A customer who has gone far beyond the time they were expected to make their next purchase.
Things to know:
Defining lapse rates can be difficult, but a good ballpark is twice as long as the average purchase frequency. These customers need to be in some form of re-engagement strategy.
How to define Unhappy Customers:
These are upset or angry customers. Although they’re the most at-risk customers, they present the most significant opportunity. Excellent customer service can help appease these customers. If the issue can be fixed, these customers can very often be turned into advocates – as the company has proved they care about them.
Things to know:
After the customers have had a reasonable amount of time to consume a product/service – ask for feedback. This will help identify customers that are unhappy and haven’t said anything. If nothing else, increasing the level of customer experience for these clients can smooth things over and repair the relationship.
How to define Loyal Customers:
Each business should have its definition of what a loyal customer is. For example:
Loyal customers are those that have completed more than three transactions, have been a customer for more than six months and have performed a transaction in the last two months.
Things to know:
These guys should be in for the long hall, 20% in the 80/20 rule. Building on long-term relationships not only with the key decision-makers but the subordinates as well.
How to define Referring Customers:
A happy customer who is willing to refer the company to friends and family or provide a glowing testimonial.
Things to know:
When sending feedback requests out, identify the happy customers, and add them into a referral campaign, asking for a referral or testimonial. After their contribution, reward them with a surprise.
How to define Company Advocates:
A pleased customer who wants to tell anyone and everyone about the company. Advocates are the most profitable segment and will bring more customers in the door at any opportunity. A company wants every customer to become an advocate.
Things to know:
When asking for testimonials/referrals, look for the most passionate customers – they will be the advocates. These advocates are worth their weight in gold. They need to be treated the best of all.
Customer Marketing Strategies
It’s a reasonably extensive list! As briefly mentioned in each of the scenarios, there are different actions to take for each type of existing customer. When a company has categorised its customers, it’s time to act. There are several types of marketing strategies a company can implement.
Retention Strategies:
The 80/20 rule, 20% of customers, give 80% of the business. This is about trying to keep customers as long as possible.
Types of customers this works for:
Retention strategies work best for company advocates, referring customers, loyal customers, and repeat customers
What To Do:
Customers that fall into this category should be rewarded for their loyalty. A company should put together a program that rewards a customer the more the customer commits. This provides a customer with a better experience and more than just a product or service. Since the top 10% of customers spend three times more than the rest, it’s imperative to keep these customers happy. Here are some ideas on how to reward customers:
Types of customers this works for:
Retention strategies work best for company advocates, referring customers, loyal customers, and repeat customers
What To Do:
Customers that fall into this category should be rewarded for their loyalty. A company should put together a program that rewards a customer the more the customer commits. This provides a customer with a better experience and more than just a product or service. Since the top 10% of customers spend three times more than the rest, it’s imperative to keep these customers happy. Here are some ideas on how to reward customers:
- Create an exclusive tier for big spenders:
-
- Entry comes after a customer purchases a certain amount.
- Initial entry lasts at least two years.
- Renewal only needs 40% of the entry barrier.
- Offer discounts, exclusive days, pre-launch awareness, hospitality, MDF (Marketing development funds).
- Make sure not to push customers for too much loyalty. If a company demands more than they can give
the customer can feel jaded, undervalued and leave.
-
- Instead of providing a discount, offer something the customer can share, making it more likely for them to refer a new customer.
- Create a financing plan. Easing the burden of cash flow for both parties giving a customer more reason to stay.
- Amazon Prime is a membership that provides a bunch of benefits, including free 2-day shipping on a wide range of products. Even though not quite a customer loyalty program, Amazon Prime is still a great example of providing enough value to regular buyers so that it benefits them.
- The North Face customer loyalty program enables customers to earn points the traditional way, with every purchase they make. For example, for every £1 spent on their website someone receives 10 Peak Points. In addition to purchase-based points, a customer can earn points by attending special events, checking in at locations, downloading their app etc. The points collected can be used to redeem travel experiences, not just a discounted jacket.
Reactivation Strategies:
A company is constantly competing for mind share, which equates to wallet share. Reactivation campaigns are for the customers who may have once been purchasing at a high level but have started to communicate less.
Types of customers this works for:
The types of customers this works for is: Lapsed customers, New customers, Novice customers
What To Do:
New and novice customers can easily fall into this category by accident. A sales rep could see the initial purchase as a job done, or a customer doesn’t realise that the company can provide more value. Along with lapsed customers, reactivation campaigns are all about making customers active. Check these options out:
Types of customers this works for:
The types of customers this works for: Lapsed customers, New customers, Novice customers.
What To Do:
New and novice customers can easily fall into this category by accident. A sales rep could see the initial purchase as a job done, or a customer doesn’t realise that the company can provide more value. Along with lapsed customers, reactivation campaigns are all about making customers active. Check these options out:
- Ask them to come back
- For customers who had a positive experience and only became inactive due to the lack of engagement by sales and marketing.
- Provide a special offer
- Customise promotional offers based on past interactions and purchases.
- According to the 2016 Target Marketing Media Usage Survey, methods that deliver the most reliable ROI include:
- Direct mail
- Social media engagement
- Webcasts/webinars
- Outbound telemarketing
Reconditioning Strategies:
Comfort zone clients. They do business, but they are not giving any real value. The truth is, there is more to do.
Types of customers this works for:
This works best for repeat customers, active customers and novice customers
What To Do:
These customers offer the most opportunity for growth. As they’re comfortable with the current value the company provides, it is an excellent foundation for enticing them to commit more. Providing a positive customer experience and increasing loyalty to the company is the first step towards customers spending more. Here are some things to consider trying:
Types of customers this works for:
This works best for repeat customers, active customers and novice customers
What To Do:
These customers offer the most opportunity for growth. As they’re comfortable with the current value the company provides, it is an excellent foundation for enticing them to commit more. Providing a positive customer experience and increasing loyalty to the company is the first step towards customers spending more. Here are some things to consider trying:
- Solve customer problems
- Be timely
- Be helpful
- Help customers to succeed
- Listen to customer feedback
- Be enthusiastic
- Be unexpected
- Build a community
- Change the product mix (up/cross-sell)
- Increase prices
- Negotiate with suppliers for a better deal
Reach Strategies:
For inactive clients, they aren’t engaged, but they could be in the future.
Types of customers this works for:
The types of customers to re-activate are: At-risk customers, unhappy customers, lapsed customers
What To Do:
Reconnecting with customers that fall into these categories isn’t always easy. It can feel awkward and uncomfortable. If a company can re-engage these customers, there’s more business to be found. Try some of these tactics to improve retention rates and reach customers:
Types of customers this works for:
The types of customers to re-activate are: At-risk customers, unhappy customers, lapsed customers
What To Do:
Reconnecting with customers that fall into these categories isn’t always easy. It can feel awkward and uncomfortable. If a company can re-engage these customers, there’s more business to be found. Try some of these tactics to improve retention rates and reach customers:
- Send them a note in the mail.
- Customers are probably inundated with phone calls and e-mails all day long. That’s why an old-fashioned letter in the mail packs a big punch.
- Reach out with a “happy birthday.”
- A birthday message or a happy Christmas and any other holiday message shows that the company is thinking about the customer,
just try not to be creepy.
- A birthday message or a happy Christmas and any other holiday message shows that the company is thinking about the customer,
- Ask for introductions to new customers.
- This trick has two powerful benefits:
- Reconnecting with existing customers
- Getting leads for new business.
- This is risky as the customers aren’t engaged, but it can also serve to uncover the reasons why they aren’t.
- This trick has two powerful benefits:
- Ask for introductions to new customers.
- Regularly request customer feedback.
- To make customers feel valued, understood, and important, ask them for feedback. This allows a customer to tell the company why they have become distant.
- Host a customer event.
- Hosting events is a powerful way to compel existing customers to reconnect using a face-to-face.
- Invite them out for a bite to eat.
- Treat existing customers to breakfast or lunch. This vastly under-utilised strategy is an easy way to strengthen the bond with them.
Looking at the different tactics put forward by The DCA, many can overlap with other customer categories and types of customer marketing strategy. This is fine, and a combination that works for one company isn’t necessarily one that works for another, especially as some of the examples require a substantial budget to get started.
The next section is a shortlist that looks at how account managers and sales reps can help improve customer loyalty, satisfaction and re-engage existing customers that have started becoming a little distant.
Tips for Accounts and Sales for Existing Customers
- Identify a customer’s priorities:
Figure out what a client is doing, such as trade shows, and product/feature roadmaps for the year. With this figured out, sales can plan outreach. - Find out whom they’re hiring:
Talk to HR/Recruiting to learn a customer’s hiring plans. If their response is “We should have four positions in customer support by Q2,”
there are two things to note:- First, customer support is a priority.
- Second, there’s an executive pushing for these new hires.
That way, instead of rehashing client needs from the past, a sales exec can discuss fresh strategies for the new year.
- Talk to the new people:
The most open meeting to book is with a new employee because they’re so eager to provide value to their company. This is also
a smart way to reach other influencers by scheduling meetings. - Don’t talk about the past:
By starting an e-mail with “I sent a message on Tuesday, but haven’t heard back from you”, it makes them feel guilty.
What happens when they feel guilty? Avoidance.
- Change what’s seen as a close:
“Closing is any interaction where a salesperson asks a prospect to commit to something — whether big or little.” Some examples include a prospect reading a white paper, scheduling a call, making an introduction, or providing information. - Talk to someone else:
Instead of sending a breakup message after a prospect goes quiet, strike up a conversation with someone else at the company. Let the original person know and give them a deadline to respond. Then move onto the next decision-maker. - Vary the time of the call:
This sounds obvious, but most salespeople don’t do it: Call and e-mail the prospect at different times of the day. - Become more personal:
Try a non-business approach. If they have an Alaskan vacation coming up, send a quick e-mail about it! Don’t be all work, be their friend too.
If this style of existing customer marketing appeals, then contact The Digital Connection Agency to get started.
How Much Does it Cost?
The DCA Operates In Three Ways
One Last Thing!
Individual task – Billed by the day
Projects – Billed in accordance with the scope
Commitments – On retainer typically starting at £1000 per month
This is always something that everyone leaves out! Additional costs may apply depending on the services we agree, especially things like paid advertising and the tools you need. We always make sure this is completely transparent!
