How to grow your business with CRM, lifecycle & retention marketing
I don’t know about others, but if you’d ask me, your CRM strategy is the most efficient way to grow your business. In fact, if you’re not using a CRM strategy in your business, you’re probably leaving a lot of money on the table.
And you know what the best part of a CRM strategy is? Most of it is automated, so you get to work less on marketing and more on your wonderful products. Apart from a couple of touches here and there, you can automate all communication via email, and just watch the sales come in.
What is CRM, lifecycle marketing and retention marketing?
CRM (short for Customer Relationship Management) is about just what its title says, managing your relationship with the people whose contact information you already have, (ex: your leads and your customers), in order to make more profit and get more loyalty. Contrary to what some people say, CRM is not a tool or a software. It is also not a sales funnel. CRM is a holistic, end-to-end strategy that generates more sales and more loyalty.
Lifecycle marketing is about creating marketing that elegantly moves a person from a prospect to a lead, to a customer, to a repeat customer and all the way to a VIP customer.
Retention marketing is about keeping your customers.
So, at the end of the day, all these three terms are essentially about the same thing: growing a relationship with your leads and customers, so that you make more money and get more raving fans.
For simplicity, I refer to all these three terms combined as CRM.
One myth about CRM
A big misconception out there is that CRM doesn’t help you get new customers, but only helps you keep them after they already bought once.
That’s not true, at least not in the way I teach this concept.
First, because CRM starts with growing a thoughtful relationship with your prospects and leads, it helps you convert more of them into new customers.
Second, because loyalty and profit are your overall objectives (not just sales), CRM also informs your acquisition efforts. When you start working on a CRM strategy, you can’t hide anymore from the fact that not every new customer is worth your acquisition efforts. A new customer is much more valuable to your business if she/he refers others or buys again. Thus, your CRM efforts will also help you craft a strategy to acquire only people who have a high likelihood to become loyal down the line.
So, in addition to helping you get more profit and loyalty from your current customers, CRM helps you get more new, high quality customers.
Who is CRM for?
Back in the day, CRM used to be a strategy employed only by the giants of the business world, the lucky few, the rich companies that other businesses envied for their high profit margins. They weren’t the only ones that used CRM because they had smarter people working for them, but because they had the luxury to invest in sophisticated (at the time) customer database systems, which allowed them to accurately track people’s behavior.
Nowadays, almost every business has the same opportunity. You don't even need a sophisticated system. Most e-commerce platforms and email providers these days allow you to track enough data to start making more money from your leads and customers. So, no matter how small your business is, you can take advantage of this powerful force.
In fact, I'm pleased to see more and more small businesses starting to implement a CRM strategy. You guys rock!
By the way, the smaller your business, the better it is to start using a CRM strategy as soon as possible. You can’t afford to drive any traffic to your website or physical location if you don’t have a system in place to convert them into customers. Maybe big companies can afford this loss (even though they shouldn't), but you don't have that luxury.
How to get started
Here’s a 5-step process through which your company can get started to implement a CRM strategy:
Step 1. Analyze your customer data
If you’ve been in business for a while and you have some customer data, you should analyze your customers’ behavior and understand things like:
- Your customer KPIs (and trends over time)
- At which points in their journey you’re leaking the most money
- Who are your most and least profitable customers and what’s different about them
- What marketing channels your people respond the most to…
...and other things that are important to your unique company.
Even if you’re a small business and you don’t have much data yet, you have enough data to be able to calculate how much more profit you’ll make for every incremental email lead, for every incremental customer and for every incremental repeat customer (or referral). When you’re armed with this knowledge you’ll not only be more motivated to create a CRM strategy, but you’ll also know how much money you can invest back into a customer.
Step 2. Map out pivotal points on your customers’ journey
Next, you want to map out your customers’ current journey in your business. In other words, what are the steps they need to take before they become a VIP client?
If you sell a physical product, this journey will look different than if you sell an app.
It could be something like this:
Prospect -> Lead -> 1st Time Customer -> Repeat Customer -> High Value Repeat Customer -> VIP Customer
Or it could be something like this:
Prospect -> Lead -> Free Trial -> Uses Free Product -> Buys -> Uses Product -> Upgrades
(note: If you offer a free trial, you want people to engage with your product, and actually use it, otherwise they're less likely to even consider buying it).
Once you map out your customers’ journey, take a look to see if you can split it into even more measurable and actionable milestones. For example, becoming a "High Value Repeat Customer" could be split into at least "Getting more sales from a repeat customer" and "Getting a referral from a repeat customer."
Or, in the case of an app, you could split "Uses Free Product" into "Uses Feature X" and then moves on to "Uses Feature Y", where you'd know from your data and your tests that people who use feature X and Y are more likely to end up buying your product.
You'll want to pay attention to these milestones upfront, because they will help you create deliberate marketing that moves a prospect from one milestone to the next, to the next, and so forth.
A couple of things to consider:
A) Don’t overlook the importance of getting an email lead
New customers come from traffic that eventually converts into sales. Except, most people are not ready to buy on their first visit. The ones who are not ready will leave and will go on with their lives. They may or may not come back (usually they don’t).
However, you can get them back much faster if you intelligently ask for their email address (or other contact info, depending on your business) and then use it to methodically build a relationship with them and to get a first sale. If people don’t give you their email address, you can also target them on Facebook with a sequence of ads. However, email is almost free and Facebook ads cost money, so always start with email.
B) Don’t settle for just one sale
If you’re a small business, it’s tempting to just be happy when you get new customers and not worry about getting a repeat sale or referrals. Please don’t do this, because you’d be forsaking a lot of profit, and you’ve already worked hard to get to where you are. As a benchmark, according to a study by Bain & Co, a 5% increase in your retention rate leads to a 25%-95% increase in your profit.
So you have to continue your relationship with people after they buy. What you say to people right after they buy can either set yourself up for another sale/referral, or kill the relationship.
C) Don't just assume you have a high retention rate
Just because you see a customer's name in your order list more than once, or you see the same person come in again and again in your store, or the people who buy from you tell you they love your business - does not mean you have a high retention rate.
You have to look at your data. Only your data can tell you if you indeed have a high retention rate (most businesses don't, including small businesses). It's a quick calculation: what percentage of the customers who bought from you last year returned to buy again this year? You can adjust "year" to whatever makes sense to your business.
Step 3. Take inventory of the direct marketing channels you have at your disposal
Most of you have email and targeted social media ads. Some of you also have others (like direct mail).
Step 4. Create your strategy to get people to advance from each of these points to the next one
Using all the direct marketing channels you listed above, what will you say to get a prospect to convert into an email lead? I don’t recommend discounts because that incentive doesn’t capture people who aren't ready to buy.
What will you say to get a lead to buy and how many targeted emails you need to send to get a sale? You have to map out the main message(s) you’ll put in each email.
How will you speak differently to your leads after they've gone through your automated email sequence but still didn't buy? How will you speak differently to the people who did buy from you?
The reason why all of this is called a “relationship” is because you have to build it up methodically. When you ask people for a sale and do nothing else to build this relationship, you’re creating transactions. Transactions will cost you a lot of money in the long run, while relationships will be both profitable and fulfilling.
"If you make a sale, you can make a living. If you make an investment of time and good service in a customer, you can make a fortune. " (Jim Rohn)
I can’t tell you in one single blog post what this entire communication should look like, but I’ll give you my 4 guiding principles, which happen to stand for LAWS (no, I didn't try to get clever with an acronym, it’s just a coincidence :-):
Keep your focus on building a long-lasting relationship, not just getting a transaction. That’s how you’ll make the most money (and also gain the most fulfillment).
If you show your genuine appreciation for having people on your list and as customers, you’re more likely to build a long lasting relationship with them.
A relationship that lasts and that brings in a lot of profit is win-win. Both parties (your business and your customers) get stronger when either of the two wins.
Automate your CRM strategy as much as possible and stay away from multi-layered, super complicated, need-a-binocular type of funnels. They won’t work and they’ll end up full of errors, of which you won’t even be aware (but your customers will be).
Step 5. Back to data
And finally, pay attention to what your customers are telling you through the data they offer you (what a gift!). You have a strategy, but how will you know if it works? You have to keep an eye on your metrics.