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Understanding Customer Relationship Marketing
Where Google Analytics, SEO, and other digital practices focus on the data driven aspect of marketing, customer relationship marketing leverages the psychological aspect that isn’t quite as black and white.
Although a large portion of our focus resides in the technical aspect of marketing and sales, the psychology of humans plays an even more significant role in how we conduct business each day. After all, as much as we try to optimize for search engines and focus on bots, we’re ultimately dealing with people.
This discussion will take a break from topics such as search engine optimization, data analytics, & website development so that we can dive into the psychology of customer relationship marketing.
We’ll discuss:
- What Is Customer Relationship Marketing?
- Why it matters
- Short-term vs. long-term thinking
- Establishing trust among your customers
- Consistency over the long-haul
- Setting expectations around customer relationship marketing
Here we go.
What Is Customer Relationship Marketing?
Customer relationship marketing refers to the practice of building relationships with your current customers (or potential future customers, without the expectation of an immediate result. Those results include metrics such as:
- Dollars spent
- Website clicks
- Email replies
- Office visits
- Event attendees
- Social media engagement
For those that are looking to show an immediate return on investment (ROI) on every marketing practice, this one is not for you.
Customer relationship marketing can come from a number of channels including:
- Direct mail sent out on special occasions (think 4th of July, Birthday, Anniversary, etc.)
- Emails that update clients on current improvement efforts or new product offerings
- Check-in calls to see how they’re doing
- A comment on social media congratulating them on a new role
- An invite to a company hosted event like a baseball game
These relationship building activities all have two things in common:
- You remain top-of-mind from your customers’ perspective
- There’s 0 expectation of anything in return (over the short term)
Why Relationship Marketing Matters
Depending on your industry, customer churn rates can range up to 25%+ year over year.
Customer churn refers to the percentage of customers that will move on from your company in a given year.
Here’s a chart from Statista that better illustrates the point.
Using general retail as an example, we see that their year-over-year churn was 24%. This means that 24% of their customers decided to take their business elsewhere the following year.
To better understand customer churn, we’ll have to understand why customers leave in the first place. Some of those reasons include:
- Your offering isn’t meeting their expectations
- More streamlined competitor offering
- Poor customer service
- Lack of engagement so you were forgotten
Using the 4 reasons above, you can’t directly solve all of them with customer relationship marketing, but you can indirectly address reasons 1 & 2, while directly addressing reasons 3 & 4. Here’s what we mean.
Offer Not Meeting Expectations
Customer relationship marketing means that you can send out periodic surveys or ask for customer reviews to see how they truly feel about your offering. With this type of intel, you’ll see what’s working well, and what has room for improvement.
If a customer decides to leave because your billing process was too clunky, or the product didn’t work as expected, it likely won’t come as a surprise given that you’ve asked for and received feedback as part of your customer relationship marketing strategy.
More Streamlined Competitor Offering & Poor Customer Service
If they haven’t already given you this feedback, or you haven’t heard from them that they were looking at other products on your check-in call, then you likely haven’t established enough trust among your customer-base yet.
Successful organizations welcome feedback so that their internal offerings and processes can be improved. Ultimately, to better serve the customer.
In a 1999 shareholder letter, Jeff Bezos wrote ‘“I constantly remind our employees to be afraid, to wake up every morning terrified. Our customers have made our business what it is, and we consider them to be loyal to us — right up until the second that someone else offers them a better service.”
Whether the more streamlined offering comes down to price or functionality, welcome feedback from customers.
Lack of Engagement
The challenge that can be addressed via customer relationship marketing the most directly is by continuous engagement.
Leverage any of the 4 (ideally they complement one another) customer relationship marketing tactics that we mentioned above (email, direct mail, social media, phone calls) to remain visible.
Organizations are challenged by a number of competitors, and you should expect that those competitors are directly reaching out to your clients. If you’re not staying in touch, be assured that your competitors are.
Short-term vs. Long-term Thinking
Before diving further into this piece, it’s important to understand the difference between short-term and long-term thinking when it comes to marketing.
Short-term marketing
Short-term marketing generates immediate leads that can ideally be converted to customers within 6-12 months.
This allows you to take metrics back to superiors and show an immediate return on investment from allocated marketing dollars. This can be done via email campaigns, digital ads, tele-prospecting, and more!
Long-term marketing
Long-term marketing complements your short-term efforts because you’re not expecting anything for at least 12 months. Playing the long game entails practices like search engine optimization, content marketing, informative flyers, and of course, customer relationship marketing.
Establishing Trust Among Customers
One of the reasons long-term marketing can take over a year to show results is because you need time to establish trust with prospects and customers.
If you’re thinking “well they’re already a customer, shouldn’t they trust us already?”, you’re not wrong, but here’s a different way of looking at it.
Why Establishing Trust Matters
Starting with an example.
Your business hires new employees all of the time. Some employees get more flexibility than others because they’ve established a track-record over a period of time. Their boss has come to expect great results from the more seasoned employee, while keeping a tighter leash on a newer employee.
This is no different with your customers as you seek to earn their trust over a period of time. Often, organizations put in significant effort trying to land a customer, and then ultimately forget about them once the initial deal is done.
Just as employees put in more effort initially and then ‘get comfortable’ after a period of time, this portion is to remind you to never get comfortable neglecting the value you bring to customers.
Develop a System for Consistency
One of the hardest parts about long-term marketing planning is remaining consistent. This stems from marketing and management teams not seeing an immediate return on investment, leading to it taking a backseat to “higher priority” items that the day-to-day commands.
The way to thwart a lack of consistency is by putting a marketing system in place that you can follow and track.
Here are some of the channels that should go into that system.
Email Marketing and Automation
Email marketing is one of our favorite tools because it can leverage a combination of manual and automated emails.
Email Automation
You can schedule emails to go out for periods like:
- Holidays
- Birthdays
- Seasonal offerings
- Cyclical industry events
Automated emails can be scheduled out far in advance of their send date so the majority of the work can be done upfront.
On the contrary, automated emails tend to not be as personalized as custom emails that are sent manually.
Which brings us to our next point.
Manual Email Creation
Although manual, emails that are tailored for one specific person tend to get better engagement than automated emails. Sending tailored emails to your customers allows you to have 1×1 communication with messaging just for them, not an entire audience.
Here are some tips on how to send a marketing email that gets opened, and read.
If you’re wondering how you’re supposed to remember to send manual emails in addition to the automated emails that have already been created, we’ve got you covered.
Calendar Time Blocks
In this era, a majority of the workforce lives by their calendar throughout the work week. One thing that can be a challenge is remembering to block off times that allow you to proactively focus on specific tasks for the future, rather than just the reactive time blocks such as calls and meetings.
You can set recurring time blocks that remind you to stay in touch with customers once per quarter, month, week, or even day.
This can be via:
- Phone calls
- Social media message
- Sending out direct mailers
During this time, ignore everything else that isn’t directly reaching out to customers to stay in touch.
Quarterly Events
Whether in-person or virtual, events are a great way to connect with your audience periodically throughout the year. This tactic should complement the efforts previously discussed, and will give you a talking point as you’re reaching out to customers to check-in.
Ways to provide value to your audience throughout your events include:
- Giveaways for attending
- Providing informative content on industry offerings
- Entertainment such as singers, speakers, or even chefs that’ll go through a cooking class
Events enable you to build relationships among customers so it’s important to ensure that they’re fun; not just crammed with an agenda solely around your product/service.
Here’s how to plan your next event and make sure you drive attendance.
Setting Expectations Around Customer Relationship Marketing
With the understanding that the majority of customer relationship marketing is about establishing a relationship of trust over the long-term, let’s go through what you can expect to gain from it over time.
New Leads
Every sales and marketing professionals’ dream, new leads. New leads will give you a steady pipeline of potential customers that are looking for what you have to offer. Leads will come via:
Referrals
Hint – your loyal customer base will recommend your business as long as you’re providing value and establishing trust.
Inbound
Inbound leads entail customers finding you online. You’ll work your way up the ranks of online search as you gain more positive feedback (we’ll get to that soon) from customers.
Outbound
Outbound leads entail you finding your customers.They’ll be more likely to work with your business when you have an account-set of case studies, positive feedback, and references that you can show off when you’re reaching out.
Customer retention
When you implement a customer relationship marketing strategy, you’ll have constant communication with your customers. That constant communication will allow you to better understand what they’re looking for, how you can improve the value provided to them, and establish a relationship that’s built on trust.
Much like how online algorithms credit websites that are trusted and penalize websites that aren’t secure, real life trust is no different.
Ultimately this allows you to better retain customers and mitigate the customer churn that we talked about in the beginning.
A lot of sales and marketing is driven by trying to find new customers, but take care of your current customers first.
Positive reviews/feedback
As you continue to build customer relationships, you can expect to receive positive reviews and feedback that you can highlight to prospective customers.
According to mention, 90% of shoppers read at least one online review before deciding to visit (or work with) a business.
Reviews tell a story to potential customers and highlight the end result that they can expect after working with you; They’ll also be comparing you directly to competitors.
Lastly, you’ll notice that reviews and feedback are much easier to ask for after you’ve already established a relationship with your customers. They’ll serve multiple purposes such as:
- Helping you enhance your online presence (search engine optimization)
- Validate your offering and compare to competitors
- Create testimonials to showcase on your website
- Turn stories into case studies to show potential customers
Closing out customer relationship marketing tactics
Although this discussion predominantly focused on customer relationship marketing, you’ll notice that it opens up a number of additional facets that can be used in your marketing strategy.
As an example, your short-term campaigns where you are expecting immediate results can leverage customer stories from those you’ve built a relationship with already.
Additionally, your long-term campaigns that aren’t expecting immediate results can leverage insights that you’ve gained while running your short-term campaigns.
To conclude, customer relationship marketing will help you better understand:
- Where you’re falling short
- Where you’ve set yourself apart from the rest of the competition
- Expectations from customers
- How to provide more value/better outcomes
Let us know how you’re leveraging customer relationship marketing or if you need help putting a strategy together.
Gary McConnell Co-founded Rubicom Digital in 2019 with a goal of providing digital marketing consulting services in the B2B space.
Gary continues to serve as the Marketing Director of a Data Center-focused IT Provider, VirtuIT Systems.