In this article, we explain how you can use marketing automation to effectively increase and maintain the CLV of your customers.
Generating a lead or leading a potential customer to a purchase is definitely a success for your company. However, when looked at from a long-term point of view, a customer is only beneficial if you manage to increase their customer lifetime value.
Digitalization has changed consumer behavior, not only in B2C, but also in B2B. The demands of potential customers today are higher than they were a few years ago, both in terms of the product itself and its commercialization. It is no longer enough to provide the interested parties with all the product information. Today's self-determined customer uses a multitude of communication and information channels and expects to be supplied with the information that is currently relevant to them via all of these touchpoints - even beyond the conclusion of a purchase or contract. After all, the next offer is only a click away.
For your company – especially for your marketing and sales – this means:
1. The right messages to potential customers need to be delivered at the right place and the right time to turn them from leads into actual customers.
2. Even after completing the transaction, a customer still requires tailored informational support through other relevant content in order for the company to be able to retain them in the long term and tap into additional revenue potential.
So that you not only win customers, but also achieve sustainable economic success for your company, it makes sense to effectively and efficiently increase the value of each individual customer over their entire "lifetime" - the so-called Customer Lifetime Value. Marketing automation can help you, because it automates customer acquisition and care.
According to quicksprout, marketing automation means:
"Marketing automation is a category of software that streamlines, automates, and measures marketing tasks and workflows so that companies like yours can increase operational efficiency and grow revenue faster."
This allows companies to respond appropriately to the changing buying behavior of today's customer: Marketing automation makes it possible to provide interested parties and existing customers with relevant content at the right time: the touchpoint . Thus, the use of an appropriate software solution for marketing automation is becoming increasingly popular: According to a recent study for which 400 B2B companies were surveyed, 59 percent consider Marketing Automation Systems (MAS) suitable for their own marketing cycle. 80 percent expect the automation of marketing processes from the use of a Marketing Automation solution, and 59 percent want to provide relevant messages and content.
However, marketing automation is able to do much more than just "automatically" distribute relevant content to attract potential prospects. Automated marketing processes can be used to create more personalized campaigns, both for lead generation and caring for existing customers. This is made possible by a legally compliant tracking of reading and clicking behavior integrated in the Marketing Automation software (MAS), in particular, accurately keeping track of marketing emails and whether they were opened, certain contents clicked on, or content downloaded. This can then be associated with the profile of the lead or client within the MAS and used to determine additional course of action based on their individual preferences and needs.
With this technology-based personalization, the relevance of individual content for the respective recipients increases and the success of the marketing efforts increases. This can be measured and evaluated with Key Performance Indicators (KPI) of the Customer Lifetime Values (CLV). This metric measures the value a customer brings to a business across their entire customer life. The CLV covers previous sales with a customer, as well as those that can be expected in the future based on the customer’s buying behavior.
The strategically embedded use of marketing automation enables you to significantly increase the CLV of each customer: your customer receives customized content and offers that can be used to cross- and up-sell, and therefore maximizing revenue with that particular customer. Cross-selling refers to the sale of similar products, up-selling to the sale of a higher quality product compared to what the customer originally searched for. You promote the economic growth of your company by increasing the customer lifetime value.
In order to effectively increase customer loyalty, sophisticated support along the entire customer journey is required right from the start, which conveys a sense of appreciation to the customer. The following practical example will show you how to use marketing automation software (MAS) to turn customers into steady customers and thereby increase customer lifetime value.
The provider of an electronic invoicing software solution offers useful content on their website - including an e-book "Electronic Accounting 5.0" and various helpful checklists on legal compliance, software selection and KPIs in electronic accounting. This can be provided as a download in the context of a legally compliant double opt-in procedure in exchange for the data of the interested party and therefore, successfully generating a lead. The software provider has developed these with a sophisticated, personalized lead nurturing campaign, and using MAS. Each lead receives information relevant to them - for the personal phase in the decision-making process, information is sent via e-mail and it is therefore possible to accompany the lead step-by-step to a purchase based on their needs. As a general rule, the purchase of a temporary basic license turns a lead into a customer.
However, customers who have been acquired this way only become regular and loyal customers if they get the impression that the provider recognizes and serves their individual needs. Therefore, it is the task of marketing to prove this to the customer through customized campaigns. An MAS is enormously helpful: By integrating the software with the CRM system, both marketing and sales have an overview of all customers at all times - for every customer it is possible to view data such as name, company, e-mail address, etc., recent purchases, as well as reactions to marketing content such as opening a newsletter.
With the help of all these features, target groups can be defined with just a few clicks and customized campaigns can be set up. Understanding customer needs based on the collected data helps with picking out the right, helpful content for the campaigns. Further customer reactions to these marketing measures are given by the following steps.
The software provider in the area of electronic invoices wants to devote itself to new customers who have acquired a one year basic license for the software. For these, the marketing department creates a nurturing e-mail campaign to expand the customer lifecycle. After purchasing a temporary basic license, the customer automatically receives a welcome email in which the provider thanks them for having decided on his solution and providing them with important information for using it (contact for customer support, link to the user forum, etc.).
In order to best support the new customer during the onboarding process, further e-mails with useful content will follow within the next few weeks. For example, in the second e-mail, the customer will find a step-by-step guide for the key features of the software, including a link to the website with the appropriate video tutorial. Now the customer is familiar with the solution, and in another email they will receive a list of software hacks for even more effective use.
After a few e-mails of this kind, with in-depth content that guides customers to the proper use of the software and thus promotes customer satisfaction, it is time for the provider to explore the cross-selling and up-selling potential. In this case, the marketing department has designed the email campaign to divide the new customers up into two new groups: a) those who have responded to the previous content, and b) those who have not.
For the latter, the responsible sales representative automatically receives a message from the marketing department with the request to personally contact the customer and to check whether or not they are satisfied or require further assistance. On the other hand, those who have read the info-mails and clicked on the additional links are ready and eligible for further contact. They will now receive emails encouraging them to purchase the premium version of the software. For example, such an e-mail can include a list of five good reasons to upgrade, as well as the link to the product website. If the customer's reading and clicking behavior signals a high level of interest in the full version, MAS automatically informs the sales department of that and transfers the customer to them so that they can complete the transaction.
With the software upgrade, the new customer is now a repeat customer - the first important step towards a long customer lifecycle. The provider would like to reward the customer for their loyalty and further assure customer retention: The "Upgrader" target group receives regular e-mails, which emphasize their status as a valued steady customer. Suitable content or measures here are online surveys for customer satisfaction, additional offers such as free webinars on relevant topics, invitations to customer events, etc.
At every point on the customer journey, it's also a good idea to send the customer a newsletter with content specifically tailored to the target group and the sales target. For example, a newsletter could help the provider filter out those customers from the group of premium users for whom further products in the portfolio could be of interest. As a result, the software company uses MAS to systematically exploit its cross-selling and up-selling potential - and maximize customer lifetime value.
Once you consider implementing an MAS, you should realize that marketing automation is more than just a software system: It's a digital strategy that affects all areas of the business. In the majority of cases, the marketing and sales department must rethink their processes from scratch and align them.
Where marketing used to be responsible for the website and newsletter, and sales responsible for purchases, both now work together to achieve the defined sales targets. Companies should take the big step of interlinking marketing and sales first, even before they think specifically about the technology issue. First of all, the processes have to be right, and only then should the search for their optimal technical implementation begin.
If you have taken these things into consideration and you have decided on an MAS, you should also deal with the subject of data protection . On May 25, 2018, the General Data Protection Regulation (GDPR), which regulates the processing of personal data of EU citizens, was implemented throughout the EU. Compared to the old EU data protection directive, it brings with it some changes, including the threat of higher fines for data breaches. When choosing a marketing automation solution, it is therefore crucial to be GDPR compliant.
Increasing customer demands today call for the highest precision in B2B marketing and sales. No decision maker wants to waste their valuable working hours with annoying, irrelevant advertising emails. The appreciation of the customers, which is measurable in a high customer lifetime value, can only be achieved by those who clearly segment the target groups and provide them with the right offers at every point of the customer journey - and even beyond the purchase or contract conclusion.
Marketing automation software helps you and your business by aligning the processes of marketing and sales, creating transparency between departments and creating the conditions for a coherent support of each customer throughout their lifecycle. The resulting sales opportunities are then very beneficial for business, and are measurable.
Practice makes perfect!
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Published on 06/04/2018 by Martin Philipp.
Martin Philipp is Managing Director of SC-Networks GmbH, provider of the email marketing automation solution Evalanche, where he is responsible for new customer business and customer loyalty. In addition, he has over 20 years of experience in consulting, marketing and sales of consultation-intensive, web-based products and solutions in the B2B environment.