academy CUSTOMER LIFECYCLE MARKETING HOW TO BUILD AN AWESOME SALES & MARKETING MACHINE Ometria Academy: Customer Lifetime Marketing

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1 academy CUSTOMER LIFECYCLE MARKETING HOW TO BUILD AN AWESOME SALES & MARKETING MACHINE 1

2 WHO IS THIS EBOOK FOR? It is intended for ecommerce marketeers, Heads of Ecommerce or anyone running an ecommerce store. WHY SHOULD YOU READ IT? You will learn the fundamentals and tactics behind becoming a lifecycle marketeer. Acquire the knowledge necessary to increase revenues and customer their development. 2

3 ALL-IN-ONE ECOMMERCE ANALYTICS FOR RETAILERS. GET A DEMO LEARN MORE ECOMMERCE REPORTING 360 View of your customers and products. CUSTOMER SEGMENTATION Target by engagement and transaction history. CLV ANALYSIS Optimise your marketing by lifetime value. MERCHANDISING Improve your product mix, from views to conversion. REALTIME DATA online store. CONVERSION FUNNEL Identify roadblocks along your path to conversion. 3

4 ABOUT THE AUTHORS Written by EDWARD GOTHAM Ed manages client relations and consulting at Ometria as the Head of Ecommerce. He delivers results, utilising a data driven mindset, across all areas of topics such as UI/UX optimisation. Designed by DJALAL LOUGOUEV Djalal is a technology entrepreneur and a co-founder of Design and product management. CONTENTS INTRODUCTION 5 THE 5 STAGES OF CUSTOMER DEVELOPMENT 7 CUSTOMER LIFECYCLE DEVELOPMENT 9 Acquisition > Activation > Retention ENDING NOTE 19 4

5 CHAPTER ONEINTRODUCTION This ebook explains the fundamentals of customer lifecycle marketing from ecommerce store. Customer Lifecycle Marketing machine. Let s get going! Customer lifecycle marketing (CLM) starts with creating the right thought process. I see too many retailers focused on optimising around conversions per website visit rather than the whole lifecycle. The key to success in CLM lies behind optimising for Customer Lifetime Value (CLV) and not conversion rate (CR) or revenue per visit (RPV). This is not to say that conversion rate does not have its place - it s a very important metric in the right scenario. 5

6 However the hierarchy is what is important. CLV trumps all others as a metric for therefore optimising over the course of a customer s relationship with your brand rather than at one point in time. This leads on to the concept of the customer lifecycle machine, which is made Retention. These elements nurture and guide the behaviour of your visitors and revenues based on maximising CLV. Throughout this process your visitors and customers will go through various stages of development, and understanding these stages is essential to creating the right sales and marketing machine. Before that, let s have a quick break to see how important CLM is! THE IMPORTANCE OF CLM 25% to 40% of the total revenues of the most stable businesses come from returning customers. (Sumall) Repeat customers drive 3-7 times the revenue per visit than one-time buyers. (500friends) The above quotes focus on repeat customers. Why? Because this is one of the 6

7 CHAPTER TWO THE 5 STAGES OF CUSTOMER DEVELOPMENT These are the core phases of evolution that will occur as customers are guided through your Customer Lifecycle Machine from a visitor to a loyal customer. Not everyone will advance through each progressive stage, many people will drop individual step. LEVEL 1 LEVEL 1 Prospect Prospect LEVEL 2 Lead LEVEL 5 Loyal Customer LEVEL 4 Repeat Customer LEVEL 3 Single Purchase Customer RETENTION & LOYALTY ACTIVATION ACQUISITION 7

8 THE CUSTOMER LIFECYCLE STAGES PROSPECT purchased from your online store or given you any other personal details. I like to refer to this group as prospective customers, it s good practice to think of all your visitors as opportunities. LEAD Leads are prospects who have performed a micro conversion, such as signing up to your blog, and giving you some personal information in the process. The most important information to gather is the address. You can then use this to market to them after they have left your site, optimising the customer-prospect conversion rate through nurturing. SINGLE PURCHASE CUSTOMER REPEAT CUSTOMER Individuals who have made more than one transaction with you but are yet to become loyal customers. LOYAL CUSTOMER stores. However as a guideline I like to say loyal customers are those that have completed more than 3 transactions, have been a customer for more than 6 months and have performed a transaction in the last x months. The x months should be relevant to your average sales cycle. 8

9 C H A P T E R THREE CUSTOMER LIFECYCLE DEVELOPMENT: THE SALES & MARKETING MACHINE Ok, we have covered the main stages of customer development, so now we can look at the system that guides and optimises the transition of your customers through each stage. The customer lifecycle machine is made up of three core ACQUISITION > ACTIVATION > Converting Customers RETENTION > OUTBOUND ACTIVATION INBOUND FUNNEL NURTURE FUNNEL ACQUISITION RETENTION & LOYALTY ONLINE ASSETS PRODUCT REACTIVATION CHURN NURTURE VIRAL LOOP 9

10 ACQUISITION GOAL To acquire the highest quantity of relevant visitors, who are new to Relevant visitors refers to individuals who are likely to be interested in your which will be calculated by comparing the cost of customer acquisition (CoCA) per channel in relation to customer lifetime value (CLV). This target will be manipulated based on a business s current business model. If you are early stage and going through rapid growth you may be able to customers until you reach a certain scale. ACQUISITION TACTICS Acquiring prospects relies on a well structured marketing strategy that targets Research, Intent). I recommend utilising highly targeted marketing tactics in each INBOUND Blog, Ebooks, Free tools, Social, SEO, PR, Videos, OUTBOUND Paid search, PR, TV ads, Paid Radio, Paid Print, Telemarketing. 10

11 PRODUCT Product acquisition tactics revolve around building virality into your but it can be incredibly rewarding. Take Diamond Candles as an example. Their product spread virally through word of mouth due to the free diamond ring you received with every candle. The friends of customers often commented on the rings and were subsequently made aware of diamond candles.they made their product into a marketing tool. A viral loop directly related to buying a product...you can t really ask for much better. ONLINE ASSETS helped them to grow very quickly and get a big lead over their competitors. IMPORTANT METRICS & ANALYSIS TECHNIQUES: Segmentation Cohort Analysis 11

12 ACTIVATION GOALS Primary Goal - To convert prospects and leads into customers Secondary Goal - To convert prospects into leads by gathering personal information such as their , gender etc. After new users have arrived on your site it s all about activation, which is the process of turning prospects and leads into customers. Many people think that you need to activate visitors into customers straight away with a macro conversion - i.e. a transaction - however I advocate using a more long term strategy. It s important to understand that many people need to be nurtured into customers, and you will need to foster engagement through micro conversions before going straight for the sale. For example people may need to learn the value behind your products and brand before converting. Try to focus on encouraging micro conversions that you know increase the likelihood of a prospect eventually customer behaviour data. It is also very important at this stage to obtain someone s address so that you have the ability to market to them at a later stage. Without that information you have no way of individually targeting those individuals again until they come back of their own accord - which of course many will never do! ACTIVATION TACTICS: CONTENT MARKETING 12

13 FIRST PURCHASE DISCOUNT / FIRST PURCHASE FREE SHIPPING TIME LIMITED OFFERS HIGHLY TARGETED LANDING PAGES BASED ON ACQUISITION CHANNEL IMPORTANT METRICS & ANALYSIS TECHNIQUES Prospect-Customer Conversion rate (CR) Prospect-Lead CR Lead-Customer CR CLV Customer segmentation/behavioural Analysis Cohort Analysis RETENTION & LOYALTY GOALS purchase value. You want to know the value customers give you over their whole lifecycle, not just at one point in time. 13

14 TO IMPROVE AVERAGE CLV YOU WILL NEED TO NURTURE AND ENCOURAGE YOUR CUSTOMERS TO LEVEL UP THROUGH YOUR CUSTOMER DEVELOPMENT STAGES: CONVERT SINGLE PURCHASE CUSTOMERS INTO REPEAT CUSTOMERS Find the behaviour which caused previous customers to become a repeat customer and optimise your site for it. CONVERT REPEAT CUSTOMERS INTO LOYAL CUSTOMERS Cluster together the customer behaviour which was condusive to converting repeat customer into loyal customer and further optimise your site for it. MINIMISE CHURN an inactive customer as someone who hasn t purchased in a time frame that is 25% more than your average sales cycle. However if you customer once they have churned. It s even more expensive to gain a new customer - It costs 5-6x more to gain a new customer than to keep an existing one. 14

15 RETENTION & LOYALTY TACTICS: IMPROVING AVERAGE CLV Segment your customers by behaviour and create highly targeted marketing buyer persona. There are some personas that are relevant to the majority of HERO CUSTOMERS Your top 1% of customers can generate as much revenue as the bottom 50% combined. (RJmetrics). 1-2% of customers by CLV. Have a high level employee phone them personally. Invite only events. Add handwritten notes to their purchases. Prioritise their orders when stock picking, to ensure they receive them promptly. 15

16 EVANGELISTS communities. Give them the tools necessary to promote your brand in order to encourage and easily facilitate word of mouth marketing. ECONOMICAL CUSTOMERS These customers have a tendency to only purchase when discounts too often, or too regularly, so as to prevent your customers become conditioned to always wait for the next deal. Having said that, there will always be price sensitive selection of people so you can obtain better margins from your less price sensitive customers. BIG BUT INFREQUENT SPENDERS These individuals have a very high AOV value but purchase infrequently. It is likely these individuals have a lot of disposable income. Send special promotions based on their purchase behaviour to try and gain a larger share of wallet. 16

17 NEW CUSTOMERS when they are most impressionable. Utilise welcome/ follow up s, how to guides etc. and customer service and brand development - a mix of highly targeted personalisation and promotions with helpful, interesting, and brand-building content. You need to continually optimise throughout the buying cycle and take care of your best customers. It s all about customer segmentation. The ultimate goal would be for all your customers to be hero customers! However this defeats the point, as we know your hero customers are the top 1-2%. Therefore the goal is not to optimise for only which make up your repeat and loyal customer base. Many customers will never become heros or evangelists, but enough will if nurtured properly. Optimise your which funnel them towards your goals. IMPORTANT METRICS & ANALYSIS TECHNIQUES: Again this will vary wildly based on your individual business, however I ve listed some key metrics below. CLV (By persona/development stage) Single Purchase Customer to Repeat Customer conversion rate Repeat Customer to Loyal Customer conversion rate % monthly churn Recency 17

18 Frequency Engagement (Micro conversions) Share of wallet Cohort Analysis Customer Segmentation 18

19 ENDING NOTE Thanks for reading. We have now covered how the sales and marketing machine functions. We welcome your feedback, as well as any ideas you have for creating a customer lifecycle marketing machine that we may not have covered here. Please SHARE THIS EBOOK: 19

20 ALL-IN-ONE ECOMMERCE ANALYTICS FOR RETAILERS. GET A DEMO LEARN MORE ECOMMERCE REPORTING 360 View of your customers and products. CUSTOMER SEGMENTATION Target by engagement and transaction history. CLV ANALYSIS Optimise your marketing by lifetime value. MERCHANDISING Improve your product mix, from views to conversion. REALTIME DATA online store. CONVERSION FUNNEL Identify roadblocks along your path to conversion. 20