Customer Marketing: Definition, Strategies, and Best Practices

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Customer marketing holds the key to sustainable and economic growth. Build a plan of action for your team by:

  • Establishing metrics for retention and growth
  • Choosing your ideal customer marketing strategy
  • Targeting the right customers to promote your brand

What is customer marketing?

Customer marketing focuses on elevating and leveraging current customers’ experiences to improve retention and growth. Successful customer marketing relies on properly segmenting your audience, effectively engaging with customers, and maintaining a customer advocacy program.

The value of customer marketing is two-fold:

  1. Retention
  2. Growth

No doubt you’re familiar with the handful of statistics on customer retention. Acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one.

Put in the effort to engage that customer and you’ll see 3x the annual value compared to other customers.

The real value, then, lies in turning that satisfied customer into a brand marketer in their own right. It’s no wonder our final stat reveals that a 5% increase in customer retention can increase a company’s profitability by 75%.

customer marketing stats infographic
Infographic from Customer Marketing: Definition, Strategies, and Best Practices

With an emphasis on quality over quantity, customer marketing strengthens client bonds while attracting new users. Marketing teams can actually decrease spending while increasing loyalty and customer lifetime value.

First, provide an exceptional customer experience that makes customers want to stick around. Then, establish a full-fledged program that makes it easy for current customers to invite new ones.

I won’t mince words: retention comes before growth. Focus on keeping your current customers happy and growth will follow.

But how?

Start by looking at the numbers. Determine the metrics you want to track, find your baselines, then set goals to improve them.

We’ll begin by breaking down the metrics to track retention and growth, then define the types of customer marketing strategies that will move these metrics, and finally show you how to reach out to the right customers with that strategy in mind.

Customer Marketing: Definition, Strategies & Best Practices
Download Customer Marketing: Definition, Strategies, and Best Practices for the full breakdown

Inspiring loyalty with customer retention marketing

Customer retention marketing focuses entirely on increasing retention and decreasing churn with regards to current customers.

The end goal here is not necessarily to get customers to market for you (yet!), rather it’s to make your current customers as happy as possible. Focus on improving customer experience, innovating your products or services, and implementing customer feedback in a meaningful way.

Follow these three retention metrics to understand the health of your current customer base:

1. Customer retention rate

Definition

Customer retention describes the ability of a company to maintain its current customer base after acquisition.

Calculation

First, set a time period you want to measure (i.e. past week, month, quarter, year) then gather the number of customers:

  • At the end of the time period
  • Added during the time period
  • At the start of the time period

Subtract the number of customers added from the number at the end of the period, divide by the number at the start, and multiply by 100.

retention formula for customer marketing metrics

2. Churn

Definition

Customer churn describes the drop off in engagement with a customer, whether they no longer actively use a product or formally end a service agreement.

Calculation

Set a time period you want to measure (i.e. past week, month, quarter, year) then gather the number of customers:

  • At the end of the time period
  • At the start of the time period

Subtract the number of customers at the end of the period from the number at the start, divide by the number at the start, and multiply by 100.

churn formula for customer marketing metrics

3. Customer lifetime value

Definition

CLTV or CLV (Customer lifetime value) measures the potential amount of money a customer could bring to your business over the entirety of their relationship.

Calculation

Gather the average:

  • Order value of one of your product(s) or service(s)
  • Number of repeat purchases
  • Time your customers stay with you

Multiply average order value by average amount of repeat purchases, then multiply again by average amount of time customers stick around.

CLTV formula for customer marketing metrics

Promoting advocacy with customer centric marketing

Customer centric marketing leverages your relationship with current customers to successfully execute a strategy to reach new customers.

The bottom line with this strategy is to increase the number of new customers. Focus on establishing a transparent program for advocacy, rewarding those who participate, and continually optimizing the system to inspire growth at scale.

These three growth metrics will help you track the success of your customer centric marketing:

1. Customer acquisition costs

Definition

CAC (customer acquisition cost) reveals the amount of money needed to bring a new customer into your business.

Calculation

Set the time period you want to measure (i.e. past week, month, quarter, year) then gather the amount of:

  • New customers added
  • Money spent on marketing and/or sales

Divide money spent by new customers.

CAC formula for customer marketing analytics

2. Net Promoter Score

Definition

NPS (Net Promoter Score) measures a customer’s desire to recommend a product or service to a friend or colleague using an NPS survey.

Calculation

Set a time period you want to measure (i.e. past week, month, quarter, year) then gather the percent of:

  • Promoters from your NPS survey
  • Detractors from your NPS survey

Subtract the percent of detractors from the percent of promoters.

NPS formula for customer marketing analytics

3. Average order value

Definition

AOV (average order value) measures the average amount of money your customers spend on any one transaction with your business.

Calculation

Set a time period you want to measure (i.e. past week, month, quarter, year) then gather the total amount of:

  • Revenue
  • Orders

Divide revenue by the number of orders during the desired time period.

AOV formula for customer marketing analytics
Want to keep these metrics on hand while you work? Grab a PDF version of this article!

Customer driven marketing strategies

Once you clarify your metrics, you’re ready to invest in customer driven marketing strategies. Get inspired by these customer marketing examples to help grow your user base.

We’ll break down each type of strategy to help you decide which one is best for your organization.

customer marketing strategies chart

Case studies

Case studies provide a somewhat scientific approach to drawing in more customers by detailing the exact problem and solution that your service can provide. By diving deeper into a particular client’s experience, you show potential customers exactly how it could apply to them.

Choose a few different types of customers to target your ideal client base. Get the most out of these personas by really differentiating them. Think about which customers are most valuable to you, and which customers can get the most value from your business.

Keep case studies on your website, making it easy to find for newcomers eager to learn more. Stick to numbers and concrete examples to really make the case study pop.

Here at Groove, we devote an entire page to “Customer Stories.” Each study is broken down by important characteristics like industry, location, and number of employees. Readers can choose a similar company to see how our product works for them.

case study example
Case studies from the Groove website

Reviews and ratings

Reviews and ratings offer a candid opinion of your organization, as told by customers themselves. Your strategy should aim at two types: (1) onsite and (2) offsite.

Onsite reviews sit clearly on your website, enticing browsers to become purchasers. Especially for e-commerce, customers weigh these reviews heavily when deciding which product to buy.

Most e-commerce sites embed reviews directly onto the purchasing page. Keep a close eye on these reviews and respond immediately to any less-than-stellar comments. This is often the last thing a customer views before actually purchasing.

customer marketing onsite review example
Onsite review for Califia coffee

Califia provides onsite reviews for each of their dairy-free drinks. Product descriptions highlight the number of stars and reviews for each item. Customers can scroll down to see the complete list of written comments to help make a final purchasing decision

Offsite refers to third-party aggregators (like Yelp, Google Business, Apple’s App Store, or Google’s Play Store) that host a database of numerical ratings and reviews.

You have less control over customer sentiments on these platforms, but it’s often the first place potential customers will look. Create a protocol for checking in on these reviews and responding to customers, just as you would do for your support inbox.

Maintain a constant and professional presence on these sites to let viewers know that you prioritize feedback and will engage with customers on whatever platform they prefer.

Califia manages their offsite reviews with the same care as their onsite ones. Knowing how much a review can affect purchasing decisions, they respond to negative comments immediately.

customer marketing offsite review example
Offsite customer review and response from Califia

Testimonials

Testimonials encourage prospective clients to trust your business by hearing directly from current customers. Testimonials are typically shorter than case studies, some may be a simple quote. Unlike reviews, a business solicits these positive snippets directly from happy customers.

Get concrete examples when asking for customer testimonials. More often than not, you’ll want this request to come about naturally.

For instance, say a customer offhandedly mentions in a support email how your software has helped them retain or acquire more users. Your support team should be on the lookout for these statements, ready to pounce. You want these customers providing testimonials.

Post testimonials throughout your site on relevant pages. Add a visual element, and as much detail as possible, so these quotes stand out to newcomers.

ChowNow, a food ordering system, has some of the sleekest testimonials I’ve seen. They include the customer’s name, title, company, and video alongside a hard-hitting pull-quote to capture a viewer’s attention.

customer marketing testimonial example
Customer marketing testimonial on ChowNow’s website

User-generated content (UGC)

UGC (user-generated content) relies on customers sharing their own stories about your business offerings without (seemingly) any prompting. This type of marketing is especially prominent on social media and within online communities.

The goal is to inspire customers to post pictures, videos, tweets, and blogs featuring your product without necessarily soliciting them.

UGC doesn’t need to come from an explicit ask, instead present a unique experience that subtly nudges them to share it with the world.

Billie, a women-centric shaving and body care brand, has essentially mastered the UGC strategy. Customers post photos of their Billie razor on Facebook, Twitter, and Instagram. Each post includes a hashtag so followers can find out more about the company. Billie’s bold colors and unique packaging encourage customers to post on social media without the company even needing to ask.

customer marketing user generated content example
User-generated content for Billie razors on Facebook, Twitter, and Instagram

Influencers and micro-influencers

Influencers and micro-influencers are individuals who hold the attention of a devoted group of followers in a particular field. Like UGC, this strategy is often used in social media.

However, influencer marketing typically requires actual back-and-forth between your company and the influencer, usually involving payment of some kind.

On a large scale, well-known influencers can reach hundreds of thousands of people with a single post. Micro-influencers target a smaller, more niche group, offering authentic advertising opportunities and a precise injection into a desired community.

If you’re in e-commerce, apps like UserGems or Gatsby make it easy to find out who among your existing customers are influencers and propose a collaboration.

Hip Mommies, a curated shop for baby and toddler goods, boasts an impressive amount of micro-influencer content on Instagram. The company reposts photos of customers using their products, most of whom have over 1000 followers themselves.

customer marketing influencer example
Hip Mommies reposts a micro-influencer’s content about their product

Collaborations like these are often a win for both parties, offering targeted exposure for both your business and the influencer’s account.

Since influencer marketing is a relatively new growth strategy, be deliberate with your expectations. Set numerical goals for new customer acquisition, ask potential influencers to provide data for expected outcomes, and use tools to track exactly how many customers are coming in from this channel.

Referral programs

Referral programs set up a definitive system where current customers can invite new customers to your business in exchange for something of value. The key with this marketing strategy is to be explicit and persistent so every customer knows how to easily refer people.

Referral programs are one of the most tangible ways to encourage customers to market on your behalf. Follow customer marketing best practices by tracking all the metrics associated with the program and constantly tweaking it for ease of use.

Native personal care products put their referral program front and center. Immediately after purchasing, a pop-up window simplifies the entire program. They break it down into simple steps, provide buttons for social sharing, and even generate a pre-populated email.

customer marketing referral program example
Native’s customer referral program

Customer lifecycle marketing

Customer lifecycle marketing focuses on charting out the entire journey of a customer then implementing specific tactics at strategically chosen points of the life cycle. A good plan for customer lifestyle marketing will pinpoint when to reach out to certain customers and how.

Compile data to segment customers

The first step in implementing customer lifecycle marketing is to segment your customer base. Make your customers feel special by catering to their unique demographic.

Data points could include basic information like location, gender, or age. Or, segmentation can get as granular as date of first purchase, date of last purchase, or even number of customer support emails sent.

Figure out what information is the most crucial to understanding your customers, then compile data like crazy until you have the complete picture.

Influence customer behaviors

Using the data from above, you can start to draw conclusions and influence customer behaviors.

The retention and growth metrics we explored earlier will help you establish baselines. Once you know the average numbers for your entire customer base, use segments to see which demographics are below or ahead of the curve.

For instance, customers over forty years old may have a churn rate of 40%, whereas customers aged under forty churn at 60%.

Use a strategy from above to target the under-forty crowd. Encourage these customers to participate in your referral program by offering a special incentive. Track churn rate during this campaign to see if metrics improve.

Trigger customer marketing emails based on touch points

Emails are the simplest and most effective way of engaging with customers once you’re ready. Add even more efficiency by automating customer marketing emails to send at the right time.

Here’s our quick guide on when to approach customers, broken down by strategy:

customer marketing strategy and approach guidelines

Customer marketing action plan

Combining customer experience and marketing techniques can seamlessly grow your business and customer base. Use this abbreviated action plan to simplify your customer marketing strategy:

customer marketing plan overview

Put this plan into action then re-visit your metrics. When applied accurately, customer marketing can increase both retention and growth. It’s the two-for-one special that you can’t afford to not take advantage of.

Ready to take your customer marketing plan to the next level? Download a PDF of this article to help you strategize and execute the growth plan of your dreams!

Melissa Rosen
Melissa Rosen Melissa is a content creator at Groove. Her background spans running customer support and experience at startups to running script changes on live TV shows. Her goal is to help businesses grow by offering practical and actionable ways to improve customer experience.