Neal Freeland

Engineering/marketing manager, family guy. My personal blog with a few work thoughts mixed in.

Deepen customer relationships with Lifecycle Marketing

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Marketing for online businesses often feels like trying to fill a bucket with a hole in the bottom: new customers come in, but at the same time old ones leave. Many days it feels like no progress is being made. Even Twitter, with incredible viral growth powered by free promotion from celebrities like Ashton Kutcher and Oprah Winfrey, has a retention problem. According to a recent Nielson study, an astonishing 60% of Twitter users do not return the following month, a group Nielson calls the “Twitter Quitters.” The typical response from marketing when faced with low retention is often to increase acquisition efforts to replace the customers who leave. But when faced with a leaky bucket, instead of pouring in more water wouldn’t it make sense to at least plug a few of the holes?

They best way to solve a retention problem is to think about the end to end customer experience. Acquiring a new customer is not the finish line of marketing, it’s the starting line. What happens after acquisition is really critical to creating long term relationships with customers.

In my marketing experience, we’ve used a simple framework – we call if Lifecycle Marketing – to guide our engagement marketing efforts. We don’t just have “users” (the typical industry term) of our products. Rather, we think about helping to create active members of a community, and look for ways to guide them through the process of becoming more involved and vested in their community. We do this as follows:

  • Identify member segments. It is important to have as much data as possible. Generally behavioral data is most valuable as it is concrete and actionable. Try to find activities that predict loyalty: members who watch a video, send an email, or invite a friend usually have longer lifetimes and create more revenue than those who don’t. Here’s a simple version of a segmentation framework:

 

As your marketing efforts expand, these segments can be made richer and encompass more detail about member activity. For example, gaming businesses might find it makes sense to distinguish between core and casual gamers, or within core between war gamers and sports gamers.

  • Engage each segment. Each segment is assigned specific, targeted actions designed to drive deeper levels of engagement and membership. In executing these actions, there are three considerations: first, it’s important to develop content and offers that match the member segment. For new members this might simply be a checklist of three things they should do right away, or for loyal members it could be a sweepstakes offer with clear call to sign up for an additional service. Next, content and offers must be communicated effectively and as widely as possible, using email, blogging, web site promotion, or contextual hooks in the product itself. Members have different preferences for receiving information, and repetition of a message is valuable to drive action. Finally, seek ways to communicate interactively with members. Don’t just broadcast your messages, get out where your members are active and collaborate with them.
  • Learn and improve. When starting engagement marketing programs, don’t try to be perfect. Instead, be open to learning. The best way to learn is to try lots of different types of offers and content, and allow feedback (via activity data) from your members to determine which ones work best. While retention rates are critical, they are an outcome of driving increased activity, so be sure to look at all the steps leading to more activity. Then draw lessons from those successes and create a list of best practices to guide future program development. Remember to keep a control group (~10% of total members) which receives no marketing treatments so you can measure lift and calculate the return on your investment. And once you think your programs are all set, go back and review the lifecycle all over again.

Following these basic guidelines of Lifecycle Marketing will help drive deeper engagement with your product. Since engaged members are loyal members, revenue will improve and the positive word of mouth will lower acquisition costs, creating a virtuous cycle for your marketing efforts.

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Written by nealfreeland

May 1, 2009 at 8:33 pm

Posted in Uncategorized

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