- Applying a customer strategy to build customer affinity is essential because strong customer relationships are a leading indicator to increased customer purchases, referrals, customer lifetime value and retention; all factors that deliver significant and sustained revenue growth.
- Customer success strategies design, build and scale customer relationships that generate increased revenues as measured by customer purchases, customer share and customer retention. They define what the customer and the company want, and they design the methods to achieve both profitably.
- A research study revealed that most companies do not have recognized or formal customer success strategies. However, those who did outperformed those who did not. The research also found the four most used customer strategies are Customer Relationship Management (CRM), Customer Experience Management (CXM), customer engagement and customer loyalty programs.
Customer success strategies create and grow customer affinity. That's important because affinity is a leading indicator for increases in purchases, customer lifetime value and retention. It turns first-time buyers into repeat buyers and repeat buyers into advocates. And that makes customer affinity one of the company's most valuable and durable assets.
In fact, growing mutually rewarding customer relationships based on an emotional connection creates a competitive advantage that can withstand disruptive technologies, competitor encroachment and the erosion of other competitive advantages.
But achieving customer affinity doesn't occur by happenstance. It requires a well-executed customer strategy. That strategy defines a systemic approach to achieve affinity and downstream revenue and profit objectives.
Customer success strategies are designed to satisfy customers and in turn increase customer acquisitions, grow customer share, and improve retention. And do these things at the least cost.
A customer success strategy must define how the company will align and engage customers. It must apply technology to automate and scale customer relationships. And it requires analytics to measure success or inject course corrections.
These things are no small effort. But the customer success strategies provide frameworks to help.
Customer Success Strategy Research Findings
Research performed for The CRM Benchmark Report set out to identify the most utilized and most effective customer strategies. We also wanted to measure and rank benefits and ROI. Data from the research survey surfaced the following findings.
The Top 4 Customer Success Strategies
Four customer success strategies were most pervasive among respondents. The below chart shows the most adopted strategies among all respondents and the Best-in-Class respondents (i.e., the top 15% as measured by customer strategy ROI).
Below is a recap for these four customer strategies.
- Customer Relationship Management (CRM) is most often a technology-based relationship strategy. If there's an overarching flaw with this strategy, it's that adopters sometimes fail to recognize that it is both a customer strategy and enabling technology and incorrectly adopt the technology in a vacuum.
Without the strategy the technology is aimless. Staff pursue what is easiest instead of most important and execution becomes haphazard. But together the CRM strategy and technology create a symbiotic relationship to consistently and predictably grow customer relationships at scale. This then achieves the essential downstream benefits such as increased customer acquisitions, customer share and retention.
To get more strategic value from your CRM software, check out how to benefit from a CRM strategy.
- Customer Experience Management (CXM) is a strategy designed to deliver differentiated customer experiences throughout the customer lifecycle. It defines the distinctive experiences that the company will deliver to make customers feel delighted, appreciated, valued, engaged or rewarded.
Not all experiences are equal in building relationships. So, the customer experience strategy focuses on the processes and technologies that produce the experiences that most matter and avoids wasting time with activities that don't.
- Customer Engagement is most often an activity-based relationship strategy.
Active communication is the bedrock of relationships, whether personal or professional. A Customer Engagement strategy is a business communication program built on proactively designed interactions to create a dialogue and emotional connection between a customer and brand.
Success is based on the quality of interactions more so than the volume or duration of connections. Engaging customers across channels and touchpoints and throughout their lifecycle helps companies create a personal and emotional connection and grow customer value beyond just products and transactions.
- Customer loyalty programs based on promotions and discounts are costly and seldom improve customer relationships. But loyalty programs based on gaining customer intelligence can be extraordinarily valuable and acquire the customer data to deliver more relevant, personalized and contextual communications and engagement.
The best loyalty programs are designed to acquire customer intelligence, increase customer lifetime value (CLV), shift customer purchases to higher margin products, increase customer retention and shift loyalty from products to the brand.
They are less about periodic sales incentives and more about reinforcing the brand's distinctive qualities.
The Top Customer Strategy Benefits
We asked survey participants to rank the top 3 customer strategy benefits. The results are shown below.
When the data was compared by performance archetype it demonstrated more differences than similarities.
Both Laggards (i.e., the bottom 35 percent) and Medians (i.e., the middle 50 percent) cited improved customer data management as the top benefit. While customer data is important, it's not a business outcome. This response suggests the strategy for these cohorts was largely a technology project whereby staff enter customer data to a CRM system.
The data was skewed for the Best-in-Class respondents. This cohort cited business benefits first and customer data management last. It should not be lost on readers that respondents with the most successful customer strategies cited revenue growth as their top benefit.
Customer Strategy ROI Results
Understanding the most used customer strategies is interesting. But understanding their financial impact is more important.
So, we asked participants to rate their customer strategy ROI. We advised that ROI should be measured as the incremental revenue directly attributable to the strategy less the costs incurred. The results are shown below.
The volume of respondents that did not measure their customer strategy ROI was surprising. However, when filtering the results by performance archetype it was less surprising that 76 percent of the Best-in-Class cohort achieved a 'Significant ROI' from their investment.