What is customer relationship marketing?

What is customer relationship marketing (CRM)?

Customer relationship marketing is a product marketing strategy that companies use to center their business and product marketing efforts around customer relationships, customer needs, and customer loyalty.

The approach focuses on using customer feedback and data to optimize product marketing.

In this piece, we'll focus on:

Benefits

Companies invest heavily in their customer marketing efforts to improve their customer retention, reduce churn, and boost customer loyalty, brand advocacy, and community participation.

A method hinging on customer segmentation, engagement methods, and customer advocacy programs, customer marketing strategies hone in on leveraging the experiences of existing customers, to improve both retention and growth.

Customer marketing and product marketing are key components in B2B Marketing. However, it is important to keep in mind when you talk about your product and solutions, it’s marketing. When your customers talk about your products and solutions, it's evidence.

Externally, a customer marketing organization should work to build strong relationships with their customer communities to build strong engagement that will lead to advocacy. Internally, customer marketing and product marketing partnership are important to enable a better experience for our customers.

Disadvantages

Customer relationship marketing requires sustained commitment and a company must instill a compatible business culture to support it. Everyone from customer service reps to C-Suite executives has to be on board.

Plus, not only is it expensive to execute, but it’s also time-consuming and takes time to enforce.

What are the types of customer relationships?

1. Loyal customers

Loyal customers are customers who come to you repeatedly for products or services.

These types of customers are worth their weight in gold and are an indicator of when the work you’re putting in on improving your brand is hitting the right notes.

2. Discount customers

Discount consumers only buy your product or service if it’s been discounted and is not listed at its full retail price.

While difficult to manage, it isn’t beyond the realms of possibility to manage them and keep them onside - it’s all about being creative and thinking outside the box.

3. Impulse customers

Impulse customers don’t necessarily have pre-determined plans to purchase your product or service. Rather, their purchase is a spur-of-the-moment decision, that can sometimes arise from a situation when they weren’t considering buying anything at all.

4. Need-based customers

The buying decisions of need-based customers are influenced by a specific need. They’ll enter a store or enter your website knowing exactly what they want, why they want it, make the purchase, and then leave.

Because they’ve made a decision already, upselling and cross-selling to this segment of your customer base can be challenging, though not impossible.

Why is customer marketing important?

1. Greater propensity to buy

We’ve all been in a position where we’ve experienced mediocre customer service.

Similarly, we’ve also been made to feel like royalty by a company and been inclined to put our money into their pockets, instead of their competitors.

This principle applies when marketing to existing customers; they’re 50% more likely to try new products and spend 31% more compared to new customers.

Key takeaway? Never underestimate the influence of great customer service; a positive initial experience with your product will boost the chances of a repeat purchase.

2. Get to know your customers

When product marketers are doing their utmost to attract new customers, buyer personas are used to try and understand the target market.

Sure, it’s effective, but it takes time. And time, as they say, is money.

Rather than imagining who your customers are, customer marketing strategies help you use real-life examples, through use cases and case studies, to develop user personas and buyer personas.

3. Customer retention

Customer marketing strategies are pivotal in staving off churn and increasing retention rates. If a customer marketing strategy is executed well (i.e. your product messaging hits the right spots, they’re engaged, and your relationship’s watertight), then why would they go elsewhere?

The longer your customer uses your product, the more reluctant they’ll be to sever ties - and that’s great news for company revenue.

4. Customer advocacy

Customer advocacy is one of the most valuable ways of adding to your customer base. There’s every chance you could land additional business in the form of recommendations or referrals.

When a customer sings your praises and shouts how good your product is from the rooftops, they effectively do the hard work for you, offering their respective networks authentic, reliable feedback.

What are the factors that impact customer relationships?

Customer understanding, service, and technology all impact customer relationships.

Customer understanding

Choices

Customers must understand they’re not there purely for financial purposes. Your most loyal clientele seek reassurance that the company they’re buying from has their best interests at heart.

It goes a long way when a company tailors the buyer experience to the individual requirements of each customer. For example, offering a selection of flavors of food or drink, or garment colors based on previous purchases may not seem important, but when a customer has a selection to choose from, they’ll feel as though they have more autonomy during the buying process.

That said, it’s important to remember that too many product choices may leave your customer feeling overwhelmed, which could lead to them seeking an alternative elsewhere.

Preferences

Never underestimate the power of customer preferences - you should cater to the demands of your audience, wherever possible, so they can see you’re doing everything possible to make sure they’re satisfied.

Whether it’s payment methods, delivery options, and marketing preferences, you must always have a thorough understanding of your target audience. If you don’t give people what they want, they’ll go to someone who will cater to their requirements.

Personalization

Personalization is a commonly used method amongst marketers that can make your communication stand out when compared to that of your competitors.

Service

Customers often attribute value to friendly service, and whilst it’s relatively straightforward to offer service with a smile, there’s more to it than meets the eye.

Ultimately, customer service is defined by whether you’re fulfilling customer needs, regardless of the requirements.

Effective service can be characterized as being convenient, intuitive, and in tune with what you’re able to offer; it’s important not to make promises to your customers that you can’t keep.

Technology

When your product or service doesn’t perform as expected, you run the risk of frustrating your customers, and this can quite easily see them jump ship and look for an alternative to your offering.

However, the emergence of technological elements such as social media, websites, blogs, and apps has played a critical role in how contemporary businesses operate and the level of service that can be delivered.

Technological platforms are being increasingly used by IT-literate companies to provide a stellar customer experience and gain a competitive edge over their rivals.

When technology is successfully implemented, this can make your product or service easier to navigate for the user, and increase performance levels, e.g. website loading times, which only bodes well for user experience and subsequent customer relationships and retention.

How to optimize your customer relationships

Igor Kranjec, Head of Marketing at Mediatoolkit, outlines the factors that contribute to building effective customer relationships:

As a product marketer, I’ve always been aware of the importance of customer communication. Marketers tend to send dozens of different newsletters.

Personally, as I am sure many of you do too, I ignore most of them. The one email I never ignore is the one marketers keep forgetting about, the ground zero of product marketing communication – product and feature updates.

I’ve been part of dozens of product launches in a few different organizations and one thing is certain - communication plan has a big role in Go-To-Market strategies. But what happens after the big bang? Product development does not stop, that’s when it begins, again.

Products evolve (or at least they should) and continuous updates are expected so you can stay competitive and respond to the customer’s needs and pains. This is where we often forget about customer communication.

We release new features, big or small, without preparing our customers, expecting them to nail the usage, hoping the feature adoption will come by itself. It has even happened to me numerous times - I discover a new feature accidentally and think – I just wish I had known about it sooner!

Nurture your existing users, and create new power users

Every product has its power users – individuals that know every corner of your product and utilize the biggest portion of the product’s features.

By establishing continuous communication with your entire customer base, you’re not only nurturing the champions, but you’re also enabling more users to join the power user base simply by increasing the feature adoption.

In the SaaS business, one must look at every new feature as an opportunity to provide your customers with new, additional value. This directly affects retention rates, as unused features pose a threat to customers thinking they are paying for features they do not use.

This can lead to down-selling (better case scenario, they just decrease the tier or number of modules) or even churn (worst-case scenario, they switch to a provider that offers a better service, in their eyes).

It’s hard to expect to see feature adoption if your users are not aware of the updates. One of the hardest feedbacks I got from one of the customers was “I haven’t seen any improvements in years”. It struck me because I knew how much our Product Managers are working on updating the product. The customer just wasn’t aware of it.

I knew how dangerous this was, especially for subscription businesses, where this feeling can impact the decision of the customer not to renew. This made me realize once again, how feature release communication, although basic, is an important factor in increasing adoption and retaining customers.

The “right message at the right time” mantra

Email is not dead! I’m a great supporter of the new channels when it comes to customer communication but in B2B, email is still the king. It stays in the inbox, unlike the notification, and allows you to return to the content when needed.

Whichever channel you choose, be sure to communicate the benefit to the customer. In my experience, the approach that worked the best was to send an announcement email to the users in advance.

The email should have enough information for them to see what’s expected and to prepare their process, should they change due to the new features. The email contains the WHY and WHAT of the new feature. It then provides links to your dedicated release notes page that holds details on the HOW.

On the day of the launch, use the in-app announcement whenever possible. Make it short, and redirect the users to the release notes page, or provide a guided walk-through of the new functionalities.

Why in-app? It’s contextual, it happens inside the tool. Also, it has a very high open and read rate. I’ve used in-app regularly, and had up to 80% of the users read our release notes that were published inside the product!

After the release, based on product metrics and usage, your Customer Success Managers can approach the customers to ensure feature adoption and create upsell opportunities.

Creating upsell opportunities

For products that are not all-inclusive in terms of pricing, upsell and expansion is the key to generating new revenue from the existing customer base. Having worked in customer base marketing for years, I can confirm the theory that it’s easier to sell to your existing customer than to the new one – but it’s not that one-dimensional.

For the customer to even think about expanding or upselling, you need to create additional value. Features don’t create additional value themselves. Benefits that come from using the feature do!

I always turn to the washing machine example. When you buy a washing machine, you’re buying clean clothes. If we say that all washing machines do that job perfectly, why would you upgrade to a better model? You probably won’t upgrade because of fancy buttons and touchscreens. You’ll upgrade to a new one if it provides more value – shorter cycles, better energy grade that consumes less electricity. This saves you money and creates more value, and it’s a good enough reason to upgrade to a better model.

Why should software be any different? It’s more challenging and much more important to show value. Communicating new features should never be in feature-list form. If it is, it’s just another email the user will ignore.

Don’t say: “We’ve released a new feature that works like this (link to product documentation)”. Try: “New feature enables you to finish job X 3 times faster. See how it works (link to product documentation)”. The probability of me clicking on the link in the first example is low. While, with the second one – you got my attention. Let me see more!

Sending this kind of update to your users will generate interest. During my career, I’ve witnessed release communication becoming an additional upsell channel for Customer Success Managers.

They would either respond to customer inquiries that come after we send the email, or they would approach the users themselves saying “Hey, have you seen our new product updates? I believe feature X can help you in achieving…”.

Team effort

Release communication is not a one-man band outcome. It is the PMM’s responsibility for the communication to reach the users, but release management as a process has numerous stakeholders.

Close collaboration with product development, engineering, and customer success teams is crucial. For the release communication to be successful, every piece of the puzzle must work. Jobs may differ from organization to organization, but in a nutshell, it often looks like this:

The Product Manager owns the technical side and ensures that the new feature brings business value to the customer.
The Product Marketing Manager compiles communication-based on PM's inputs and translates technical features into customer benefits.
Engineering is responsible to implement the feature based on PMs inputs and meeting the release deadline.
Customer success should be ready to handle any user inquiry about the new feature and to use communication to strengthen the relationship with the customers and act on the upsell opportunities.

If you still don’t have release management established in your organization, sit down with the key stakeholders, and discuss the release management and communication cadence.

Find the middle ground with your product and engineering team, when defining the release cadence. Your job as a PMM in this process is to put the customer first. Even though we’re eager to release the new feature as soon as we have it ready, it’s better for the customer, and for the feature adoption, to group the releases and make a habit out of the process.

Making release notes a habit for the users

When defining release management and the communication that follows it, every company has its approach. The number of feature releases differs from product to product. When developing new features, we can become overly excited about the desire to push the feature out as soon as possible.

If we decide to communicate them to the user base, we are in danger of over-communicating. Imagine having released several times a week and sending an email or in-app notification every time. Soon enough, we’ll end up on the ignore list for the customers.

I worked on daily, weekly, monthly, and quarterly releases. Each approach has its pros and cons, but after testing them all, I have my personal favorites.

Bi-weekly and monthly releases have given the best results when it comes to open and click rates and feature adoption. Both of these approaches resulted in making a habit out of our release management.

In the customer interviews, they would often say they were looking forward to new release notes and new functionalities.

We’re all reluctant to change

One may think, why is all of this important? If we’re updating a part of a product and making it better people will embrace it naturally.

Wrong.

People don’t like change. We’re prone to habits, and even though the new process may be better, if you change it out of the blue, you’re causing stress. That’s why awesome features sometimes get bad results.

Communicating changes on time is not just considered polite, it’s a must-have process in building a trustworthy relationship with the customer. The slightest change in current processes can irritate users, but if you communicate in time and prepare them for the change, you’re not only reducing negativity but encouraging positive behavior where customers are eager to find out what’s new.

By establishing a continuous communication process, you’re encouraging your customers to discover new features and you’re directly impacting not only adoption but the overall value you and your product are providing. Showing the benefit, and what’s in it for the customer makes it easier for them to jumpstart adoption of the new feature.