Most of the conversation about content marketing has focused on its role in acquiring new customers. For example, we often hear or read about the use of content to attract new prospects and about how content provides the “fuel” for lead nurturing programs.
What is discussed less frequently is the critical role that content plays in building and sustaining relationships with existing customers. Marketing to existing customers is part of what is often called customer lifecycle marketing, and it is also a major component of most account-based marketing strategies. Although the principle isn’t new, a growing number of companies are recognizing the value of maximizing their relationships with existing customers.
This is the first of two posts that will discuss content marketing for existing customers. In this post, I’ll describe three circumstances that make marketing after the initial sale particularly important. My next post will describe the type of content that helps build strong relationships with existing customers.
Creating and maintaining strong relationships with existing customers will produce major benefits for virtually all kinds of companies. Research going back to the early 1980’s has shown that it’s usually much more expensive to acquire a new customer than it is to retain and grow an existing customer. In most companies, existing customers account for a large percentage of total company revenues (up to 80% in some companies), and those revenues tend to be more stable than revenues from new customers. Highly satisfied customers are also more likely to recommend your company to other potential customers.
These broad benefits are important for most B2B companies, but there are three circumstances that elevate the importance of building strong customer relationships, particularly with newly-acquired customers.
When Customer Profitability Requires Multiple Purchases
In several types of businesses, most customers make multiple, relatively small purchases over time. For example, some commercial printing companies and firms that sell MRO supplies have this type of business model. From an economic perspective, software companies that provide their products on a subscription (or SaaS) basis have the same model.
In this situation, the first sale to a customer is rarely sufficient to make that customer profitable because of the marketing and sales costs that must be incurred to acquire the customer. If your company has this model, it’s obviously critical to persuade newly-acquired customers to make several purchases.
When the Purchase of Ancillary Products are a Major Component of Customer Profitability
In this situation, the first sale to a customer may be sufficient to make the customer marginally profitable, but over the lifetime of the relationship, most of the profits will result from the customer’s purchase of ancillary products. For example, Epson probably earned some profit when I purchased my new printer about a year ago, but they’ve almost certainly realized even more profits from the multiple ink purchases I’ve made over the past year.
When the Potential to Expand “Share of Wallet” is High
In some cases, your first sale to a customer may cover only a small portion of the customer’s actual requirements for the product or products that your company can provide. Perhaps the customer is “testing” your company or is reluctant to move all of their category spend to a single supplier. Whatever the cause, you may have the opportunity to significantly increase the revenues and profits you earn from the customer by increasing your “share of wallet,” and that will require you to entice the customer to move more of its business to your company.
All three of these circumstances elevate the importance of having marketing programs for existing customers. In most cases, content marketing will be the most effective way to nurture relationships with your existing customers. In my next post, I’ll describe the kind of content that you need for this purpose.