Targeted User EducationLast week, I shared a post explaining why a proactive customer service strategy is the only option for startups and expansion stage companies. This week, I will explain why under-funding targeted user education and customer marketing can lead to customer retention and long-term profitability issues.

Marketing misperceptions can be costly.

Acquiring new customers is expensive and generally requires significant customer tenure in order to reach a break-even point on profitability. Oft times, younger companies underestimate these costs when they are in the startup or expansion stage because they are acquiring customers at a rapid pace and don’t think about the potential costs of losing customers. This leads to them overfunding new customer marketing investments and underfunding user education and marketing to their current customer base.

This can be a costly mistake, as it generally results in lower customer retention rates, which drive down long-term profitability of the firm if not maintained at a reasonable level.

So why does underinvesting in targeted user education lead to customer retention issues?

Customers rarely understand the full potential of a product and consequently don’t make the most of it. This often leads to misuse of a product or its under-utilization, which both result in a customer not realizing the full potential value of a product. This results in lower levels of customer satisfaction and a higher likelihood of losing “good customers.”

How can this be prevented?

Thankfully, it’s easily preventable, as you have data on your customer utilization of your products and can perceive patterns in their behavior to determine how to improve their experience. The problem is that too few companies put this information to use and think of user education and current customer marketing as being all encompassing campaigns and not targeted efforts.

Even if your company does not track data that easily allows it to understand customer behavior, you can gain many of these same insights through regular customer research calls and requesting user and customer feedback. By talking to your company’s customers, you will learn that many of your customers don’t actually utilize all of your product’s functionalities and are often missing out on significant value-added features of your service. This can also help identify how you could better service a specific group of customers as well.

The key is being able to effectively segment your customers and/or users for the delivery of targeted user education and marketing. This type of content will actually be consumed by your customers and users and will drive retention. The general cross-customer base marketing approach is just as ineffective as blanket approach new customer marketing, and in almost all instances will be a waste of your company’s resources.

Customers can be a great resource, but it is important to not overburden them with research call requests and surveys. You will have to decide what the appropriate amount of interaction is with your customers. Generally speaking, the more central a product is to a customer’s business, the more willing the customer will be to accept regular research requests. Trying to spread this research around the customer base is also a good idea, as the initial touchpoint is actually is a way of showing your customers that you care what they say.

Next week, I will share some examples of a couple user education tactics that some innovative companies are using.

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