Given the wealth of products in the marketplace, it’s often difficult for yours to stand out. Marketing will help, but these efforts sometimes do more to build brand awareness than to drive actual sales. To get the highest return on your marketing dollars, it’s important to focus on cultivating relationships with current customers.
Dropbox uses this strategy to grow its business. The company offers existing customers bonus storage for each referral, and this incentive has created an army of brand advocates. The cost of the bonus storage is much cheaper and more effective than a Google AdWords campaign.
Similarly, Lululemon Athletica found great success by turning its super customers into super advocates. In its early days, the company enlisted local athletes, fitness entrepreneurs, and community leaders to become the local faces of the company. It gave them free apparel and allowed them to teach classes in its retail studios, among other things. With an average of 12 advocates per store and more than 200 stores, that’s more than 2,400 advocates who are spreading the word and driving sales.
You, too, can lessen the marketing load on your business by cultivating relationships with current customers and turning them into brand advocates. Here are five steps to get you started:
1. Personalize your messaging. Tailoring communications to your customers can go a long way to improve their experiences with your brand. It shows your commitment to their happiness. And as you improve the customer experience, you’ll do the same for customer satisfaction.
Fortunately, technology has made getting to know customers a lot easier. Leverage data from their behavior on your website, and use tools such as HubSpot to tailor emails and offers.
2. Respond promptly to customers. For better or worse, social media has forever changed consumer expectations. They now expect immediacy. If your company doesn’t respond to questions or complaints within 24 hours, you’ve waited too long and might have damaged that relationship. In fact, up to 55 percent of customers won’t buy from a company again when forced to wait days for a response.
Make it company policy to be timely with all customer correspondence, even if it’s just to say that you’re working on the issue. Take care not to swing too far the other direction when being timely; you never want to sacrifice quality for speed. That, too, can damage a relationship.
3. Go above and beyond. Your word is as good as gold with customers. When you make a promise — as you often do in your ads, emails, and other marketing materials — do everything in your power to honor it, and deliver more if you can. Nothing impresses a customer more than employees who go above and beyond what is expected.
If your customers can trust you, they’ll be more apt to buy from you again and become brand advocates. And potential customers trust a referral from a brand advocate.
4. Reward your customers. Loyalty should be rewarded. The same goes for referrals. Set up a loyalty or incentive program. Starbucks established a loyalty program called My Starbucks Rewards, which executives cited as the main driver for the chain’s 26 percent increase in quarterly profit in early 2013.
If you establish a loyalty program, participating customers are likely to spend anywhere from 30 percent to 100 percent more on their purchases. With a points-based program, you can see as many as 46 percent of your customers modifying their purchases to reach certain thresholds.
5. Anticipate future needs. Instead of looking for the next customer to “sell,” focus on the next solution. Much of the data you gather will inform customer behavior, including their future wants and needs. Take advantage of trends, and see if you can anticipate what will make them happy next. By catering to the needs of your current customer base, you can create a team of brand advocates — none of whom are on your payroll.
Paid advertising can only go so far when it comes to closing a sale. You also have to inspire your customers to start marketing for you! Slack managed to raise a staggering $1.1 billion before it hired its first marketing employee for one simple reason: its customers were happy with the product and customer service, and they wanted the world to know about it.
Keeping customers happy can obviously reduce churn, but it can also close more sales. And because the main people talking about your products are your customers, why not give them something nice to say?
Arteen Arabshahi is a senior associate at Karlin Ventures, an L.A.-based venture capital firm that focuses on early-stage enterprise software, e-commerce, and marketplaces. Follow the company on Twitter.