I’ve been jotting down notes on this blog post over the weekend, wondering how “front of mind” this topic is, then I saw David Edelman’s blog post on LinkedIn this morning about his presentation at SAP’s Sapphire Conference and thought: Good. Someone else is thinking about this… in a similar way… and it’s important.
Most, if not all, companies with a Marketing function focus their efforts (and metrics) on activities that drive net new customers. These metrics generally include new leads, qualified leads, analytics on web traffic/behavior, conversions, etc. Over time, a number of organizations have gotten better at focusing less on “vanity metrics” and paying more attention to the ones that really drive sales; nonetheless, the primary focus of the marketing department’s effectiveness, and value to the organization, has been related almost exclusively to its impact on the company’s ability to acquire new customers.
One Level Deeper:
Now don’t get me wrong, I’m a huge advocate of top line growth and customer acquisition; however top line growth doesn’t just happen by bringing on new customer logos. Most companies have a huge revenue growth opportunity in their existing customer base, and fundamentally, in a SaaS world, where value needs to be proven continuously, the initial acquisition of a customer is not the end of the Customer Journey, it is merely one of many Moments of Truth to come in a much longer customer journey and relationship. Once a customer is “on board”, organizations must now focus on ensuring that customer is getting value from the solution. Paying attention to the data a SaaS solution can provide helps you understand what’s happening – on a customer-specific basis. Effectively automating your communication, and nurturing your customers, not just your leads, through something that looks a lot like Marketing Automation, creates many 1-1 dialogs …that scale …that are relevant …that create loyal customer relationships …that build brand advocates …that generate more revenue.
Freemium to Paid: The Transition Begins
The freemium model has made the need for customer marketing clear for a number of “consumerprise” companies. In many ways, converting a free customer to a paid customer is very similar to “up selling” a paid customer to a higher level of service. A customer will go from one level of financial and emotional commitment to a higher one. In order to get there, customers need to see value. Conceptually this isn’t very different from the old enterprise sales model where a company would “pilot” a solution for little or no cost, then once they were able to prove value, the license sale would occur. In the world of SaaS, however, this needs to be a highly repeatable, highly automated, highly scalable process, and has the opportunity to occur many times during the life of a customer. Freemium SaaS companies get this, and the good ones are doing an excellent job understanding usage and behavior data from their free customers, and applying automation to nurture/market to them effectively (relevant in a 1-1 kind of way) and drive conversions. The great ones are also using that data to constantly improve their product and make the customers’ product experience consistently better.
Connecting with Customers:
The fundamental objective behind customer marketing should be to create a connected experience. Customer Experience is made up of two key components: 1) the experience a customer has with your product/service; and 2) the experience a customer has with your company via other interactions – online, in-person, on the phone. The data and technology exist to create a connected experience with your customers and communicate value in a personal, targeted, yet scalable way. I’ll cover those topics in a future post.