While advertising might be the type of marketing that’s easiest to recognize, it’s a common misconception that ads are all that matter in modern marketing.
The fact is that advertising is only a single customer acquisition channel, and acquisition is only one part of what makes a complete marketing strategy. For long term success, marketing needs to move customers through 3 distinct stages. You need to first acquire a customer, then encourage them to engage with you, and motivate them to keep coming back to make another purchase.
Acquisition is only the beginning
Let’s be clear: customer acquisition is an extremely vital part of marketing. Without attracting new customers, you won’t have a business to do any marketing for! That being said, the key to effective acquisition is investing in the strategies and channels that make sense for your brand and your target customer base.
Knowing who your ideal customer is will help you focus acquisition on the methods that will multiply your efforts.
Unfortunately most brands fall into the trap of digital advertising. While seemingly inexpensive, there can be serious drawbacks to relying solely on advertising to acquire customers. Since year-over-year social ad spend grew by over 24% and isn’t slowing down, your customer acquisition cost (CAC) is only going to increase on those channels.
This can lead to an illusion of growth, where sales numbers look good but your CAC actually eclipses profits. If you’re not careful, you can get stuck continuously paying more for customers that never actually return any value, putting your business at risk.
Customer referrals give you the social proof to acquire customers who are one step closer to becoming loyal to your brand.
One way small businesses try to get around this is customer referrals. Thanks to the science of social proof, customer referrals are one of the most trusted forms of marketing. Since your customers do it themselves, referrals are highly repeatable too, and help to drive down your overall CAC.
However, there’s still a chance that even the best referral only results in another one-time sale. All by itself, a referral doesn’t quite show customers that your brand has value to them beyond the initial referral offer.
In the end, focusing only on acquisition means your time and budget are only invested in getting you one-time sales. You undeniably need to invest in acquisition in order to get your business started, but acquisition needs to be the beginning, not the end of your marketing strategy
Customer engagement connects the dots
Since you don’t want a customer’s first purchase to be the end of their relationship with you, you shouldn’t treat it that way. Instead, you need to do everything you can to keep them engaged with your brand.
This marks the shift from stage 1 (acquisition) to stage 2 (customer engagement). Moving the focus from simply gaining a new customer to investing in them increases each customer’s emotional connection to your brand. Emotional connections are what makes the difference between a customer shopping around for the best price versus coming back to your brand because they see you as a trusted friend, not just another business.
Customer engagement is the ongoing interactions between company and customer, offered by the company, chosen by the customer.
- Paul Greenberg (for HubSpot)
Building that emotional connection through customer engagement can come in a number of ways, but the best is value-add marketing. Value-add marketing (better known as the blog, tutorials, and interactive content you create for your customers and not-yet customers) reinforces the value of your brand with every customer interaction.
With the right content, value-add marketing can even be a powerful way to acquire new customers. By creating the content your target customers are looking for, you demonstrate that you want them to get more out of your brand experience than the purchases they make. Instead, you show them that you care about every touchpoint with your brand, turning every potential interaction into something memorable.
To get customers, you need to go from the heart to the brain to the wallet.
- Gary Vaynerchuk
When you’re crafting content your audience cares about, a simple engagement with a social media post or a video view can help forge or reinforce the emotional connections your customers have with your brand.
In all its forms, customer engagement makes the most of your acquired customer by pulling them from merely being acquired to forming and then strengthening their emotional relationship with your brand. The more closely connected and engaged customers are, the more they will see the value your brand can offer. This brings them one step closer to not having to be re-acquired and two steps closer to being a loyal repeat customer!
Retention is the end game
Once you acquire and start engaging with your customers, you’re two-thirds of the way to the promised land. The end goal is to form such strong emotional connections with your customers that they keep coming back to your brand to engage and make additional purchases.
Make a customer, not a sale.
- Katherine Barchetti
When customers move beyond engagement, their dedication to your brand turns into true loyalty. Truly loyal customers don’t have to be acquired or re-engaged because they are electing to return to your store on their own. In other words, they are being retained.
In our experience, the best way to retain customers and inspire true loyalty is with the tried and true value of a loyalty program. The familiar format of points & VIP programs motivates customers to engage in micro-actions, like social likes and newsletter signups, that give your business value. At the same time, they earn rewards that can be put towards free products, discounts on future purchases, and more.
This promise of additional value is not only a fantastic way to encourage higher customer engagement, but can also work as an acquisition tool. For customers who can’t decide between you and a competitor, the rewards you’re willing to give them plays into your existing value-add marketing strategy to tip the scales in your favor, making a loyalty program the powerful boost you need to win more customers.
83% of customer say a loyalty program increases the likelihood that they will make additional purchases from a brand
Reward programs don’t stop there, though. Besides being able to acquire and engage your customers, they also keep them retained through gamification, reciprocity, and other psychological concepts that influence not just how loyalty works, but also how humans behave. Pairing that psychology with a beautiful loyalty program makes your investment in every acquired and engaged customer rewarding for them and for your business as well.
When customers move from being engaged to retained, they come back to make purchases again and again. Aside from the most obvious uptick in sales numbers, one of the best side effects of customer retention is that the more times a customer shops with you, their average order value tends to increase with each subsequent purchase. Plus, the longer a customer is retained the more frequently they make purchases, too!
A second but equally important benefit to retention is that it in this stage you inspire brand advocates who can’t help but tell everyone they know about your brand. By combining rewards with the referral marketing strategy you built in the acquisition stage, you can create a customer journey feed-back loop where your retained customers bring in new ones who then have the potential to become brand advocates themselves!
Increasing customer retention by just 5% can increase profits by 25-95%
- Bain and Company
At the end of the day, putting a loyalty program to work to retain customers lets you focus your marketing on the ones that have an increasing amount of value to your brand, rather than putting even more money into low-value customers one-time purchases or guest checkouts.
True marketing is moving customers through all three stages
If you incorrectly look at advertising and customer acquisition as the only form of marketing, you unintentionally cut off every single customers’ ability to deliver value to your brand beyond the initial sale.
With true marketing in focus, you can spread your efforts equally among customer acquisition, engagement, and retention strategies. That way, customers are simultaneously reminded about why they love your brand, encouraged to engage with it, and motivated to make additional purchases and bring you value.
Any one step of the process on its own simply won’t work. Without the other pieces, you’re going nowhere fast.