Business Model Canvas Block #4: Customer Relationships

What Are the 3 Motivations of Customer Relationships?

Customer Relationships describe the kind of relationship you create with specific customer segments. In general, it has three motivations:

• Customer acquisition

• Customer retention

• Sales expansion

I. Customer Acquisition

Acquisition measures comprise enticing, convincing, or persuading people to become customers. The strategies used include raising brand awareness and marketing unique selling propositions. Regardless of the methods used, you should also measure the effectiveness of the campaigns. And, if necessary, make necessary adjustments.

Common Customer Acquisition Strategies

Customer acquisition, over the decades, has evolved. In the past decade, much of the marketing strategies shifted from traditional media to digital. Among the most commonly employed methods are:

• Content marketing

• Email marketing

• Social media marketing

1. Content Marketing

Companies today understand the importance of establishing a digital presence. Having a homepage, though, is not enough. It is imperative to have a content marketing strategy.

Content marketing is a strategy that includes the creation of valuable content. These could be videos, blogs, ebooks, infographics, case studies, white papers, and more. Its primary purpose is to establish the brand as an authority and build trust. Ideally, the content should target specific niches or customer segments.

Content marketing highlights:

Consider the following figures, which highlight the benefits of content marketing.

• 72% of B2B marketers say content marketing increased engagements and leads. (OptinMonster).

• B2B buyers consume around 13 pieces of content before choosing a vendor. (MarTech)

• 47% of consumers view 3 to 5 pieces of content before engaging with a sales representative. (Demand Gen)

• Content marketing costs 62% less than traditional marketing but generates three times more leads. (Demand Metric)

In essence, content marketing provides these benefits:

• Increase and keep audience or customer attention

• Enhance brand loyalty

• Generate high-quality leads

• Increase direct sales

Content marketing stages:

Putting up random content is unlikely to be effective. Instead, planning and implementation should comprise the three sales stages.

• Awareness. Content marketers address customer concerns and objections during this stage. And they do that by offering solutions to pain points and other challenges. As a result, they can build a positive customer relationship. Among the most commonly used types of content are educational or instructional videos, blog posts, ebooks, and newsletters.

• Consideration. Content in the awareness stage usually does not include any sales pitch. But that is not the case in the second sales stage, which incorporates marketing. Instructional videos and articles, checklists, worksheets, and case studies are among the most effective content types.

• Closing. After catching the attention of target customers and introducing a product or service as a solution, the last stage is to close the sale. The content should highlight key selling points and persuade the customer to buy. User-generated content such as reviews is compelling. Product videos, buyer guides, research reports, and case studies are also often used.

2. Email Marketing

One of the most effective content marketing strategies is email marketing. This form of digital marketing is so effective that most business websites offer newsletters. However, you should be wary of overselling, which turns off many people. You want to strengthen customer relationships instead of weakening them.

Email marketing highlights:

• Over 80% of people open welcome emails. (GetResponse)

• For 87% of B2B content marketers, email is among their top free organic distribution channels. (Content Marketing Institute)

• Segmented email campaigns can increase revenue by as much as 760%. (Campaign Monitor)

Email marketing primarily provides these benefits:

• Promote and raise awareness of products and services

• Increase leads and sales

Rather than marketing, emails (and newsletters) should focus on providing practical and valuable information. These include solutions to problems often encountered by the target audience. You may also have promotional offers to incentivize customers to take action.

A correctly implemented email marketing campaign brings about many benefits. Besides increased sales, it helps raise brand awareness and forge strong customer relationships.

3. Social Media Marketing

Social media marketing (SMM) refers to marketing products and services on social media networks. The strategies employed here include creating content that drives engagement. By connecting with the audience deeper, you can build positive customer relations.

Social media marketing highlights:

• In one estimate, there are 4.55 billion people active on social media. (Kepios)

• Facebook alone had 1.93 billion active users in 2021. (Statistica)

• 79% of consumers say that user-generated content on social media significantly impacts their purchasing decisions. (Stackla)

• 71% of customers who had a positive experience with a brand on social media are likely to recommend it to their friends and family. (Oberlo)

Benefits of social media marketing:

Consumer interactions on social media provide you with these five benefits:

• Warm-up Potential Customers. Remember that the average consumer consumes 3 to 5 content before engaging with a brand. Social media content, in this regard, can help warm up the audience. It works exceptionally well when the content is engaging and can evoke an emotional response.

• Build Stronger Customer Relationships. While the intention is to market products and services, SMM is more than that. In particular, successful brands connect with audiences to build long-lasting customer relationships. This tactic increases the likelihood of the audience sharing posts on their networks, thereby increasing brand awareness.

• Generate Leads and Conversions. SMM is not only an excellent way to engage with consumers. It is also easy to generate leads in two ways. One is organic, in which people share content with their connections. Another is advertising or boosting posts, which may also increase organic traffic on top of paid traffic.

• Cost-effective. SMM is arguably the cheapest way for brands to get exposure in the consumer market. Creating an account on any of the top social media platforms, for instance, is free. Small companies may either create posts themselves or hire specialists. On the other hand, Larger businesses typically work with digital marketing agencies.

II. Customer Retention

Marketing efforts should not only focus on acquisition but also on getting higher customer retention rates. Companies that do that can derive benefits in two ways. One is steady revenue from repeat orders or purchases. Another is that loyal customers can bring in more customers through referrals.

Importance of Customer Retention

These statistics illustrate the benefits of focusing on retaining customers:

• A 5% increase in customer retention can lead to 25% to 90% higher profit. (Harvard Business Review)

• The chance of closing a sale to existing customers is 60-70% compared to new customers’ 5-20% conversion rate. (Invesp)

• Return customers spend 67% more than new customers. (Business)

Common Strategies Used to Retain Customers

Companies can employ several strategies to promote long-term relationships with customers. In particular, these measures enhance customer loyalty, which influences customers to make repeat purchases.

Customer Retention Considerations

In planning a strategy, companies should consider these factors:

• Idea. Companies should promote a concept that is consistent with their brand. This way, customers can identify with the brand. When that happens, they are more likely to be loyal.

• Ego. Customers are more likely to buy products that reflect their positive or best qualities. Brands like Apple, for example, are attractive because they “raise” the social status of users. You should identify customer preferences and desires. After, create specific campaigns to target those segments.

• Solution. Products should solve customer problems. Brands that can address those needs will retain more customers. More than that, the loyal customers would also spread the word to other people.

• Quality. Consumers today are more discerning. Apart from affordability, they also demand quality. At the very least, the products or services must meet customer expectations. Brands that consistently provide good quality can better retain loyal customers.

• Personal. More companies today are recognizing the advantages of personalized services. This strategy makes consumers feel special, thus creating a bond between them and the brand. An elevated customer experience can most likely lead to repeat business.

• Promotions. You may offer special discounts, freebies, or gifts in some business models. Such measure helps keep the interest of customers. Although there is a reduction in profit margin, the sales volume generated more than makes up.

• Communication. You should choose the proper communication channels while considering other business model blocks – Customer segments and Distribution channels.

III. Sales Expansion

The third sales motivation is enticing customers to buy more products – at the same time.

Common Upselling Techniques

Many companies employ upselling strategies. It is typical in commercial establishments for representatives to offer complementary products. For example, they offer drinks to go along with food in a fast-food restaurant. In essence, upselling combines linguistics, bundling products, and offering lower prices.

Sales expansion has a massive impact on revenue. Hence, a common practice for companies is to provide incentive programs. Employees who can boost sales, for instance, may receive a commission.

To upsell, brands need to understand their customer segments, including:

• Economic

• Demographic

• Preferences

• Needs and demands

• Desires and fears

• Social aspirations

By understanding customers, brand representatives can pitch according to individual customer profiles. Besides recommending products that go well with particular products, representatives may also use fear. For example, they can employ a sense of urgency. An example is a condominium developer telling customers that only a few units are available.

What Are the Different Types of Customer Relationships?

In business models, startups can choose among many customer relationship categories. Keep in mind that each type can be independent or coexist with others.

• Personal Assistance. Such a relationship involves human interaction, in which brand representatives assist customers in person. They can provide information that helps customers make a purchase decision. Or, they may also offer after-sales services to ensure customer satisfaction.

• Dedicated Personal Assistance. You can build strong customer relationships by taking personal assistance to a higher level. For example, have dedicated representatives assist individual customers. For sure, most customers would appreciate individualized services. At the same time, customer familiarity allows representatives to give better advice or solutions.

• Self-service. Companies nowadays are also providing self-service. For one thing, it is cheaper. For some of them, cost-cutting measures are a means to lower the prices of their products. In this strategy, you provide customers with all the necessary tools they need.

• Automated Services. Similar in concept to self-service, automation uses technology to interact with customers. One advantage is that these services can provide recommendations based on users’ profiles and buying behavior.

• Communities. You can create user groups or communities online. One benefit is that these forums let you engage with customers, and build strong customer relationships. For users, they can exchange knowledge and solutions.

• Co-creation. One popular concept of building positive customer relations is to involve customers in the creation process. A typical activity is asking them for their opinion. In some cases, they might help design and collaborate on new projects. Co-creation is also a method used by platforms such as Facebook and YouTube, which let members create content for public consumption.

Customer Relationship Is a Core Block of Business Models

People today are much more discerning. Customer service expectations, for example, can be unforgiving. Anything less that leads to a poor customer experience can spell disaster. Bad reviews are one example that can ruin a brand’s reputation.

Customers expect the best experience. And one way you can do that is by having a sound customer relationships management strategy. In each of the motivations, put together a solid plan. Aim to build positive customer relationships by delivering on the value proposition.

In more ways than one, customers are very much like partners. Using your products or services, they can complete their jobs. For you, it is the satisfaction of providing something helpful while earning. In this sense, one could say that the goal of building customer relationships is to have a mutually beneficial relationship.