Advertising to existing customers is gaining attention as a new growth market following traditional mass advertising and digital targeted advertising. This business model is an evolution of Customer Success, and aims to maximize CLTV by redefining existing customers as potential customers for expansion (cross-selling, upselling, etc.). This is based on the fact that 80% of future profits will be generated from 20% of existing customers.
Just as the water level in a leaky dam will not rise no matter how much water you store, acquisition-oriented marketing will lead to an increase in the churn rate of existing customers. However, preventing churn will maintain sales but will not lead to expansion, so it is necessary to balance sales growth through expansion with cost reduction through tech touches. If this is successful, it is possible for the KPI = NRR (Net Revenue Retention) to exceed 100%.
Not only do they invite customers with long contract terms and high contract amounts to join their loyalty program, but they also offer an advocacy program for influential customers to act as promoters. This allows customer marketing to be highly effective in the pre-sale phase as well, rather than being limited to the post-sale phase. Bringing back customers who have drifted away is more costly than acquiring new customers, and future opportunity losses are also added up, so the damage to a company is significant.
Providing good service should lead to customer retention, a strong reputation, and an increase in new customers, but the reality is harsh. In response to the emergence of competing services and a worsening economic situation, companies are required to take an active stance in dealing with existing customers.
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