In the fifth session of the Customer-led Growth Summit, Matt Roche, CEO of Extole, shared insights on the evolving landscape of customer acquisition and retention. Let’s explore the key takeaways from Matt’s discussion on Customer-led Growth’s potential to revolutionize how businesses approach marketing and customer relationships.
The Shift to Customer-led Growth
Matt began by highlighting a crucial shift in the e-commerce landscape. For 25 years, businesses have focused on using search and social media to bring in new customers. However, this approach has led to an erosion in customer quality, especially post-COVID. Matt emphasized that the real challenge now is not just acquiring customers but retaining them and increasing their lifetime value.
“How a customer enters defines how they leave,” Matt stated, underlining the importance of quality customer acquisition. He argued that Customer-led Growth is about building your business around quality customers, leading to a naturally higher-quality customer base.
Matt further emphasized this point by saying, “If you want good customers, you have to start at the source.” This philosophy underpins the entire concept of Customer-led Growth.
The Power of Referrals
At the core of Customer-led Growth is the power of referrals. Matt cited research showing that enterprise value was three to five times higher when companies had an above-normal percentage of customers acquired through referrals.
However, Customer-led Growth goes beyond simple referrals. It’s about engaging customers throughout their lifecycle, asking them to participate in your brand and build a larger, better community.
The Evolution of Customer-led Growth
Matt shared how Customer-led Growth evolved from a conversation with a client who discovered that customers acquired through referrals were almost twice as valuable in terms of longevity, spend, and profitability. This realization led to a shift in thinking: instead of just running more referral programs, the focus became on engaging more of the customer base in various ways.
The Three Dimensions of Customer Relationships
Matt introduced three dimensions of customer relationships in Customer-led Growth:
- Transactional Relationship
- Engagement Relationship
- Advocacy Relationship
While transactional loyalty (like traditional points-based programs) has its place, Matt emphasized the importance of engagement and advocacy in creating deeper, richer relationships that last longer and lead to less churn.
The Advocacy Journey
Matt detailed the advocacy journey, which includes:
- Getting customers to advocate
- Successful advocacy (when someone joins or purchases due to a referral)
- Super advocacy (multiple successful referrals)
- Ambassadorship (influencers who are also customers)
The goal is to move customers along this journey, similar to how loyalty programs aim to move customers from bronze to silver to gold tiers.
Customer-led Growth as Performance Marketing with Brand Impact
An intriguing perspective Matt shared was viewing Customer-led Growth as performance marketing with brand impact. It’s funnel-based and measurable, but even when an advocate doesn’t successfully bring in a new customer, they’ve still amplified your brand in an authentic way.
Matt eloquently summed this up: “CLG is performance marketing with brand impact. Even when an advocate is not successful at bringing in a new customer, they have still sent your message from a person with authority and authenticity out into the world.”
The Importance of Customer Quality
Matt stressed the critical role of customer quality in Customer-led Growth. While initial focus might be on bringing in enough customers or revenue, the next step is always to look at the quality of these customers. This quality can be defined differently for each business (e.g., basket size for retailers, number of products used for banks).
Implementing Customer-led Growth: The Value of Platforms
When implementing Customer-led Growth, Matt highlighted the value of using specialized platforms. These allow for easier optimization of rewards and messaging, and help ensure rewards go to deserving customers while preventing system gaming.
The Future of Customer-led Growth: Targeted Audiences
Looking to the future, Matt sees Customer-led Growth evolving to target specific audiences based on how people identify themselves, rather than broad demographic segments. This approach allows for building deeper, more meaningful relationships with customers.
Matt emphasized this point with a powerful statement: “We want to identify people the way people identify themselves, and we want to engage with people according to that kind of identity and that kind of audience. That’s how you build relationships.”
In conclusion, Matt Roche’s insights reveal a powerful shift in how businesses should approach growth. By putting customers at the center of growth strategies, companies can build stronger, more valuable customer bases that drive long-term success. As we navigate the post-COVID business landscape, Customer-led Growth offers a compelling path forward for businesses seeking sustainable, quality-driven growth.
