People sell products
This is the most fundamental rule of marketing. Whether it is peer pressure, social proof, influence, or aspiration, it is the people around us who make us desire and buy products. To grow, you must tap in to the enthusiasm and energy of the people who know you to drive the behavior of those who don’t.
Customer-led Growth is making your customers a primary vehicle for awareness, acquisition, and activation. It is a disciplined, measurable go-to-market approach for growing a customer base that is healthier, stable, more engaged, and more profitable.
We started this project when we realized a huge contradiction in digital marketing:
Modern customer awareness and activation is overwhelmingly driven by social cues, influence, and referrals from their existing customers, yet brands and firms dedicate the vast majority of their acquisition spend and staff to three companies: Google, Facebook, and Amazon, yet for most brands, the customer is doing the real work.
Brands were (and are) paying outrageous taxes to big tech, while turning their backs on folks that loved their products and services and were effectively marketing for them.
We set out to fix this, and in the process we discovered Customer Led Growth.
Customer-led Growth enables every customer to participate in growing the brands they love and be rewarded and recognized. We have learned that the value of your brand is essentially the sum of all of your customers’ activity and conversations. Without sharing, referring, rating, reviewing, engaging, using, commenting, wearing, there is no brand!
The customer is the nuclear reactor in the center of all of your marketing, creating all of its energy.
The principles of Customer-led Growth:
We make customer activity the goal and measure of every marketing decision we make
Our touchstone is permission - we offer experiences that customers opt-in to
We seek to recognize and reward authentic customer activity
We know influence is driven by individuals, and that every customer can play a part
We expect each team in our organization to take customer advocacy and engagement into
account in every decision they make
We segment and personalize customer experiences based on what the customer is willing to
do, not just what they are willing to buy
Customer-led Growth companies are objectively more valuable. A new analytical approach called “earned growth rate” captures the revenue growth generated by returning customers and their referrals.
Created by Fred Reicheld of Bain, the original creator of the Net Promoter Score, this approach is proving highly predictive of enterprise value and the sustainability of growth.
https://hbr.org/2021/11/net-promoter-3-0, Net Promoter 3.0 - A better system for understanding the real value of happy customers by Fred Reichheld, Darci Darnell, and Maureen Burns.
And as valuable as Customer-led Growth is for the long-term strategy of a brand, it is also an essential response to the immediate market pressures that threaten both small and large enterprises.
Paid media acquisition is expensive, up to 40% of the revenue generated by a first customer transaction, and it is only going to get worse. The digital giants control pricing and have perfect awareness of the attention and value of their users to your business. Case in point, in Apple’s app store, there is a mandatory 30% tax on every transaction, regardless of what you may have paid to drive the customer to that app.
Moreover, there is a proverb, “When elephants dance, it is the grass that suffers.” The battle for supremacy among the tech giants is leading to chaos, opacity, and not leading to lower prices. Apple cuts off key data to Facebook, and your marketing becomes more difficult. Google follows suit (2/16/22) and you are flying blind.
Much of the revolution in both D2C and Fintech has been driven by automated marketing via Facebook Audiences (the other factor was virtually turnkey operational infrastructure from China for products and platforms like Plaid for Fintech). A smart entrepreneur could scalable drive meaningful, predictable traffic by outsourcing the problem to Facebook’s algorithms and generate impressive growth.
This approach no longer holds. Fintech startups struggle to afford the cost of rapid acquisition and the complexity of non-automated media buying, D2C are rapidly deploying new tactics like physical retail, TikTok videos, and any possible idea to replace the affordable stream that was once their birthright. Google, Facebook, and Amazon audiences are not growing fast enough, so their future growth will come out of your margins.
When your customers (or fans) talk about and share you, it has a more profound and lasting impression on your prospective customers than a paid media campaign. And it can be argued that virtually every first purchase, new account, subscription, or enrollment is fundamentally driven by someone advocating it as an option. For many sectors, referral is a component in 80-90% of purchase intent. Advertising is extremely effective. However, many of the consumers that are clicking on your ads have an affinity for you because somebody shared.
Customer-led Marketing is about systematizing authenticity. No marketing approach can create an authenticity that comes from the fundamental interaction of your customers and your product or service. But by encouraging and rewarding authentic sharing, by recognizing engagement, and by giving your customers a reason to engage, you can increase participation and what we might call “the distribution of authenticity”.
When the COVID pandemic hit in the first quarter of 2020, there were almost immediate winners and losers. Delivery services, online wine, streaming media, and video conferencing boomed. Travel, hospitality, and live/theater entertainment crashed.
Once these trends had set in, the longer-term implications became clear - for those businesses stressed by the pandemic, the question was, “Will my customers return?” And those with explosive growth asked: “Will they remain.” In either situation, the essential marketing strategy is to dedicate resources on the quality and engagement of their base of customers.
If you are growing like a weed, your Customer-led Growth strategy should be around recognizing when your existing customers are connected to new ones and creating programs that encourage new customers to refer, share, and engage deeper with your product or service. When customers are active, their association deepens. When customers are connected, both sides of the connection become stickier.
If you have been forced to the sidelines, then Customer-led Growth encourages you to engage your customers in ways that are not about immediate transactions. Running programs like watch parties, nomination programs for first-line workers or teachers or sharing stories are a way of sparking action where you cannot drive a transaction, and they will keep the customer around for the time when you can fire up the boilers again.
Fintech Marketing: Maximize Referrals
Our Best Practices Guide will give you quick-win guidance for turning customer relationships into customer-led growth.
Customer-led Marketing describes the marketing programs that underlie Customer-led Growth. It is a cohesive go-to-market strategy for a wide range of businesses including consumer-direct brands, banks, financial services, travel, hospitality, Saas, and so many more.
Customer-led Marketing is measurable, meaningful, and essential, and should be managed like any
other marketing activity based on its yield in the short and long-term:
Does it generate new customer acquisition? Yes
Does it drive higher long-term value? Yes
Does it drive higher awareness? Yes
Does it provide insights that make all of your marketing better? Yes
This is not first generation social media, with “hopey-dreamy” goals, it is a serious, analytical approach
to building a bigger, healthier customer base.
Customer-led Marketing results in higher long-term value and customer retention
Customer-led Marketing is a predictable means of customer acquisition with rational ROAS
(return on ad spend)
Customer-led Marketing spending is directed towards your own customer, not big tech, which
means that the money you spend puts your customer in a position to spend more.
Customer-led Marketing passively generates zero-party data for your business, which creates a
virtuous cycle of customer connection without platform intermediaries.
There will always be paid (or performance) media, whether it is broadcast, targeted, social or otherwise. It provides a stable “base-load” of acquisition by collecting prospective customers and directing them to your service. They may not create demand, but they do direct it.
However, depending exclusively on paid media has significant and rising risks.
When you advertise on tech platforms, you are interchangeable. One direct ship mattress, for all intents and purposes, is interchangeable with another. One bank, brokerage, or insurance company is just like the rest.
You can see this distinctly in the mattress sector, where leaders like Casper become lost in a sea of alternatives, none of which has any real brand presence regardless of their clever copywriting.
Customer-led Marketing is about forming a direct connection and enabling your customers to tell their authentic story. It is never a commodity because, to their friends, followers, and family, that human who is sharing about you is unique and valuable, and definitely not a commodity. Their brand is a halo on yours.
Amazon was the first tech advertising platform to realize that sellers were desperate enough for traffic that they would hand over their customer relationship to what was ostensibly a search engine with warehouses. Sellers on Amazon get zero information about who their customer is unless they ship themselves, a decision with real penalties.
Facebook, Apple and Google have not missed a trick on this one. Each has slowly removed information about identity, journey context, search intent, and other factors essential to understanding your client. Apple is even trying to make “fake” emails so that when a customer gives you theirs, it will only work if Apple wants it. How soon until we have to pay Apple to reach our customers?
Customer-led Marketing, at its core, is about permission to connect. When we engage our customers and reward them, they view us as a partner that they want to be closer to. We can use this connection to build strong, long-term preference that can enervate the tech leaders.
The number of products, services, offerings, and brands available today is staggering. The average supermarket, whose selection was dazzling 50 years ago, is now quaint compared to the choices available in virtually every niche of the digital economy.
At the same time, the ability to sample, experience, and browse is fading rapidly. Bodegas are giving way to delivery bikes, sensual experience to search results. Consumers (who were never particularly good at choosing) are now left to make prosaic and profound selections from a plethora of options with very little relevant information. Paco Underhill’s “Dilemma of Choice,” where he discovered that having to select from more the 2-3 options made it more likely that a consumer would choose not to buy, seems almost laughably provincial.
For even the smallest niche, there can be 100s if not 1000s of providers.
Customer-led Marketing allows your current customer base to be heat-seeking missiles of awareness, cutting through the market clutter with your product to your prospective customer, and removing the choice dilemma through the authentic voice of the customer.
Over the long-term, the greatest risk is that an organization that is not putting the customer in the center of their marketing is missing a critical source of information that can drive better product and operational decision-making. When you monitor engagement and participation using Customer-led Marketing, you have immediate feedback on what your customers say to their friends, what they share, and what they ignore.
This, as you can imagine, is far more useful information than any survey or customer panel. Customers will tell you what you want to hear when you address them directly, but they don’t really have an incentive to disguise their true feelings about your brand with their friends, followers, or families.
It is common to recognize “owned media” as our app, our site, our packaging, and our communications through newsletters and emails, “paid media,” as attention that is bought on the open market, and “earned media” as a looser type of awareness-raising that occurs by our own virtues.
It is time to dedicate resources to “customer media.” It is time to see your customer as more than a walking credit card that can be poked to spend more. They are the source of your future.