Great Customer Experience Is A Revenue Cheat Code

Been getting some feedback about readers liking when I go stats-heavy in the newsletter, so this week I’m doing exactly that. Hope you enjoy it.

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The most successful businesses are ones who keep customers coming back. Whether it’s through the app’s design, the quality of the services, or the pricing, your cheapest and most profit-generating customer is going to be the one you already have.

Losing customers is expensive. In fact, U.S. companies lose $136.8 billion per year due to avoidable consumer switching. Meaning, customers leaving you for your competition costs you money. That sounds obvious but it isn’t for everyone.

Generally, your CPA (cost per acquisition) targets are going to be at a level where the ratio of cost to revenue is at a place that keeps your business growing. But if your user funnel is leaking like a sieve, your company will always be in a situation where you’re doubling down on acquisition to keep up with those user losses. This is not a sustainable trajectory for the long-term.

Today we’re going to be focussing on the power of retention marketing, which is basically the marketing you do to your existing customers to keep them coming back. You have a 60-70% chance of selling a product or a service to an existing customer, which is a fantastic conversion rate compared to the 5-20% chance you have with a new customer.

But why such a wide difference?

Well, let’s bring it back to the crypto industry for a second. When a customer tries a new trading platform, their first trade amount is typically a relatively low sum. They’re testing out the product. They’re evaluating the app. And they’re trying to connect with the overall experience of the product. If those boxes get checked off, they’re going to come back for more, and as a result, generate more revenue and increase their LTV (lifetime value).

This is why crypto trading platforms are racing to constantly add more features, like lending, staking, leverage, social features, and so on. By increasing the number of attractive products and revenue streams, the platforms have an opportunity to hold a larger market share and grow their businesses.

With 67% of customers saying that their standard for good user experiences are higher than they’ve ever been, it’s more competitive than ever for brands to improve the user journey.

The Power of Retention Marketing

I want to drop some pretty crazy stats about retention marketing to set the tone here a bit.

• Increasing customer retention by just 5% boosts profits by 25% to 95%

• A 5% increase in customer retention correlates with at least a 25% increase in profit

• Returning loyal customers spend an average of 33% more per order as compared to others.

Small improvements to top-line retention metrics can provide a huge improvement to business metrics. Despite this, many businesses will only focus on acquisition to drive those eye-catching headline growth figures. Over time, this actually hurts the business’ ability to thrive and grow for the long-term.

This is particularly true with companies who have really good marketing, but a less than optimized product. This is one thing I think people sometimes confuse -- user experience is not UX, but UX is a part of the user experience. You can have the most visually appealing product on the market, but if the rest of it doesn’t come together, you have nothing. An app’s UX is just one element within the whole user experience.

On the other side of the coin, even if you have a best-in-class sales team, a poor product won’t necessarily make up for that. For example, 48% of consumers have left a business' website and made a purchase elsewhere because the experience was poorly curated. And 57% of people won't recommend a business if the website doesn't have a well-designed mobile version.

It all needs to tie in.

You can’t just market your way out of this issue. In an environment where 69% of US consumers do not trust advertisements, a user’s opinion is going to be dictated by the way they’re treated by the business, not how the business presents itself. As a result, the attention to customer journeys is more important than ever, and this is anchored by the product experience.

Better Experience = More Revenue

One of the best things about having a better product than your competitors is that you can charge more. Just look at Coinbase -- they are notoriously one of the more expensive exchanges in the US market. Despite that, they are one of the most popular platforms in the fintech industry, with 2.8 million monthly active users.

Why are they in that situation?

They were the first-mover for having a modern app experience in the crypto industry. All the apps in our industry now use them as the standard bearer.

The better the experience, the more you can charge, more revenue you get. Not convinced?

• 66% of American consumers say positive personal experiences are more influential to them than great advertising

• Customers with an emotional relationship with a brand have a 306% higher lifetime value and will recommend the company at a rate of 71%, rather than the average rate of 45%

• 41% of consumers and 47% of Millennials (47%) will pay up to 20% more for exciting customer experience.

It pays to invest in the user’s experience.

But like I said earlier, an app experience is only one piece of the journey. There’s another increasingly important category that is a huge drive of retention and winning over life-long customers.

Good Customer Service Is a Growth Hack

In the 2017 crypto boom, a lot of people left Coinbase for their competitors. Many of these competitors had worse platforms, no app, and questionable security practices. Despite all of that, do you know the primary driver of Coinbase losing customers during that period?

No, those customers weren’t dying off.

It’s that the customer didn’t feel like the company cared about them.

For those of us who used Coinbase back then, the crypto boom caught them off guard. As a result, their customer service (CS) team was under-staffed and virtually unreachable. Now excellent customer service is a huge competitive advantage in our industry.

When I worked at BlockFi, Zac invested in CS before he even started looking at marketing. And it paid off. At the time we were the only platform in our category where you could call and talk to someone about the products, about issues with the platform, or even just to get advice about the market. We were able to up-sell customers every day simply because the team would take the time to talk to them. This is a value the company carries to this day.

That is a growth hack.

This idea of CS as a driver of revenue is also supported by some interesting data:

• 54% of consumers say they’ve had at least one bad customer service experience in the last month

• 86% of customers say an emotional connection with a customer service agent would make them continue to do business with the company

• 93% of consumers are more likely to make repeat purchases at companies with excellent customer service

• 67% of customer churn could be avoided if the business resolved the customer’s issue during their first interaction

• 52% of consumers have purchased more from a company after having a positive customer service experience

Need I say more?

Not only that, but BAD customer service can have even worse implications. 20% of consumers would complain publicly via social media if they received a bad CS experience. And they often do, particularly in our industry.

I get it, CS is an expensive channel to run with high turnover rates. But with 65% of customers ages 18-34 looking at social media platforms as an effective channel for customer service, the new challenge for brands is finding a way to drive collaboration processes between marketing and CS to manage channels like social.

It’s not easy, but it’s necessary.

Your customer’s experience isn’t just the CS rep they talk to. It isn’t just the app. And it isn’t just the logo. A customer’s experience is their entire journey through your brand’s product. Your priority should be to keep them happy and coming back for more. Your business’ profitability depends on it.

Who’s Hiring Marketers in Crypto?

• Email Marketing Lead @ eToro US [APPLY]

• Business Intelligence Analyst @ eToro US [APPLY]

• Senior Social Media Strategist @ Paxful [APPLY]

• Head of Content @ Kraken [APPLY]

• Content Lead @ OkCoin [APPLY]

• Marketing Content Manager @ Bitcoin IRA [APPLY]

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