Blueprint for Customer Loyalty

Contact: Dave Ury, [email protected]

Customer Insight & Lifecycle Marketing

Confidential and Proprietary


Overview 3

Customer Intelligence 7

Strategic Alignment 11

Lifecycle Marketing 14

Conclusion 20

Recommendations 21

Appendix 22


Customer Insight & Lifecycle Marketing 2



Digital subscriptions and memberships present an exciting

opportunity to build lasting, profitable relationships with

consumers

But the business model has inherent challenges:

Fast changing, competitive environment

Easy come, easy go nature of digital memberships

Lack of communication reach and frequency

Thus, lower customer engagement, loyalty and lifetime value

(LTV) are often a strategic problem



Alig

nm

en

t • Conflicting Objectives: e.g. customer acquisition impact on churn

• Insight is gathered but not leveraged

• Extraordinary investments may be needed

Measu

rem

en

t • Difficulty benchmarking or testing

• Limited access to product usage data

• Time lag between execution and measurable results

Assu

mption

s • Service is accessible and performing well

• Service has high mind-share or engagement

• Low usage is just a feature awareness issue



To maximize customer LTV, digital subscription businesses need

a comprehensive loyalty strategy encompassing:

1. Customer Intelligence = Behavior, Attitude, Demographics

2. Strategic Alignment = Right Customer, Right Product

3. Lifecycle Marketing = Execution of Customer Treatment Strategy

The good news is that these essential components can be

managed in parallel to some degree, and frequently there are

quick wins to be found





Customer value should drive priority, while all metrics should

inform product planning and customer treatment strategy

Metric Description and Examples

Customer

Value

Define what each customer is worth in terms of profits to the

company. Commonly defined as LTV. Your customer base is

your most valuable asset, what is the asset worth?

Behavior

Buying: Purchasing additional products, subscription renewals

Product Use: Range and frequency of product feature and

content use

Advocacy: Sharing/recommending to friends

Attitude/

Perception

Customer Feedback. What features and attributes matter the

most? Would they recommend to a friend? Why do they stop

buying?

Performance Service delivery. Uptime, outages, etc.



Attrition by Cohorts Average Lifetime by Sales Source



6 6.5 7 7.5 8 8.5 9

Referrals

Website

Email

Paid Search

Affiliates

Average Lifetime Duration (subscription in months)

0

10

20

30

40

50

60

70

80

90

100

1 2 3 4 5 6 7

Subscriber Attrition by Tenure (subscription in months)

Jan Sign-ups

Feb Sign-ups

March Sign-ups

Interactions Profile Update



Communication

10

- Website Visits

- Membership Log-ins

- Content Use

- Purchases

- Campaign Response

- Customer Support

- Record at Individual-Level

- Enhance with Predictive Modeling, Segmentation, etc.

- Event-Based Messages

- Alerts

- Offers

- Recommendations

- Customized UI



Right Customer

Understand the profile and needs of happy, high-value customers

Right Message

Relevant to high-value prospects and customers

Right Product

Match the needs of high-value customers

Customer loyalty and the

resulting profitable

relationships are all about

delivering a great fit



Executive Provide oversight and maintain program priority

Marketing

Product Management: Product matches needs of target customer

Customer Acquisition: Target consumers and channels that return profitable customers

CRM: Targeted treatment designed to engage users, provide support, and reinforce sale(s)

IT

Integrate rich customer data with tools that support

analysis and targeted

communication

Staff and align around a clear loyalty strategy because

“everything affects churn”







Management of the customer relationship should be needs-based,

and oriented around lifecycle phases

Onboarding

Habituate & Expand Relationship

Re-engage or Save

Customer Engagement

& Profitability

Customer Tenure

Objectives: Deliver the product, maintain excitement, provide

orientation



Event Description and Notes

Purchase Flow Simple, quick, and reinforce the sale

Order Confirmation

and Welcome

Single, comprehensive message confirming status and

providing recommendations on what to do next

Product Delivery and

Access

User’s first engagement with product. Track

“conversion” from sale to first use, performance

perceptions

User Guide, Tutorials

and Support

Make support easy to find. Show user how to get the

best value, even if UI is highly intuitive

Free Trial Conversion Timely and relevant upsell for free trial users. Test to

determine optimum timing, message, and medium

Objectives: Make product part of customer’s routine and expand

use. Facilitate loyalty, additional purchase and advocacy



Event/Touch Point Description and Notes

Updates, News,

Alerts

Maximize awareness of new features, content or other

“news”. Communicate with targeted, relevant message

based on explicit or implicit interests

Tips and

Recommendations

Increase user’s perceived value of the product by

introducing/promoting features they haven’t used

X-Sell, Up-Sell

Once value has been established at initial service bundle,

encourage user to expand the relationship with relevant

offer

Encourage and

Reward Advocacy

Make it easy to share with friends, and motivate customers

for doing so with rewards, a better user experience, etc.

Objectives: Re-engage customer, problem resolution, billing

optimization. Manage voluntary and involuntary churn

Event/Touch

Point

Description and Notes

Payment

Processing

For auto-renewals, billing optimization can be an easier

opportunity because it’s often just back-end processes changes

Customer

Support

Could apply at any point in lifecycle, although most contacts

occur when customer has an issue and is at-risk of cancelling

Proactive

Outreach

Infrequent or dormant users are usually at-risk. Communicate

high value features and relevant content

Cancellation

Requests

“Save” customer by uncovering the issue and offering a solution.

Manage through self-help or customer care agent

Renewal Notice Proactive reminder when customer must actively renew

Win-Back Targeted renewal offer to high-value, former customers





No gimmicks required to increase customer LTV, just some

basic principles:

Targeted customer selection

Product designed to fit the target customer

Relevant, timely communication and treatment

Product meets performance expectation

Benchmark and track progress

The customer relationship develops and loyalty/profitability is

earned over time



Increase customer loyalty and LTV with a strategic

commitment and programmatic approach

Next Steps:

1. SOW - Deliver a specific, time-bound project description

2. Audit - Complete a customer experience and cross-functional

audit to identify and prioritize opportunities

3. Review - Review audit findings with management team to

confirm priorities

4. Execution and Measurement - Yielding positive results and

additional learning





Situation: To better understand the drivers of early subscriber churn

at RealNeworks, we examined account sign-in data. We discovered

that many former customers had never signed-in to access their

subscription during their entire tenure.

Treatment Strategy: Proactively contacted these “orphaned”

customers via email and offered help with account access.

Execution: Designed a series of tests covering email subject line

and content, and landing page content. Also presented alternative

content and treatment if customer had installed software client or

not. All tests were compared against control cell which received no

treatment.

Results: Winning test combination increased first-time sign-in by

46% and reduced 90 day attrition by 6% over control cell.



Situation: Using web surveys at TeleNav, we identified key product

features that were strong drivers of customer satisfaction, yet a large

share of users were not aware of these features.

Treatment Strategy: In addition to increasing visibility of these

features throughout the customer lifecycle, we initiated a monthly

email newsletter focused on the satisfaction-drivers.

Execution: Each edition of the newsletter focused on a single

feature, highlighting use cases and benefits. To determine any

change in behavior, a series of four newsletters were sent to a test

cell, while a control cell didn’t receive the recurring campaign.

Results: After 4 months, the test cell receiving the monthly

newsletter had 27% lower attrition than the control cell.



Situation: Significant churn at RealNeworks was caused by

subscriber's credit cards failing to authorize and settle during

automated billing . While the billing success rate was already

relatively high, we determined that even small improvements could

yield meaningful revenue.

Treatment Strategy: Focused on testing and optimizing back-end

billing processes.

Execution: Tested and carefully measured any lift from

reconfiguring the timing and number of “recycling” attempts on failed

credit cards. Applied several other process changes identified with

the help of our payment processor, testing each in isolation.

Results: Reduced monthly customer churn by .5%, and yielded

$600k/yr incremental lifetime revenue.



Situation: Based on primary research and customer support

feedback at TeleNav, we identified issues with on-boarding, product

feature awareness and on-going support for small and medium

business customers.

Treatment Strategy: Created a more robust CRM program. Helped

customers get needed support and maximum value.

Execution: Deployed a series of new treatments including website

knowledge base, welcome email, new user activation guide, and

tutorial videos. Initiated new order status reports to carrier partners,

working with them to improve order processing success and

expedite timing from order placement to fulfillment.

Results: Increased top-box customer satisfaction rating 32% yr/yr

and reduced contact center call volume by 15%.



Situation: At RealNetworks, there were a broad set of factors

influencing customer churn, as well as significant resource and

organizational hurdles affecting our ability to manage it.

Treatment Strategy: Addressed customer churn as strategic

problem.

Execution: Built cross-functional team with performance goals tied

to customer loyalty. Segmented customers by behavioral and

attitudinal data, creating a profile of our high-value target customer.

Used same data to identify satisfaction drivers.

Results: Delivered loyalty “blueprint” including full-year budget for

cross-functional team. Gained support for key initiatives including:

email platform, data warehouse, music recommendation engine,

revised acquisition strategy, shift to agile development and improved

product performance, and range of relationship marketing programs.



Dave Ury is Marketing Director and Principal of Customer Insight & Lifecycle

Marketing. He is an accomplished leader offering over 20 years of proven success in relationship marketing including acquisition, CRM, and retention.

Dave has successfully led national marketing efforts and cross-functional teams for large brands including Cox Communications, AT&T Broadband and

RealNetworks. Clients include Cricket Wireless, Allrecipes, Smilebox and WhitePages. He earned his B.A. in Business Economics from the University of California, Santa Barbara, and his M.B.A. from the University of Colorado.

Dave can be reached at [email protected], or 425-999-7548



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