We do a lot of research at HubSpot.
It's how we remain able to deeply understand human behaviour and so manage to innovate by developing new software that people actually want to and need to use.
We invented inbound marketing which helped thousands of companies out there drive good-fit leads through their own website and content, and then pass them onto the sales department that though an inbound sales philosophy became able to close these leads into actual customers and so grow the company's revenue.
We preach what we teach and this whole methodology served us well for a long time. But by deeply knowing our own customers we're starting to see a shift where customer acquisition through the described approach above is not only becoming more expensive but it's also not as effective as it used to be.
People now trust other people - they trust their friends and families and they ask them for recommendations. This means that now more than ever you need to leverage your happy customers because they will naturally bring you other customers.
Customer acquisition through happy customers is your biggest opportunity for business growth.
For many organisations this shift will be a shock. It'll take them a long time to adapt but there's no better time than now to get started.
As I said earlier, we do a lot of research at HubSpot so today I want to show you some facts about how consumer behaviour and interaction with companies has changed from two studies we've done - one on customer acquisition and another on customer success. This data fully supports the points I made earlier and I hope it'll get you thinking too.
#1 Consumers don't trust businesses anymore
#2 Word of mouth is the most important source of information when making a purchase decision
#3 People don't trust Marketing and Sales
#4 Your traditional acquisition through Sales won't work in the long run
#5 People really do talk about businesses they've had a positive experience with
#6 Businesses that care about customer experience are set to grow
As we conclude in one of those research studies,
The hard truth is that your customers need you a lot less than they used to. They learn from friends, not salespeople. They trust other customers, not marketers. They’d rather help themselves than call you.
Taking another point directly from the customer acquisition study, I want to leave you off with the following to make you do the math and think about the future of your business:
When you’re growing a business, two numbers matter more than anything else:
- How much it costs to acquire a new customer (or “CAC”)
- That customer’s lifetime value -- how much they’ll spend with you over their lifetime (or “LTV”)
For many years, most businesses (HubSpot included) focused on lowering CAC. Inbound marketing made this relatively easy, but the new rules of the internet mean this is getting harder. As Facebook, Amazon, and Google tighten their grips on content, the big opportunity for today’s companies is raising LTV.
If your customers are unhappy, you might be in trouble. But if you’ve invested in their experience, you’re well-poised to grow from their success.
When you have a base of successful customers who are willing and able to spread the good word about your business, you create a virtuous cycle.
How will you grow your business in the coming years through your existing customers?