Retention marketing is essentially about keeping your customers engaged, satisfied and spending, otherwise known as lifecycle marketing. You can increase revenue for your business by providing relevant, engaging content to your customers.
According to research, attracting new customers costs seven times more than retaining existing ones. The same research suggests, an increase of 5% in customer retention can lead to a 125% increase in profits. In the absence of retention marketing, a company’s revenue and profit margins will decline as a result of customer churn. Therefore, smart businesses are increasingly focusing on retention marketing.
Building a two-way relationship with your customers is critical to retention marketing success. The key to engagement in the era of big data and predictive analytics is personalization. Personalization is now expected and demanded by customers. It is very different doing retention marketing well from doing it poorly. The following are three ways to integrate retention marketing into your overall strategy:
1) Redefine how you measure customer value
Acquiring customers is an easy task to measure. Your ROI equals the amount they spend on their first purchase minus the cost of acquiring them. There’s nothing complicated about it. In marketing campaigns, promotions, discounts, and other tactics aimed at acquiring customers at all costs are often avoided because of this. Discounts alone won’t drive sales, however, as consumers are becoming smarter.
Competitive pricing has made customers more concerned with value than just finding the lowest price. It is also important for marketers to do the same with their customers. Your brand’s potential net profit can be determined by measuring the customer lifetime value of each customer over their time engaged with your brand. In this way, you can measure the lifetime value of your customers rather than the one-time profit from the acquisition. Although it is a better predictor of future revenue, customer retention campaigns are often overlooked since they take longer to measure than one-time sales.
2) Invest in data-driven technology
Retention marketing involves addressing the needs of your customers directly with message and offers that are specifically tailored to them. It is possible for organizations of any size to personalize in some way today with the technology available. Personalize your marketing to speak to your customers on an individual level, however, by collecting information about them. The eCommerce industry has access to mountains of customer data; however, it is not without its challenges is that it can be hard to analyze and pull from this data actionable insights — this is where data science comes into play.
Due to the high costs associated with data science, only large companies like Amazon could afford this. Despite this, many organizations now rely on third-party vendors to collect and analyze customer data. Technology and resources can help companies better gather and analyze customer data, and companies who invest in these resources will see results, as well as solid returns.
3) Rethink priorities
Profitability is the most common factor used to rank business priorities. Often, since acquisition marketing can be easily measured, it is prioritized before retention marketing due to its ease of measurement; however, smart marketers know retention marketing is just as important.
While this is all great in theory, organizations and marketers must realize that retention marketing requires a full-time commitment. In order for your marketing department to be successful, you have to get buy-in from the top-down. Your current email marketer may need to be added to a retention marketing position rather than simply added as a task.
In return for their efforts, retention marketing companies will be handsomely rewarded. Keeping those customers, you have worked so hard to acquire will pay off for those who invest in keeping them. While it may not be easy to implement into an established marketing strategy, keeping them will reward those who do.
4) Utilize Email Marketing Tools
Email marketing automation tools are perfect for retention marketing. They allow you to segment your audience and you can set automated emails to be sent to your customer between certain periods of time determined by you.
Follow-up emails sent to your customers can be in any form. You can subtly urge your old customers to purchase from your brand, offer them special promotions and sales, reward their loyalty, or offer them an early sale for VIP products or services.