Want to increase the value of your company? Retention marketing holds the key. Companies that increase customer retention levels by 10% increase their own value by an average of 30%. Yet in an effort to continuously attract new consumers, many companies neglect their customer base, and in the process miss out on a lifetime of profits. Don’t be one of them. To build relationships, retain customers, and grow profits, follow this simple guide to retention marketing.
What is Retention Marketing and Why Does it Matter?
The goal of retention marketing is to nurture and convert returning customers. When done correctly, retention marketing creates new satisfied customers while continuing to foster an environment where customer loyalty is more likely to occur.
All customers are valuable, it’s true. But some are going to cost your business less while generating more revenue. Over time, your business will spend less on marketing to existing customers, but gain a greater return. Retaining existing or one-time customers is a wise decision for any business.
5 Reasons to Focus on Retention Marketing
- It costs less to retain a customer who is already familiar with and/or in need your brand, product, or service than to find a new one
- Satisfied repeat customers tend to spend more than new customers
- Customers who have already had an experience with your brand bounce about 10% less frequently than new ones; that means the money you have invested in keeping them around is paying off
- Return customers are twice as likely as newbies to put items in their shopping carts AND
- Repeat customers convert at nearly twice the rate as new customers
According to a study of 300 CEOs, those who spent more on retention marketing over the past few years were 200% more likely to increase market share over those who spent more on acquisition. You owe it to yourself to invest in retention and dedicate a segment of your marketing budget to your existing customer base.
Go for the Gold by Building Customer Value
The longer and closer the relationship between consumer and brand, the more profitable it becomes. A detailed analysis conducted by Bain & Company, working with Earl Sasser of Harvard Business School found that increasing customer retention rates by 5% increases profits by 25% to 95%.
This is partially because a new customer is likely to spend a bit less than a customer with a previous positive experience. Your brand has to earn their trust, so they may start with a small purchase to ascertain your brand’s quality before investing in multiple products or services.
As time rolls along and customers develop an affinity for your brand; be it due to superior quality, lower price points, or stellar service, existing customers tend to spend more and more on brands they know and love, while the cost of retaining them falls. At this point, they know your brand, and regular check-ins via remarketing, automated emails, or even a personal note or phone call can spark their interest.
When customers stick around, they give you a prime opportunity to invest in the relationship, thereby creating an even more satisfied and loyal customer. In other words, checking in, learning about them and their lives, and asking them what they want will go a long way in ensuring both your long term profitability and your reputation.
The Girl Scouts were onto something when they sang:
Customer Relationship Management: Retention Marketing Strategies for the Real World
Now that we’ve established the value of keeping healthy relationships with existing customers, you might be wondering where to start. It’s important to use a hefty portion of your marketing budget on retention, but there are many easy ways to get up and running without breaking the bank.
Think of retention marketing like you would think of tending to a new friendship. When you meet a new friend, you like each other and provide each other mutual enjoyment or benefit. Then, in order to maintain that level of relationship, you check in. You ask them how they are. You do things to indicate that they are on your mind and that you welcome another engagement in the future. You invite them to spend time with you. All of these relationship management skills can be translated to commerce and incorporated into your messaging.
Tips for Effective Retention Marketing
1. Choose Targeted Graphics
Does the smell of your pine-scented candles invoke the forest during Yuletide? Do you provide a service for busy business travelers? Use imagery to invoke the feeling of the solution your product provides in the environment where the problem they need to solve exists.
Pictures can tell a story in an instant, which is about the amount of time you have to catch a customer’s highly valuable attention. They’ve bought from you before, so pick an image that evokes nostalgia for their first sale, while creating intrigue for something new. Use variable data printing to make each direct mail piece resonate with recipients through graphics targeted around their interests and purchase history.
2. Leverage Customer Data in Email Marketing
Targeting your customers based on their buying patterns can help you turn emails into sales. If a customer generally buys one product, like shoes, suggest other similar and related items; other shoes by the same designer or snazzy socks to complement their new kicks. Utilize their buying frequency to time your email. If they haven’t made a purchase within their usual time frame, that’s an opportunity for you to check in.
When you do, you can return to your data to determine what they like and what they might like to try with a gentle but interesting email nudge. Creating custom workflows for automated email and direct mail marketing campaigns can make nurturing these customers even easier.
Don’t forget to monitor your return on investment (ROI) as you proceed with email marketing. These numbers can reveal what’s working and what isn’t, and help you make smart decisions with your marketing budget.
3. Clear, Conversational Copy
Retention marketing copy should be simple, consistent, and even conversational. Make your reason for reaching out immediately clear. For example: We’ve missed you, Check out the new fall line, or even a simple sale on something they already like, will all pique their curiosity.
Remember, your brand is trusted and you want to maintain and grow that relationship, so make sure to include enthusiasm and personality to remind them what their experience with your brand has been in the past. With targeted visuals and compelling campaigns, you’ll help them want to experience that feeling again.
4. Encourage Connections Across Channels
Every single one of your customers should be prompted multiple times to follow you on social media channels. The social sites your customers use most are the same ones you should target.
When you do, using smart management to coordinate campaigns while also giving customers a reason to follow on multiple channels can increase their likelihood of engaging. Work to give your customers a small sample of your brand on your social media portfolio.
Customers who have shopped with you should be exposed to your social media identity. Use plugins on your website, and make sure to include social media handles where you can, like on receipts or business cards. Display social handles and web addresses on your direct mail pieces, as well as near the point of sale to give prospective buyers a chance to like and follow you while they wait.
If you aren’t a brick and mortar establishment, try the same in your virtual “waiting room.” When the transaction goes through, makes sure to include your social links on the confirmation screen. Make it easy for customers to click through to like and follow. You can even throw in an incentive! See Tip #5.
5. Reward Customer Loyalty With Incentives
When people become customers, you want to thank them for their purchase and form a bond of trust. Letting them “into the club” is a great start. If you have a loyalty program, ask if they’d like to sign up and tell them what’s in it for them. Offering a special invite-only discount, or the classic “punch card” are all fine ways to incentivize. Some businesses like Starbucks even go the extra mile to create a pre-paid card system with rewards based on earned points.
6. Create Consistent Touch Points
When you launch a campaign via email or direct mail, is there a social component? Is there a special message or dedicated landing page on your website? There should be. When campaigns are linked, they grow stronger. Every link in the chain brings customers back to your brand. You want to make sure that they get your message wherever they are. And to do that, you have to make sure that your campaign is fully functional and immersive for your target audience.
7. Ask Loyal Customers for Their Feedback
Make the most of your budget and customer base by asking your customers how they feel. Short surveys are easy to fill out and provide critical information for your marketing department. After each purchase, give your customer a chance to tell you how you did. Ask if they are happy, if there’s anything they are unhappy about, how you can improve, and how likely they are to recommend you to others.
Add a survey button or pop-up to your website and ask for their opinion. You won’t hear from everyone, and you will hear from some outliers. Just remember to keep those facts in perspective. You want to keep a low “churn rate” (or, the number of customers leaving in a specific time interval), but even for those who do leave, surveys can help identify their reasons. This insight can be used to help make adjustments to your customer retention strategy.
8. Make Effective Purchase Recommendations
How do you decide what to recommend to customers based on what they have purchased before? There are a number of ways to go about recommending, but some of the most useful are items that logically go together like complementary software programs in Adobe Creative Suite. A coffee shop sells scones and biscotti for a great reason. Make it easy for customers to get what they might look for next without having to search. You’ll gain more loyalty by saving your customer time.
Look back at that data and check out what other customers bought together. Suggest combinations that others have created to browsing customers. Variations on an item or service should be displayed together if possible, with the key differences made apparent.
And the golden rule for recommendations: don’t overwhelm. Make smart decisions based on customer data and feedback and keep it neat, simple, and easy for folks to find the next item on their list.
9. Keep Customer Support Friendly and Helpful
Despite your best efforts and excellent products, not everyone who makes a purchase will be satisfied right off the bat. That’s why it’s critical to maintain excellent customer service and support for your products. When things go wrong, you have a customer’s undivided attention and what you do next will become their impression of your brand overall.
Make sure customers know where to turn if they run into trouble by making their options clear. Receipts, in-store signs, and business cards are all great ways for paper-based companies to circulate this information. For online operations, utilize buttons on every page so that no matter where your customer find themself, they can reach out for assistance easily.
Finally, the customer is, at least generally, right. You don’t have to go as far as accepting every return (even items you didn’t sell them). But working to find resolutions with unsatisfied customers can encourage them to tell others about their experience. Perhaps they will write a positive review of your business, or tell their colleagues about your latest sale.
10. Gratitude Like Grandma—Only Better
Your grandmother was right when she said that a handwritten thank you note is a touching way to let someone know you appreciate them. Wait, you don’t have time to run your business and hand-write thank yous to each and every customer? Digital handwriting was created to fill that gap. SimplyWritten.com offers a huge variety of handwriting styles, and a streamlined design process. Pick a stationery that works with your branding, choose the handwriting style, type your message, and we'll take care of printing and delivery. Simple for you, meaningful and memorable for your customer.
Retention Marketing Recap: The Bottom Line
When it comes to marketing, all businesses focus on finding new customers. And while introducing people to your brand is important, you might be letting sales slip through your fingers if you’re neglecting your established customers. Invest more time and energy on nurturing and retaining your existing customers to expand your brand and your profits, Check in today with a targeted message and don’t forget to measure those response rates!