Businesses are keenly trying to keep up with customers' changing demands and requirements in today's world. But, what choice do they have anyway? Given the intense competition, the inability to do so could lead to them losing out on sales and business.
The scenario is even more intense in the e-commerce sector. With millions of brands, cutthroat competition, and aggressive marketing efforts on all fronts, sellers can easily poach clients off others.
So, to maintain a status quo, you need to target the existing clients than build a vast base of customers that are likely to switch just after a transaction or two.
Research has it that there's a 60-70% higher chance of selling a product (or service) to an existing customer than a new one.
So apart from effective marketing strategies, we need more stringent efforts in retention marketing today as well.
What is Retention Marketing?
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So what is retention marketing?
In simple words, retention marketing is a crucial strategy targeted towards existing customers. These are primarily focused on keeping and bringing back the existing clients to your portfolio to keep them ever connected with the brand, even leading to loyalty at some point.
Now there's a set of retention marketing strategies brands and businesses follow all over the world. We'll take a look at a few broad strategies here so you can come up with a good retention marketing plan for your business.
8 Killer Strategies and Examples of Retention Marketing
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We can't emphasize the importance of retention marketing strategies enough. To give the benefits a number, you can see that by increasing efforts in the customer retention domain, you can bring up to 25-95% profits for the business. Imagine the possibilities!
Here are some broad strategies followed by leading brands who are killing it and effectively building this loyalty base with their clients.
1. Advocacy Program
Empathy has a whole new meaning in the marketing world. It means to show people - or, more specifically, your customers - you care in today's world. When everyone's so busy to show concern, or you have to pay for someone to listen (think therapy sessions), a simple gesture that shows the world you care about a cause or fellow humans and even animals for that matter is a huge deal.
Combine your BTL (Below the Line) efforts along with it and make the world see your efforts through the social media platforms, and you are all in for success.
People feel good to be part of a cause or associated brand that contributes to it. So involve your research department and get know-how about the latest trends and issues of the society and then bring in holistic advocacy plans. You'll be astounded by the results and bottom line scores.
Coca-Cola had this whole campaign centered on the Summer Olympics 2012. So they combined sports, their brand, and music together and made it all part of their social media campaign. The response was surreal, with over 16,500 visitors' footprints on their webpage.
Today, personalization has gone far beyond remembering customers' birthdays, special occasions, names, and family details. Thanks to specific marketing tools that help profile the customers, you can now create each communication message customized to the customer's demographics and interests.
When you have access to important details like their location, preference, age, gender, and previous purchases, you can talk to them in a more personalized manner. Work on building this emotional bond with them.
Take an example of the Commercial Bank of Kuwait, which offers video chat-based solutions to their clients. This builds engagement and provides a personalized feel to the conversation.
3. Discounts and Deals
Although it's not a relatively new concept, discounts and deals have always been a great tactic to bring in customers, clients, and visitors to your website. Giveaways and freebies are a great way to connect with the initial visitors, but the question remains, is it any good for customer retention?
Well, only if the deal is good enough or what you have for your existing customers for tomorrow is exciting; it may actually be a great strategy.
Plus, since these deals and discount coupons usually have a due date attached to them, there is a feeling of urgency or instant buying created in the customer. That brings in more profits and brings you closer to your clients, too, as they make frequent purchases off your shelves.
There's actually a study according to which you can see that just a coupon receipt increases the oxytocin levels (trust in the brand) of a client. So again, there's huge potential in this strategy too.
Take the example of Amazon Prime. It started as a way to deliver timely, in fact, rather quickly, to their existing customers. The concept gained a lot of popularity, so the brand has a solid base today.
4. Referral Programs
Referral programs offer a double benefit.
a) You get to keep your existing clients
b) You widen your client base by inviting more clients from the existing client lists.
Referral programs have been found to bring in more leads for your business. Vouched by over 60% of the marketeers, referral programs are a great way to make your existing clients solid advocates for your brand.
Take the example of MeUndies here for their referral program. When customers make their first purchase, they are encouraged and promoted to make the next one with a $20 off. The only catch is to ensure they refer the webpage to their friends or family. Also, the benefit is not limited to the immediate client; every friend or family who buys off the page will also get a 20% on their first purchase.
5. Personalized Emails
Contrary to popular beliefs, all emails do not just go into the spam folder. Instead, people love personalized emails involving AI to show them just what they want to see!
If they know and love your brand, any offers or new products sent directly to their mailboxes is often more than just a treat.
Take an example of a CVS pharmacy that sends personalized emails to its customers. Each email is narrowly targeted and has discounts or other offers for customers who've made similar purchases.
6. Customer Feedback Channels
Open your doors to customer feedback and see what they say about your brand—whether positive or negative, hearing them out often is the key to success. So instead of spending heavily on market research and customer behavior activities, why not build a system to keep your regular customers aligned with your business activities?
You can even tailor your products to their specific requirements that way and build a healthy two-way communication network with them.
Canva is one such company that paid heed to its customers' feedback and developed animations, images, and other elements to enable them to work more efficiently.
7. Special Treatment Plan
While it's easy to say that customers are the 'kings' or that they matter most to a brand, often, it's important to add meaning to those words. Give them an exclusive feel. Make them part of something that gives them better treatment than others, like forming an exclusive members' club, loyalty cards, or putting them in a higher tier than your other clients.
Once they are in a category, give them discounts, the latest info on the upcoming products, take their valued input, offer more features or add-ons, literally anything that gives them a feeling of being important for your brand.
You can refer to an example of Zappos, an online shoe store. It was just a situation where one customer couldn't return a pair due to a death in the family, and what the Zappos team did was exemplary. They sent a courier to pick up the shoes and sent a bouquet and note to the client as condolence. The emotional connection made with this customer is sure to be lifelong.
8. AI and Retargeting Strategies
Thanks to Artificial Intelligence, we can now retarget one-time clients by offering them just what they need exactly when they want it!
Just imagine how more convenient can it get? Based on the browsing history of your clients, you can give them something new or remind them of things they left in their carts. Maybe even couple that up with a discount or short-term promotion deal to speed up the sale.
Starbucks uses AI and predictive analysis to store their customers' details. So every time a customer makes a purchase, their choice, details and time, etc., are stored on their database. It then uses predictive analytics to target its marketing strategies to the customer. It even makes recommendations to the customer whenever they near an outlet to make a purchase.
Customer Retention Measures
Considering the benefits and success rates of customer retention marketing strategies, you definitely should look into starting a customer retention marketing campaign of your own (if you haven't yet.)
Here are some of the metrics or measurements to track the success of your action plan.
Customer Churn Rate
The churn rate is the rate at which you are losing your customers, i.e., when they stop doing business with you or shift to other competitors. The measure is made over time or every year as a norm.
Return Website Visitors
This is the number of people or visitors who come back to your webpage. While this number doesn't tell you how much your sales are or how many returning customers make a purchase, it is a good measure of customer engagement.
Repeat Purchase Rate
Another metric that helps you measure whether everything you are doing is on the right track or not. This measures the percentage rate of clients who have made repeat purchases from your store or website. This gives you a measure of how many return or comes back to your brand.
NPS: Net Promoter Score
This is good for referral marketing. The NPS measures how likely your customers are to refer others to your brand. This is more of a subjective measure.
To find it, you will have to conduct a survey, and based on the response on how likely they are to recommend your brand (usually on a scale of 1 to 10), you will find your metric.
CLV: Customer Lifetime Value
This is a very important metric from the client's view. CLV measures the value of your brand according to a client over their life. So, it enables you to see your value in their life over the years. If at any point it drops, you will have to work on your marketing efforts to bring it up a notch.
While it's easy to think of marketing as promotion and sales only, retention marketing strategies have a lot of potential for building your solid customer base. In fact, without it, you could lose so many customers and potential leads faster than you bring them in.
It's all about building more personalized relations and customizing your services to every customer, thus making them your customers for life.
Customer retention strategies combined with marketing and sales efforts are a powerful tool to achieve success and ensure your brand stays for decades or centuries to come.
Frequently Asked Questions (FAQs)
Why is retention marketing a smart strategy?
Customer-focused efforts are never fruitful if done for a short while only. You need these customers for years, and although you may find new customers when times are good, very few would be there when the going gets tough.
For a business to survive, you need these contingency tools to survive the depths of regression, and there is nothing better than having a loyal customer base who would be with you through the thick and thin.
Why is customer retention vital to your success?
Retaining the existing clients and working on strategies to boost their confidence in the brand is part of the foundation of your business's success. In addition, it costs seven times less to work on an existing relationship than starting a new one.
Since the trust is already there and the customers have tried your products or services before, they would be willing to put in a lot more than a new lead (on average 33% more than a new client.)
So be it impulse buying or influencer decision-making, your brand will tick all the right boxes if you keep a heads up and stay connected with your existing customers.
What is the perfect retention marketing strategy?
The perfect or optimal marketing strategy can differ for each kind of business. But as a general practice, there's a lot you can do to ensure your brand comes first.
First, you need to befriend your existing customers. Build a rapport, but most importantly, be there in their time of need. Whenever they need something, your name should come first in their minds. When they are stuck and need a solution, it should be the brand they turn to.
Fostering such cordial relations is healthy for building loyalty and lasting ties with the customer.