Why You Need Retention Marketing and How to Do It Right?
Your best customers don’t purchase from you once. While attracting new customers is important, you need to focus on those people that keep coming back again and again.
They make purchases regularly, contributing to your revenue.
They consider your products valuable and trust you with their money.
Above all, they’re your loudest brand advocates.
Precisely because of that, you need to build strong relationships with your loyal customers and encourage them to keep buying from you.
Let’s learn why customer retention matters and how it can be achieved through digital marketing.
Why is Customer Retention Important?
Customer retention differs from customer acquisition. The latter option focuses on attracting prospective customers to purchase from you for the first time. On the other hand, customer retention marketing applies to those customers that have already bought from you at least once. Loyal customers can give your business a boost in multiple ways.
Repeat Customers Spend More
Repeat customers represent a continuous stream of revenue for your business. They generate larger transactions, compared with new or one-time customers.
You’ve probably heard of the famous Pareto principle that emphasizes that 80% of your profits come from only 20% of your customers. Your existing customers spend 31% more than new ones. Moreover, the likelihood of selling to a loyal customer is 60% to 70%, while the probability of getting a lead to buy from you for the first time is somewhere 5%-10%.
Customer Retention Boosts their Lifetime Value
Simply put, lifetime value is the total value a customer brings to your business throughout their lifetime. So, logically, the longer someone buys from you, the greater their lifetime value. That’s where having a solid customer retention strategy can help. The logic behind this tactic is obvious. You will boost customer satisfaction and increase their brand loyalty in order to inspire them to come back and purchase from you again and again. This will automatically reduce customer churn, maximize retention rates and, therefore, improve your customers’ lifetime value.
Acquiring New Customers is Expensive
Customer acquisition costs are higher than the costs of retention marketing. According to Harvard Business Review, it’s 5-25 times more expensive to acquire a new customer than to retain a loyal one. Moreover, its 16 times as expensive to build longer relationships with new customers than to nurture the loyalty of existing ones.
Retention Marketing Minimizes Customer Turnover
Customer turnover, or customer churn, is one of the most notorious killers of both your brand image and your revenue. It is often caused by customer dissatisfaction and poor experiences with your brand. Therefore, the idea is to boost customer satisfaction by providing them with special offers and exceptional buying experiences. As highlighted by the study conducted by Sailthru and Forbes Insights, 45% of retention-oriented companies did not have any increases in customer turnover, compared to acquisition-oriented ones.
Loyal Customers are your Brand Advocates
Before buying from you, your prospective customers will read your reviews, ratings, as well as look for other customers’ insights and experiences. Studies claim that almost 90% of consumers trust online reviews written by other customers as much as they trust recommendations from the people they know.
That’s where your loyal customers can help. When they’re satisfied with your products, services, and customer support, they will gladly spread the word about you. Research says that 75% of loyal customers will refer their friends and families to your company.
Now, there are numerous ways for them to do so, such as writing testimonials and online reviews, rating your brand online, participating in your giveaways, republishing your social media content, sharing your blog posts, creating user-generated content, etc.
Proven Retention Marketing Tactics to Apply Right Now
Now that you know why retaining customers is important, it’s time to learn how to do that effectively. Here are a few tried and tested tactics your customers will love.
Create Valuable Content
Content is one of the most powerful ways to build trust with your audiences. It gives you the opportunity to position yourself as an industry authority by providing your existing customers with valuable tips and relevant information. The idea is to create content that educates customers and helps them solve real-life problems. Discussing content marketing trends in 2020, Elevate Digital, an SEO Hong Kong-based agency, claims that diversifying content formats is critical. Namely, apart from blog articles, you should also produce podcasts, live video, voice search-optimized, and visual content.
Knowing they can rely on your content, they will come back for more tips again and again. Above all, they will probably sign up for your newsletter list and start following you on social to stay on top of your latest content.
Ask for Feedback
Transparency and honesty are critical for building strong customer relationships. First, the fact that you value their opinions will make your customers feel good. Above all, you will be able to understand what your customers think of you.
There are many ways to collect customer feedback, such as listening to your customers on social networks, creating customer satisfaction reviews, analyzing their email/phone/chatbot/live chat conversations. However, never let this data sit idly on your computer. Use them to improve your products and services and show that you take your customers’ insights seriously.
Have a Loyalty Program
These programs show that you care about your loyal customers. The more they buy from you, the more they’re rewarded. Knowing that, your customers will be glad to return to your store. Now, there are different types of loyalty programs to choose from, including point programs, spend programs, value-based programs, hybrid programs, paid programs, and so forth. Collect your customers’ feedback and analyze their preferences to choose a loyalty program that resonates with them.
Offer Incentives for Referrals
Building a referral program is an amazing way to keep your loyal customers satisfied and, at the same time, spread the word about your brand. That’s exactly why you should encourage your existing customers to refer their friends to your site for a decent reward. For example, these could be free trials, free shipping, coupons, discounts, and so forth.
Personalize Customer Relationships
Today’s customers are willing to pay more for personalized experiences. They want brands to value them as individuals, with unique traits, needs, and problems. Therefore, by providing them with the products and content they’re interested in, you will inspire them to come back and gain their trust.
Now, personalization can be applied to almost any aspect of your digital strategy.
As for email lists, you could segment them. Ask customers for their buying preferences demographics data, content preferences, etc. Send them only the newsletters relevant to them.
Chatbots and quizzes can also help. They can ask customers about their product preferences, habits, needs and recommend the right products, based on these data.
The same goes for your website. Track customers’ behaviors, browsing habits, and purchasing history to understand what products they like and provide targeted product recommendations.
Over to You
Customer retention marketing focuses on building long-term relationships with your customers and encouraging them to stay loyal to you. And, repeat customers are critical to your business because they spend more, have a greater lifetime value, and minimize the cost of acquiring new customers. Above all, they will become your brand advocates, maximizing your brand exposure and driving new customers to your website.
To get the most out of customer retention marketing, make it highly targeted and personalized. Create content, offers, and rewards that will make your customers feel special. Above all, collect their feedback and use it strategically to improve your brand over time.