Customer retention is key to the survival of any business. Studies show that you can increase your profits by between 25 to 95% just by increasing your customer retention rates by 5%. Businesses that know this invest as much as possible in retention marketing. Brands that want to increase their profitability have to improve their customer retention. However, businesses complain that brand loyalty is on its deathbed because of millennials’ brand-hopping habits. This is not true. A survey by Facebook revealed that 77% of shoppers repeatedly bought from a single brand. 37% of them considered themselves brand loyalists. Customer retention isn’t as difficult as it is made to seem. Businesses just don’t have the right retention marketing strategies in place. Some don’t even see the need to invest in retention marketing in the first place.
Why Retention Marketing Is Important To Your Business
Is there any need to invest in customers who are already spending their money on your products? Should you care about existing customers instead of going out to look for new ones? The answer is yes. This is because the most predictable source of revenue for your business is from the customers you already have. They already know about your brand and its experience. Here are five reasons why retention marketing matters to your business.
i) Less spending on marketing
It is more expensive to build a relationship with a new customer than to maintain an existing one. High customer acquisition costs (CAC) have often weighed down businesses. You don’t need many resources on convincing customers who have already experienced your brand to shop from you. You will spend fewer expenses on customer retention than on new business acquisition.
ii) Better conversion rates
Existing customers have already made a purchase from your business. They are likely to buy again from you unless they had a negative experience. You have higher chances of converting existing customers because they already have confidence in your brand and products. With new customers, you will still have to establish trust. Furthermore, you already have data such as the spending habits of existing customers. It is, therefore, easier to predict their moves and tailor your marketing for better conversion rates.
iii) Higher profits
New customers, since they know nothing about your business, might be solely interested in getting the cheapest deal. Existing customers, on the other hand, are less likely to focus on the price. They would be willing to not only pay for the product but also the experience. This gives you the opportunity to up-sell and cross-sell your other products.
iv) Existing customers offer room for improvement
New customers have never interacted with your business before. As such, they cannot offer you any feedback on your processes and customer experience. Existing customers can give you insightful feedback which can be useful in improving customer satisfaction rates. You can improve if you listen to them.
v) Existing customers are sources of qualified leads
When existing customers are happy with the experience they had with your business, they are likely to refer others. Such referrals turn out to be qualified leads that are easier to convert. This means lower customer acquisition costs and hence higher profitability.
As a business, you should only ignore retention marketing at your own peril. It helps you to maximize your resources and increase profitability. You should be proactive in maintaining your customer base. They are the lifeline for the brand.
7 Secret Tips For Retention Marketing
Very few businesses have a retention marketing strategy in place, leave alone a great one. Most don’t even know where to begin in the first place. Here are 7 secret tips that can help you improve your customer retention;
- Use customer feedback to your advantage.
As a business, you will receive both positive and negative feedback from clients. Nobody wants negative feedback, but they will come your way nonetheless. It is how you use the feedback that matters. Great businesses leverage feedback, even the negative ones, to improve their brand positioning. Feedback is the pillar for customer experience management. It eliminates the guesswork and helps you know what the customer wants.
Additionally, customer feedback gives you insight into whether the customer’s viewpoint of the business is as you want it to be. This can be helpful in coming up with a brand image.
- Create a community for your customers
As mentioned above, existing customers are likely to spend more on your business than new customers. It is therefore very important to solidify your customer base. You can create a loyal customer base by building an exclusive community for your existing customers. Customer loyalty is likely to be boosted if they feel that they have an exclusive relationship with the brand. The good thing is that social media has made it easier to create online communities for loyal customers. Several brands such as Netflix and Lush Cosmetics have already capitalized on this.
- It is much better to under-promise and over-deliver
It is always tempting to go big on promises in order to impress your customers. Considering that loyalty and trust are at stake, it is not a risk worth taking. When you fail to deliver, they will be disappointed and move to your competitors. It is much better to under-promise and over-deliver. It helps you to spring in a few surprises and get your customers excited about doing business with you. This improves customer retention. One of the ways you can over-deliver is by personalizing your products so that you create a personal and emotional connection between the customer and the brand.
- Take part in community activities
As a business, you have to stand up for a cause. For example, Lego has a partnership with the World Wildlife Fund. Being socially active helps to create a feeling of shared values between the brand and its customer base. As customers move from being product-centric to being value-centric, it will benefit your business to take a stand on political and socio-economic issues around your community. Show your customers that you have a bigger purpose beyond making profits from them. According to a Deloitte Millennial Survey, customers are more likely to be loyal to your business if it aligns with their values.
- Your employees are your first customers
How you treat your employees will determine how they treat your customers. Your employees are the business’ first customers. While it is not feasible to meet the individual needs of all your employees, you can create a positive environment that makes them better brand ambassadors for the business.
Employee turnover rates also have an impact on customer retention. Customers are not likely to trust a business with high employee turnover rates. It is also not uncommon for customers to follow their favorite agents to a rival company.
- Earn your trust
Consumers are constantly bombarded with product placement ads and information from several brands both online and offline. It is difficult to tell which brand is authentic and will live up to its word and which will not. The result of this is that consumers have become more selfish with their trust and loyalty. You have to earn it. The constant stream of ads has also made customer trust and loyalty more important than ever as consumers become skeptical about brands they’ve never dealt with before. You can earn customer trust by providing social proof. Online reviews aren’t only meant for new customers. They are also meant to provide reassurance to existing customers that they made a good choice and are in safe hands.
You can also build trust around your business by maintaining integrity, honesty, and transparency, especially in times of crisis.
- Regular customers are your top priority
The focus for most businesses, especially small ones, is always on converting new leads and landing new customers. They are under constant pressure to grow. This makes it easier to neglect regular customers. Build existing customer outreach programs into your marketing strategy and sales funnel. Schedule routine phone calls, follow-ups, giveaways, and surveys for repeat customers. Taking care of your existing customers will ultimately lead to business growth as they give referrals to those around them. Customer retention is a vital sign of your business health.
Losing a customer can be very expensive. It will take time before the new customers are able to fill their shoes. Besides, what’s the point of investing a lot in acquiring new customers if you keep losing them? Customer retention is key to higher profitability. Putting in place an effective retention marketing strategy can take your business to the next level. You need to deal with your customer churn rate today!