Retention marketing strategies are a must-have in today’s e-commerce retailer world. How much so? Increasing customer retention rates by just 5% can increase profits by up to 95%, according to a Harvard Business School study. If that’s not enough, the Gartner Group shows that 80% of a company’s future revenue will come from just 20% of their existing customers.
Marketing to existing customers is a major shift towards recognizing the value of the existing customer base, versus a constant effort to make it grow; customer acquisition is a very expensive and time-consuming process. By the time a prospect has become an actual customer, a brand has already invested significant time and money into attracting them. As a reminder, it costs nearly seven times more to attract new customers than it does to retain existing ones. With the increased focus on personalized marketing and the customer experience, retail marketers need to find ways to continue satisfying their existing customers. Here are four arguments as to why retention marketing is so critical, as well as practical tips on how to build an effective retention marketing strategy.
It is easy for customers to feel like they are just a number to retail brands, but with retention marketing, people are at the center. Customers are looked at as individuals with specific behaviors, channel preferences, and buying plans.
Brands can use behavioral data, such as browsing and purchasing patterns, to provide personalized product recommendations, creating an experience to encourage brand loyalty. Customers are much more likely to return to sites that offer personal recommendations for products, particularly those embracing personalization through every step in the customer journey.
Customers want to be communicated with as individuals. Using marketing automation services can allow brands to individualize content for each recipient. With access to mountains of available customer data, marketers can help create a more tailored and personalized marketing strategy and customer experience.
Retention Emails and Rewards Programs
Marketing experts are likely already using email marketing, and by simply refining those efforts, marketers can encourage or incentivize existing customers to keep coming back, boosting customer retention rates as a result.
This is likely the easiest retention strategy to implement, as it just takes some retooling and retargeting of campaigns already in use. For example, marketers can use an existing email campaign to offer a loyalty or rewards program to existing customers. Offering VIP or specialty offers to top tier customers has also been shown to be a successful retention tactic.
Those types of efforts can also be used to re-engage lost customers, providing another point of contact to attract them back to the brand and strengthening customer relationships. Regardless, integrating existing email programs into a retention strategy takes some effort but can show immense success in keeping customers coming back.
Providing excellent customer service is one of the best ways to create strong customer relationships and raise retention rates. It’s the most important point of contact between customers and a brand and, in many ways, one of the easiest tactics to implement.
Treating customers with exceptional service is not just for physical stores. Marketers can work to provide the same level of service online as well, ensuring customers feel valued, satisfied, and engaged at every step of the customer journey.
Shared Beliefs and Values
The Corporate Executive Board (CEB) polled customers across the United States about what they value in brand relationships. Of the consumers who had the strongest relationships with a brand, 64% stated shared values as the primary reason for such a strong relationship.
A core value or belief, shared by both the brand and the customer regarding a brand’s higher purpose or philosophy, forges a deep bond between the two. These shared values can create a very loyal customer because of the alignment of principles, fostering stronger relationships and, in turn, greater retention rates. For these customers, it is about more than a purchase – it’s about a way of living.
A seamless retention marketing strategy can be built by implementing personalization tactics, retention email programs, customer service excellence, and promoting shared values. With access to the right data and technology, brands can cultivate greater loyalty within their current customer base, and, in turn, reap the benefits.