Retention marketing: A Comprehensive Guide

Retention Marketing

Retention Marketing: A Comprehensive Guide

Table of Contents

Introduction 

Creating engagements that are value-adding and non-intrusive is something that seals the deal for businesses, small or large. It is the customers that make or break a business. As a business, you are nothing without your clients. Whether you create products or provide services, you cannot grow unless you have a customer base to back you up. If a business is new to the market, the only way it can scale up is by providing an excellent customer experience and building customer loyalty. This is a priceless component that will help you rise above market trends or cut-throat competition, irrespective of the industry you’re a part of. Let’s suppose that you’re implementing the best lead generation tactics to acquire new customers and marketing your product in the best way possible. But what about the customers that you have already served? In this age of excessive competition, it is not just important to have the best lead generation strategies in place but is crucial to also keep in touch with your past customers that have had an experience with your brand. That is when you need to invest your time and resources in retention marketing. 

What is retention marketing? 

Retention marketing primarily focuses on retaining current customers as well as targeting past inactive customers. This is an intelligent marketing strategy to keep in handy as it is cost-effective as well as easier to implement in comparison to acquiring new customers. 

Why should you focus on retention marketing? 

Did you know that a 5 per cent increase in customer retention can translate into a 25 per cent boost in profits? That’s why customer retention is important. Here are two reasons why businesses should focus on repeat customers: 

  1. Increased loyalty: The customers who have already availed your service know what your business does. It is their pleasant experience with you that has created trust and commitment on their part. Every repeat purchase by a customer will not only help you gain monetary benefits but will also help you achieve a higher customer lifetime value. 
  2. Cheaper than acquiring new customers: You will be shocked to know that acquiring a new customer is 7x more expensive than retaining an old one. When you set a strategy to acquire new customers, there is a 15 percent chance of them converting. On the other hand, if you approach your previous customers, then the chances of landing conversions are around 70 percent. In sharp contrast to retaining more customers, bringing in new customers can be five times more costly. Email and SMS marketing and acquisition marketing tactics can prove to be quite expensive for you. So if your goal is to cut costs, then this is a good angle to take a glance at. 

Learn about retention marketing by asking yourself these critical questions:

Retention Marketing questions

Top customer retention metrics to look out for to ace your retention marketing strategies

To ensure that your retention marketing strategies aren’t going to waste, these three metrics are absolutely essential for you to track: 

Customer churn rate 

You must know which customers have stopped availing your services or using your products at a given point in time. To calculate the customer churn rate, find the difference between the number of customers at the start and end of the year, and divide the difference by the customer at the beginning of the year. The value you have at the end of this is the number of customers who have stopped buying your products or services. The lesser the churn rate, the better it is. If you find the rate to be alarmingly high, then you need to deploy strategies to reduce customer churn. 

Revenue churn rate 

Revenue churn rate is another important metric to understand and analyze the natural business cycle with respect to acquiring and losing customers. To calculate the revenue churn rate, find the difference between the Monthly Recurring Revenue at the beginning and end of the month, and then divide that figure by the Monthly Recurring Revenue at the beginning of the month. What you have is the amount of revenue you’re losing. 

Repeat purchases 

Getting repeat purchases is one of the easiest ways to generate revenue, which is why keeping a check on your repeat purchases is important. You can calculate repeat purchases by dividing your returning customers by the total customers. The calculated ratio will give you a fair idea of customer loyalty. 

Tips to improve your retention marketing strategies 

Now that you are familiar with the meaning, importance, and metrics related to retention marketing, it is now time for some quick tips to enhance your retention marketing strategies. 

#1: Understand and analyse customer preferences

To create an effective customer retention strategy, you must know your users. Fun fact: loyal customers spend 67 percent more on you than newly acquired ones. It is absolutely crucial to understand the preferences and struggles of your customers so that you can use those in your retention marketing strategy. You can do the same by studying buyer personas or user journey maps. Buying personas will give you a fair idea of who your target customers are, what are their buying habits, what challenges they face, and how they make purchase decisions. A user journey map will equip you with insights into a customer’s relationship with a particular brand over a period of time. You can make use of these insights to create strategies that can help influence buyer behavior. 

#2: Ease the process of sharing feedback

Retaining customers is largely backed by the kind of experience your past customer has had with your brand. What is it that your customers liked? What improvements would they like to see? Overall, are they happy? You cannot merely guess whether your customers have had a pleasant or unpleasant experience. You should make it a point to ask for their feedback to know what’s working in your favour and also analyse gaps arising in your product or service. You can use Emitrr’s review management campaigns and send out survey forms to your customers, making it easier for them to share feedback. Not only that but you can also track the review metrics across various platforms under one umbrella. 

#3: Use data to create personalized customer experiences

Did you know that around 89 percent of companies find customer experience to be an important factor to retain customers and gain their loyalty? To be able to retain your customers, it is crucial that you personalise communications and connect with them on a personal level. For the same, you can simply segment your customers and send them personalised content. A great way to connect with your customers is SMS Marketing. For instance, you can use Emitrr’s text messaging capability to send automated text messages and choose from a variety of templates to customize your messages. 

#4: Conceptualise loyalty programs for your customers 

Who doesn’t like discounts, exclusive access, or special offers? Let’s say you offer cleaning services. Now if you see any past customer asking for service again, you can simply offer a discount to that customer, which is like rewarding that customer for being loyal to your brand. Such loyalty programs can help you big time, driving your retention rate. 

#5: Build a community of loyal customers

Remember that an engaged customer is a loyal customer. Building a community of all your loyal customers is also an excellent way to retain them. Social media can prove to be an ideal platform to build such a community of loyal customers. 

#6: Provide exceptional customer service

This goes without saying. To provide excellent customer service, you must make sure that your customers don’t face trouble expressing their concerns with you through the preferred channels. Ease of communication is the key to keeping your customers engaged and ensuring that they don’t switch to an alternate service provider. 

Conclusion 

If your goal is to expand your customer base, cut costs, and maximize profits; then having the right retention marketing strategies at your disposal is key. Understand what your customers are saying after engaging with your brand, look for areas of improvement, and make sure to get better at every step of your journey. Are you looking for assistance with respect to retaining customers? Book a demo and transform your patient engagement journey. 

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