Attracting new customers costs a modern business, on average, 5-10 times more than selling a product or service to old loyal customers. In addition, regular customers spend 65-67% more than those who are just getting to know the brand.
It’s easy to guess that it is profitable for a business to retain the audience and encourage them to make repeat purchases, rather than focusing only on attracting new customers.
That’s where retention marketing comes in!
What Is Retention Marketing?
Retention marketing is a strategy for retaining existing customers and increasing their loyalty. It involves using various marketing tools and methods to convince the audience to continue using the company's products or services.
Retention marketing is a synonym for long-term customer relationships. Existing customers can be tied to the company using marketing measures (customer loyalty systems) such as events (experiences), clubs, services (assembly, training, etc.), customer-friendly behavior, guarantees, customer cards, or special discounts.
The benefit of customer loyalty lies in the lower marketing costs per customer, the potential for additional sales (cross-selling, upselling), and multiplication (reputation, word-of-mouth advertising, etc.).
Retention Marketing Types
The main point of retention marketing is to engage the client in a long-term relationship with the brand. Not just to sell the product once, but to inspire the client's trust in the business so that, whenever needed, they will contact the previous counterparty without hesitation.
Loyalty can be increased primarily through the quality of the product. This way, the old buyer comes to the store again.
There are different forms of customer loyalty. In most cases, there is a mix, and it is not always possible to determine exactly how a company retains customers:
Situational
In this case, customers are practically forced to accept a company's offer because it has a temporal or spatial monopoly. This means that there is no comparable offer at a certain time or place.
Economic
This customer loyalty measure works particularly well with satisfied customers. It includes loyalty points, stamp cards, and similar reward systems.
Emotional
If customers decide of their own accord to remain loyal to a company, then from a business perspective, that is the jackpot. This deep customer loyalty arises from the customers' conviction and must be treated respectfully.
Technical
One software only works on one computer, the smartphone can only be charged with a special cable or the printer can only be filled with certain cartridges? Then there is technical customer loyalty.
Customers are dependent on a certain product to ensure that another product functions. This customer loyalty type can work, but only as long as satisfaction is guaranteed.
Acquiring new customers is expensive for companies. Therefore, retaining customers in the long term and keeping regular customers is all the more important. They trust the company, are satisfied, and buy more regularly, and their willingness to pay higher prices also increases.
Impact of Customer Retention Strategy: Why It Matters for Business
For modern businesses, retention marketing is primarily beneficial from a financial point of view. Depending on the chosen communication strategy, a new client re-enters the business with a probability of 20%, and an old client—up to 70%. But let’s look at this issue more clearly.
1. Regular customers are cheaper than new ones: saving the budget on customer acquisition
Several studies confirm that the average commercial company receives 80% of its income from 20% of existing customers. Only 20% of profit comes from new customers. They are not as motivated, have not yet built a trusting relationship with the company, and are constantly considering other options in search of the best. Conversion rates for a new audience are significantly lower.
2. Repeated contact indicates brand loyalty
Retention marketing is largely based on building and maintaining customer loyalty to the brand. If clients are satisfied with the purchase, the quality of service, and the prices, they are very likely to return. Moreover, they can recommend your brand to their friends, relatives, colleagues, etc. Word of mouth still works great in the world of e-commerce.
3. Loyal customers know your business
Regular customers are well-versed in the company's product, they know all its main features, advantages, and possible disadvantages. You do not need to "convince" them. But a new client needs additional information. They will study information, make comparisons, and evaluate competitive advantages. Because of this, the existing audience carries out target actions much faster than a new one.
Top Ways to Effectively Retain Customers
Now that we’ve seen why customer retention is important, here are several ways to effectively retain customers:
1. Offer a Personalized Customer Experience
Did you know that over 90% of customers are likely to spend more money with brands that provide the personalized service they’re looking for?
Personalized customer services allow you to treat each customer as an individual based on their unique behavior, qualities, and preferences. It will also help you build deeper relationships with your customers.
- Always use the customer’s name when communicating via email, chat, or phone.
- Be human in your communications and provide excellent service so people feel like you’re paying attention to them and their concerns.
- Tailor your services and products to your customer's needs and preferences.
- Offer special discounts or gifts to loyal customers to thank them for doing business with you.
2. Send Regular Newsletters to Engage Customers
Newsletters are one of the most effective digital marketing tools because they help you directly engage with customers by delivering relevant promotional offers and valuable content straight to their inboxes.
The newsletter should feel more like a message from an attentive and interesting friend than a marketing message from a salesperson.
Ideally, your newsletters should encourage subscribers to take action, such as:
- Register for an upcoming event.
- Read your latest blog post.
- Enter a giveaway.
- Purchase a product from your e-commerce store.
- Learn about a new case study.
3. Create An Effective Onboarding
With customer onboarding, you can nurture new users and help them get to know your product or service.
A positive onboarding experience reassures customers that they made the right decision and helps you retain them in the long run.
Create an onboarding program that includes:
- Helpful guidance and support.
- Step-by-step training materials.
- Access to a knowledge base.
- Follow-up emails.
- Celebration emails to impress and excite new customers.
4. Add Surprise and Excitement
Imagine receiving a push notification that you were getting a special reward because you were celebrating an anniversary this month. That would be pretty exciting, wouldn’t it? Your customers would feel the same way if they were treated to such a surprise.
Here are some examples of how you can use surprise and excitement:
- Give a free sample of your product;
- Host an event;
- Show customers you care by offering them a one-on-one consultation;
- Send them a selection of personalized treats;
- Send a gift to help customers celebrate a special occasion.
5. Create a Customer Loyalty Program
A customer loyalty program is a retention strategy that rewards consumers who engage with your brand repeatedly.
Conclusion
A reward can be anything you want to give as a token of appreciation for their activity – awards, free products, points systems, exclusive access to new events, etc. Such loyalty programs can help you stand out from the competition and encourage customers to engage with your brand more often.