3 Types of Effective Retention Marketing Strategies
Retention Marketing, sometimes referred to as lifecycle marketing or loyalty marketing, essentially comes down to keeping customers engaged, happy, and spending. By delivering relevant and engaging content to your customers, you can increase their customer lifetime value (CLV) and in turn overall revenue for your business.
Seeing as it costs 7 times more to attract new customers than it does to retain existing ones according to Bain and Co., Retention Marketing should be a prominent area of focus for any business. Further research shows that a 5% increase in customer retention can generate up to 125% in profits. Ignoring Retention Marketing and solely focusing on customer acquisition results in customer churn, which ultimately leads to a loss in revenue and profit margins.
Successful Retention Marketing involves building two-way and engaging relationships with your customers. In the current landscape of big data and predictive analytics providing us with in depth customer insights, the key to engagement is through personalization. In fact, customers now expect and demand personalization. According to Accenture Interactive, 75% of U.S. consumers like it when companies personalize messaging and offers so they are more relevant. The e-tailing group found 41% of U.S. consumers buy more from retailers when they receive personalized emails.
Here are 3 effective ways to retain your customers through personalization:
Delivering targeted communications to customers at the right stage in their lifecycle, at the right time of the day, and at the right frequency increases customer spending and advocacy. While some online research may suggest the overall best times and days to send an email, in reality the most optimal time varies per person, as does the frequency.
Analyzing online behavioral and transactional data – such as what times customers open emails, browse your site, and make purchases – allows you to determine the best type of communication and most optimal time to reach out to each customer. For example, if you know one customer always checks their email inbox in the evenings and makes the most purchases on Tuesday and Sunday, then sending a product recommendation to that customer at 6pm on Tuesday is their higher-engagement window. If a customer recently abandoned their cart, then sending a follow-up email with an incentive (i.e. discount, shipping upgrade, bonus gift) related to items left behind within a few minutes is also an optimized way to encourage a purchase.
Emails with offers generate 48% higher revenue than other promotional emails, according to an Experian study, so it’s important to deliver the right offer for both you and your customer.
Each customer is motivated differently by discounts and offers. While one customer may prefer to get a free shipping coupon, another would rather go for the 20% off deal. Optimizing your promotions based on each shopper’s preferences and customer lifetime value (CLV) not only boosts your conversions, it also helps widen your profit margins.
Analyzing the transactional and online behavioral history of a customer allows you to get an idea of what motivates them to make a purchase. A unique customer profile can then be built with their preferred type of incentive, and once a customer reaches an inactive period in their customer lifecycle and is about to churn, the correct incentive can be delivered to motivate re-engagement and re-purchasing. High-CLV customers can also be rewarded and nurtured into the advocacy stage by receiving higher incentives, such as 20% off instead of 10%.
Offering personalized dynamic incentives, such as free shipping, allows you to offer the right incentive to the right customer, rather than losing revenue to customers who would have otherwise paid for shipping.
Recommending relevant products that suit your customers’ needs increases their engagement with your brand and allows them make quicker purchasing decisions. Sending relevant communication also allows you extend their customer lifetime value (CLV) by building stronger relationships. Product personalization not only saves your customer the time and effort spent to find what interests them; customers now expect relevant product recommendations, thanks to the effects of Amazon over the past few years. The e-tailing group found 39% of U.S. consumers buy more from retailers when they suggest products based on past browsing or buying behavior. Forrester Research supports this research further, reporting that 54% of retailers that utilized automated product recommendations increased their average order value year over year.
The key to optimizing product personalization in your customer communications is to analyze online purchasing and browsing behavior, then apply predictive analytics in order to know what the customer wants before they do. For example, if you’ve recorded and analyzed data from a customer who searched for gold sandals and then scrolled through all of your products matching that search, you can send an incentive featuring gold sandals – and maybe some accessories to match.
For more tips and techniques on how to improve your Retention Marketing efforts download the free Scientific Guide to Email Marketing.