Launching a business isn’t easy; there are several things that you have to do to ensure a successful start. For starters, you have to have a plan—one that defines your objectives, strategies, and goals. Next, you want to test your idea. Will the plan work? That’s what you want to find out. Last but not least, but you want to research your market. How else will you be able to perfect your craft? Remember, more than half of new businesses fail within the first three years. The more prepared you are, the less likely that’ll happen to you!
What about after you’ve launched your business? What should you do then? The answer is—focus on marketing. Without it, no one will know about your products or services, no matter how great they are. If anything, it’s more important than the product itself! After all, it’s the thing that will drive customer traffic, which will convert to sales and profits. Of course, there are many ways that you can go about doing it. For instance, there’s internet marketing, content marketing, CTA marketing, and email marketing, to name a few. On this page, however, we’ll be focusing on a different type—that is, retention marketing.
What is Retention Marketing?
Retention marketing is different from other strategies in that it focuses on your existing customers base. In other words, it’s not meant to attract new customers. Instead, the goal is to engage your current customers so that they’re more likely to shop from you again. Put it simply, you want to increase their frequency of purchase, as well as volume. If anything, this type of marketing has become more and more prevalent in the e-commerce world!
As important as it is, however, you don’t want to neglect other marketing strategies. After all, what good would it do you if you don’t have an existing customer base? Ideally, what you want to do is to increase your ROI from those channels before diving into retention marketing—that way, you’ll have a larger audience for repeat purchases.
Benefits of Retention Marketing
The goal of retention marketing is to increase purchase frequency (how often your customer will buy from you) and repeat purchase rate (the likelihood that they’ll come to you again). Ultimately, what that does is that it increases the customer lifetime value (CLV). For those who are unfamiliar with the term, it refers to the amount of revenue that you can expect from a single customer; the longer they buy from you, the greater their CLV. The greater the CLV, the greater your long-term profits (as opposed to short-term gains).
There are a few ways to improve your customer lifetime value. First and foremost, you want to pay attention to customer satisfaction. This makes sense when you think about it—after all, the happier they are, the more likely they are to purchase from you again. Another thing that you want to do is focus on customer retention. According to Harvard Business Review, gaining a new customer can be 25 times as expensive as retaining an existing one. Considering that, it’s imperative that you identify your most valuable customers—that way, you’ll be able to boost your total revenue, which will lead to an increase in CLV.
Retention Marketing vs Acquisition Marketing
Retention marketing and acquisition marketing goes hand in hand; the former focuses on retaining customers while the latter brings in new customers. Given that, it only makes sense that they’re used in tandem. As far as the ratio goes, it depends on your store. What are your margins? What type of products do you sell? What industry are you in? These are all things that you want to take into consideration.
Perhaps the most important of all, however, is where you are with your business. Was it launched yesterday? If so, you’ll want to focus your efforts on acquisition (you won’t have any customers yet). As your business grows, you’ll be able to put more of your budget into retention marketing, which will help increase your sales with existing customers. To give you a better idea of how important it is, a 5% increase in retention can increase your profits by up to 95%!
Why You Should Start Retention Marketing
Retention marketing is more important now than it ever was. Why? It’s become a lot harder to drive traffic to e-commerce platforms. Take social media, for instance—it used to be a cheap, affordable way of attracting customers. While it still works, it’s no longer as effective as it once was in the past. Not to mention that the ads themselves have also increased in price. As you can imagine, that makes things difficult—especially if you’re running with small margins.
The bottom line is—it’s become much tougher to acquire new customers. Given that, you want to do whatever you can to make the most out of each of your existing customers. See, that’s where retention marketing comes in. With it, you’ll be able to increase the ROI of your established customer base. Remember, return shoppers are much more likely to convert compared to first-timers!
Effectiveness of Retention Marketing
Retention marketing is effective, there’s no doubt about it. However, the extent of its effectiveness will depend on your product. After all, not all items are purchased at the same frequency. Take washing machines, for instance—people are not going to buy them as often as say, towels. At the end of the day, results will be different for different businesses. With that said, there will be a boost in lifetime value regardless. If anything, you just have to figure out the right amount of retention marketing that’s right for you.
5 Tips For Effective Retention Marketing
Now that we know more about retention marketing, let’s take a look at how you can apply it to your business.
1. Make Your Customers Feel Special
Good customer service is a given nowadays. Ultimately, what you want to do is to go above and beyond; make your customers feel special. How? By treating them as real people. Sure, it’s the numbers that you’re interested in but you should never treat them as such. After all, there’s a big difference between loyal customers and satisfied customers—the latter is more of a rating whereas the former is more based on emotion. At the end of the day, your goal is to build an emotional connection with your customers. By doing that, they’ll be more engaged with your business.
2. Evaluate Your Prices
Let’s face it—customers want value. Sure, the price is important but that’s not the driving force behind a purchase. People are not looking for the cheapest option in the market; what they want instead is something that will meet their needs. Having said that, you don’t want to ignore your pricing strategy. If anything, you want to take the time to value the value of your products. The last thing that you want is to give your customers the perception that you’re purposely overcharging them. Remember, disposable incomes are dropping. You want to make sure that your prices are fair from a value perspective.
3. Encourage Engagement Across Platforms
Social media is huge—take advantage of it. Ideally, you want every one of your customers to follow your accounts. As you can imagine, however, not everyone will do that. Chances are, you’ll need to give them a reason to follow you. For instance, you can launch a campaign. Depending on how you coordinate it, it might just increase your customers’ likelihood of engaging.
If anything, you want to put yourself out there. How? By sharing your social media handles wherever you can. Consider using plugins on your e-commerce website, for example. It might also be a good idea to include them on business cards and receipts—that way, more customers will get to know your accounts.
Here’s another tip for those who have an online store—include your social links on the transaction screen (the “waiting screen” that your customer sees after they’ve made a purchase). The key is to make them easy to click through.
4. Offer Customer Loyalty With Incentives
Consider rewarding your loyal customers with incentives—that way, they’ll be more likely to return. For instance, you can start a loyalty program that offers exclusive discounts. Another option is to have a “points card.” Every time a customer makes a purchase, they’ll gain points, with which they can use to redeem rewards. It’s relatively easy to set up and works well! Why do you think so many retailers use this kind of system?
5. Ask Loyal Customers For Feedback
Ask your customers for feedback. For instance, you can include a short survey on your e-commerce website. Make a point to ask whether or not there’s anything that they’re unsatisfied with—that way, you’ll be able to address their problems. You might also want to ask how likely they are to recommend your business to others. At the end of the day, the insight that you’ll get will help better your retention marketing strategy.