As we learned in my previous post, retention marketing encompasses the activities associated with retaining customers or increasing customer value through re-purchasing and up-selling products and services. It’s anywhere from five to 25 times less expensive than acquisition marketing—and done well can reduce the expense pressure of acquisition marketing to grow your business.
Retention marketing should be a part of any business growth strategy.
Retention marketing involves communicating with your customers in a way that helps you nurture and keep them. This should be an ongoing priority for the business with buy-in from the top throughout the entire organization. After all, you’ve all worked hard and spent a lot of money to acquire those customers.
Step One: Know Which Customers You Want to Retain
This looks deceptively simple. You want to retain all of them, right? Yes—if you have unlimited funds and time—or, if you don’t have good customer data. With good data, however, you may uncover customers with varying degrees of profitability and likelihood to retain. Thus, you create a prioritization of customer segments to target if you have limited resources.
Dig into your customer data to answer these kinds of questions:
You may have customers that don’t spend a lot but renew their license again and again. Or customers that place huge initial orders, taking a great deal of your manpower, and never purchase another thing. The profitability of these may vary greatly.
One of the greatest benefits of these insights into your customers is the implications for your acquisition marketing efforts. You may learn how to focus your acquisition efforts and dollars on the segments most likely to be profitable and most likely to retain.
We learned with one consumer client, for example, that the repeat purchase rate for ages 25-30 was much lower than other segments and with higher initial acquisition costs. This became a lower priority segment.
All this takes good customer data—and customer data technology. However, this isn’t as expensive as it once was, and what you learn will help ensure that you are acquiring and maintaining profitable customers.
Step Two: Plan What You Want to Say to Your Customers
At another consumer client with an annual subscription model, we learned that a customer service phone call made 45 days before renewal increased renewal by more than 10%. And all we did was check in to thank them for their business and to see if they needed anything else.
Your desired messaging will likely vary by customer segment. That’s why you need a plan that addresses the key messages you want communicated to each of your customer segments and when. It should anticipate their needs and concerns based on your understanding of the product or service lifecycle.
For example, are there specific issues to be considered prior to an upgrade? If you can educate your customers—at the right time—as to what those might be, you are helping the upgrade process considerably. If done well, you are positioning your company as the expert and their partner, creating goodwill to help swing the pendulum in your favor at the time of the upgrade decision.
In many cases, the renewal or repurchase decision process begins even before the original sale is completed.
So, begin this nurturing process immediately. The more relevant to the unique needs of the customer, the more successful the communication will be. That’s why segmented messaging by whatever criteria is relevant for your business is so important.
Step Three: Develop Your Communications Plan
With your detailed key messages platform and timing strategy in place, all you need to complete a comprehensive customer communication strategy is a plan for how to deliver your messages.
What is the optimum communications channel—sales calls, email, text, social media posts, newsletters, user events or meetings, webinars? It’s likely not just one of these, but a combination of channels optimized to deliver the right messages at the right time in the right way to earn your customers’ attention.
The frequency and content of communications should be carefully considered. The last thing you want to do is abuse your customers’ goodwill via overuse of email or other channels, especially with messages that are not relevant.
Email is particularly susceptible to abuse because it’s so easy and inexpensive. Once you’ve abused this channel, it’s almost impossible to recapture.
The resulting plan should be a calendar of proactive communications delivered by a centralized team that can track and measure engagement, response and other measures of success. With a good CRM system, customer interactions can trigger communications and adjust the sequence or timing. Testing and continuous refinement should be part of the process.
Step Four: Gather Customer Feedback
You can ask your customers for feedback on just about anything from the product to the sales process to your ongoing communications with them. Ask regularly, not necessarily frequently. Be clear about what you want to know. And demonstrate that you’re listening and responding to feedback. This will help you to create engaged customers.
There are many ways to gather the feedback. Ensure that you have the right audience for each of your requests. And consider multiple methods to ensure you’re getting valuable and balanced insights. It doesn’t take long to develop a multi-faceted feedback loop and reporting cadence.
Now that you have an effective retention marketing program, you’ll enjoy a long list of benefits, including reduced acquisition costs, increased repeat sales and more customers advocating your brand. If for no other reason, retaining customers for the richness of feedback is well worth the investment of time.
In my next post I’ll review some Winning Retention Marketing Strategies. Please share your comments below.
Topics: CEO Marketing Strategy, Marketing Strategy, Customer SatisfactionFri, Sep 13, 2019