If you see an ad that says “Buy a coat now and get a scarf with it,” it would work much better if you already knew that store, right, than if it’s an unfamiliar online store? And that’s one of the reasons there’s a shift going on to a higher focus on customer retention. Retaining customers and getting them to make more repeat purchases is easier than bringing in new customers. That’s where a lot of gains can be made. In this blog you can read all about retention marketing and how tritonX can help you do this.
What exactly is retention marketing?
Starting at the beginning, what exactly does retention marketing mean? It is a form of marketing that focuses on retaining and returning your existing customer. Basically, with retention marketing you ensure that you improve the relationship with your customer, with the goal that they grow into loyal customers with a long lifespan. In doing so, you increase the Customer Lifetime Value (CLV). Moreover, you stimulate repeat purchases, which increases sales.
Benefits of retention marketing
When you list the benefits of retention marketing, you wonder why you didn’t start it yesterday. Here are some of the benefits.
Lower costs & higher sales
A 5% better customer retention can already lead to a 25% increase in sales – read the Harvard business School article supporting that statement here. Moreover, it costs much more to gain new customers than to retain existing ones. So if you had to choose, giving existing customers more attention is, from a business perspective, the best solution.
Conversion Increase
Studies show that the probability of selling something to an existing customer is many times higher (60% to 70%) than to a new customer (5% to 20%). This is not surprising, since the customer already knows your company and products. For example, the returning customer no longer has to worry about the reliability of your company and knows where to look.
Purchase amount
It is common in many businesses that 20% of the most loyal customers provide about 70% of revenue. This loyal customer group therefore shops with a much larger purchase amount. Larger purchase amounts bring other (cost-saving) benefits in addition to high sales. If this club of customers remains loyal to you and you make sure that they keep coming back, it will pay off big time.
Retention marketing strategies
Sending your existing customer an email every day telling them to buy more on your webshop is fun and may work the first time, but it’s not going to work in the long run. But not to worry, because we have a whole range of strategies that can help you retain your existing customers and encourage them to buy more. Now to really get started with retention marketing, we highlight a few strategies.
First of all: the registration process
This is actually a process that belongs to new customers, but it ultimately serves as a very important tool in your retention marketing. The better your registration process, the more you know about your customer, the better, more personal and therefore more effective you can approach them. Make sure you know as much as possible (name and address information, e-mail address and perhaps a date of birth), but keep it approachable.
Cross-selling
Someone who buys product A may well also be interested in product B. Design (automatically set) emails with relevant product offerings based on customers’ purchase history. We call it cross-selling.
Contact at just the right time
Look for catch-up moments for your customer group. This could be when a new variant of the customer’s favorite product is launched. Or a certain period after a purchase, when it is likely that the product needs replacement. Or send your customer a message with the bonus points he can still redeem if he has not been there for a long time. Be careful not to bother your customer and also make sure to leave a customer alone for a while if he has just been there!
Content strategy
Create and share valuable content for existing customers: for example, information on using the purchased product, how to use tips, the best way to maintain the product, and more. They will appreciate getting something without having to give anything, and that provides a boost in loyalty.
Personalization
The more personal the better. Address customers by first name, recent purchases or interests, for example. Play to the emotions. This way, customers feel connected to your company and makes future purchases a lot more likely.
Loyalty bonuses
Make customers feel special by rewarding loyal customers. A loyalty program is a great way to do this. Reward returning customers in the right way that will make them stay loyal to your business if all goes well.
The golden combination between customer retention & customer acquisition
In all honesty, there is no golden rule about how much of your marketing budget you should spend on customer retention and how much on winning new customers. That’s simply because it’s different with every product. If you are selling a product that is very prone to repeat purchases (for example, fashion or food items), then customer retention is even more important than when selling products that are only sold once in a very long time (for example, a car). Make sure you find your golden combination, because both are important, only our experience has shown that customer retention is still far too often an underserved area.
Want help improving your retention marketing? Then get in touch with us.
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