It’s one of the most resilient “bird-in-hand/two-in-bush” arguments. What is the most valuable business marketing approach, customer retention or customer acquisition? It seems like it may be a trick question in that most believe that the only correct answer is that both are equally important. The advent of relevantly inexpensive, multichannel, digital communications has many questioning the preference of retentive marketing over the acquisition of new customers. However, a strategy overly weighted to acquisition over retention, and quantity over quality is leaving many consumers overwhelmed with all the digital noise and seeking a more authentic relationship with the marketer.
Recent research performed by Frederick Reichheld of Bain & Company indicates that the cost of acquiring new customers over retaining existing customers is five times more costly. Data provided by marketing metrics shows that it’s 50% easier to sell existing customers than new customers, and the likelihood of upselling a new customer is 14 times higher than closing a potential new customer. The “old sage rule” of marketing, and just about every other measurable experience, says that 20% of any community creates 80% of positive results. If 80% of a businesses’ profits are derived from just 20% of its customers, then retaining the loyalty of the 20 percenters becomes the goal for creating a successful retention strategy. What tactics work best for developing a strategy of customer retention?
Regardless of the intent, all marketing campaigns should focus on addressing and solving the needs and problems of customers. The initial goal of any campaign should be maintaining brand loyalty and market share, not profits. A viable marketing strategy must contain three elements for success. Take actions that increase the total number of purchases per customer, increase each sales value, and increase the number of retained customers.
Building a sustained group of loyal customers requires a personal, low-pressure, and individualized approach. Creating sustained, quality customer experiences that deliver on a promise should be the goal of any marketing campaign. Deliver unanticipated extra services to returning customers, not offered by competitors. Doing what the competition cannot do or is unwilling to do will have the most valuable customers driving back for repeat business.
A productive loyalty program offers existing customers a reason to come back. It should be structured to offer a benefit that the customer recognizes to be valuable, should be easy to understand and evaluate, and be simple to implement and maintain.
Email is perhaps the most productive media method available to remain connected with customers. Getting customers’ email addresses will open the door to repeat opportunities with newly acquired customers and those ongoing loyal patrons. But successful email campaigns must be highly personal, timely, and quality-oriented over quantity. Overly frequent emails that fail to identify the timely needs of a customer may make them feel badgered and under siege. Excessive email outreaches are the most common reason consumers disconnect from a marketer’s email program. Keep the message targeted, short, and focused on the customer’s interest.
Content marketing is the practice of educating targeted consumers about a company’s offerings through the utilization of blog posts, videos, social media, podcasts, and emails. The most genuine efforts are free or low-cost and are usually performed in-house. Effective content will keep customers in the loop about things happening at your business. Customers favor being part of something positive and successful. Storytelling, through content media, about employees’ community service activities or celebrating the organization’s community outreach programs may seem unrelated to making the next sale, but shared values between the business and its customers are a growing feature of retaining the most valued customers.
Cross-selling is the act of providing a current customer the opportunity to purchase another product that is often unrelated to the business’s core competency. The boutique strategy of small to mid-size retailers is generating sustainable and profitable opportunities to compete with larger, volume-based, specialized product retail models. It is a new and popular play on the established one-stop shopping experience of old. The product diversity approach is a growing business model that can aid a business in improving customer retention and increasing sales and profitability.
To learn more on how we can assist you in developing an effective retentive marketing strategy, call Junction Creative Solutions today at 678-686-1125.