When it comes to marketing, most businesses and marketers focus solely on customer acquisition. It makes sense, because every business needs customers. It’s also easy to think about acquisition strategies and execute them, such as PPC, SEO, email marketing, etc.
However, a big mistake in marketing plans is that they commonly forget about retention – ways to maintain and sustain the customers they acquire.
Think about all the energy, time and resources it takes to acquire customers – it takes a considerable amount. A marketing funnel without retention is essentially a bucket with holes in it. To sustain the volume of customers will require more resources to refill the funnel.
Customer acquisition is the first step of starting a good business. Retention is a strong strategy on running a great business that is more efficient and can scale.
Let’s explore a few points on why customer retention is necessary:
Here’s why you should take retention marketing seriously.
- Repeat customers are cheaper to acquire: You already spent a ton of energy attracting customers to your door. You’ve driven brand awareness, and perhaps already have sold them a product. You have their contact information (social, ad retargeting pixel, email address, etc.), which allows you to re-engage with them. There have also been studies from Retention Science that show it costs 5-7 times more to attract a new customer than it does to retain an existing customer.
- Brand Loyalty & Repeat Business: In an already noisy marketplace, every business is battling against each other for their customer’s attention. The more a business engages with and retains its customers, the more customers will keep coming back. Maintain that relationship, and watch the customers come back to you more frequently. The probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is 5-20% – Marketing Metrics
- Referrals! Your customer is your No.1 advocate: Not only are repeat customers spending more money on your business, they are bringing in more! Nothing beats word of mouth marketing. According to Bain & Company, repeat customers are more likely to bring an increase in referrals. The more comfortable they are with your business, the more they will share.
- Self-Awareness: By being able to focus on retention, you will think about your product and service differently from the customer’s viewpoint. Businesses can get the feedback they need to improve their product and service which will lead to more satisfied and repeat customers! Better product and better customers is a win-win situation for both parties.
- Scalability: When a business is able to seal all its retention holes, the model for scaling becomes easier, plus churn and loss in business is a smaller problem to battle against.
What you can do to retain customers:
- Be Data Driven: Look at the data inside your product & service. The numbers will reveal where you can improve. Ask & measure these:
- What is the Lifetime Value of your customer?
- How many of them refer you business?
- How much did it cost to acquire your customers?
- If you’re an app, when do your users drop off?
- Which channels are bringing the most valuable customers?
- Some tools to consider for Data & Analytics:
- Bare Metrics
- Engage & Reengage: Build a long lasting relationship with your customers. Are you communicating with them and staying top-of-mind? Engage with them on the channels they frequently view, like social media, email, push notifications or SMS text. Put a live chat on your website to provide the best customer experience possible to retain happy and loyal customers. Some tools to consider for Engagement:
- Web Engage
- Referral Program: Are you building a happy and loyal customer base? Go in for the ask! Motivate your customers to become advocates. It can be cheaper than spending on other acquisition channels, and better yet, your customers will get rewarded to spend more money with you. Some tools to consider:
- Referral Saasquatch
- Referral Candy
- Get Ambassador
Retaining customers is the key to scalable growth.
The key element to balancing customer acquisition and retention is simply focus. Without customer acquisition, there will be no customers to retain. Without retention, the more energy it will require on the acquisition side. Both are equally important if you want your business to scale and grow. The more you spend on retention, the less of a challenge and cost it will be to acquire more customers. It will shift your business’ focus to become fully customer minded. You will be able to spot the flaws of your business and service, improve them and create a satisfying customer journey. Customer retention is really just a reminder to not only sell to your customers, but to build a long-lasting relationship. The brands and businesses that will be able to do this will be able to build a thriving business.
Connect with Justin on Snapchat