Many business owners focus on the acquisition stage of the sales funnel to the exclusion of retention. That’s because people often think of marketing as synonymous with acquisition – the act of attracting customers to your business. Keeping customers, or retention, should be equally if not more important than acquisition.
According to Bain & Company, it costs seven times more to attract new customers than it does to keep them. Additionally, if you retain just 5 percent of your customers annually, you can generate up to 125 percent more profits. Retention strategies truly pay off in the long run and help you build a sound business over time.
Be smart. Create a successful retention strategy to convert your new customers into long-term customers. Chances are that you too will spend less and earn more, the formula for a successful business.
In order to build a successful retention marketing program, you must rethink how your company prioritizes its marketing efforts. To shift the focus from acquisition to retention, consider:
1. Adding CRM.
A CRM system, or customer relationship management system, allows you to track, monitor and communicate with customers using an automated platform. You can customize messages to focus on items, issues, products or information of interest to specific customers, which helps build retention into your communications mix.
2. Prioritize around retention, rather than acquisition, strategies.
Shift the focus from outbound cold-calling, mass advertising, and general ads to communications with existing customers. Add tactics from the list below to your outbound marketing mix as part of your retention efforts, and let your team know that they should focus on completing these tasks first.
3. Budget for retention marketing.
Be sure you include enough budget to support retention efforts as much as you have supported acquisition in the past.
4. Measure customer value.
Track, measure and monitor customer value, especially customer lifetime value. Instead of measuring individual sales alone, use your database to measure sales by customer. Customer lifetime value assigns a score to customers based on recency, frequency, and monetary value of their purchases. The higher the lifetime value, the more you invest in retention efforts with that customer, since they are considered a ‘good’ customer for your company.
5. Focus on service.
The way to retain customers is through excellent customer service. Make customer service a priority for your team. Empower individuals to handle problems promptly, and follow up with customers after resolving service tickets to make sure there are no loose ends remaining. Customers often switch companies based on price, but stellar service earns your business long-term loyalty.
Now that you understand some of the basic strategies behind retention, let’s take a closer look at some popular retention tactics. These tactics support the strategies listed above and will help keep customers coming back to your business for more:
6. Send frequent communications.
Emails and postcards are inexpensive ways to maintain communications with customers. Remind customers of upcoming sales, or drop them a simple “thank you” note and coupon to encourage repeat business. Remember to only send emails to customers who have agreed to receive them (opted-in to your email list).
7. Interact on social media.
Social media isn’t about pushing messages out to your fans and followers. It’s about communication and engagement. Share, comment and thank people when they share your posts. Be a frequent, courteous social media presence and use a handful of social media platforms really well rather than trying to be everywhere at once. It’s better to focus on a few platforms and work them really well then it is to try to be on dozens of them with limited success.
8. Turn complaints into opportunities.
Remember that in a retention-driven business, service is paramount. Complaints are an opportunity to engage with your customers, not an annoyance. Use the opportunity to resolve the problem fully and to thank them with additional services.
9. Start a frequent shopper program.
Frequent shopper programs are familiar to many customers and can be started with simply punch cards or sticker cards. Make rewards easy to obtain and friendly to redeem.
10. Host an event.
Whether you have an online or an offline business, consider hosting an event. Online businesses can host podcasts, give-away events, “open office” Q & A hours, or special sales. Bricks and mortar business can have special parties, open house events, guest lectures, new product unveilings, and other events at their stores. Make some events exclusive for your current customers only and you’ve turned an event into a retention tactic.
With these strategies, you can transform your business focus from acquisition to retention. Continue to add new ideas to your retention strategy and be sure to monitor and measure the results to see what works best for your new marketing direction.
by ERIC SIU