Retention marketing is a discipline that predominantly focuses on incentivizing your existing and past customers to become repeat customers. It is predicated on a simple rationale: Who is easier to market to? The ones who have never engaged with you or ones who are existing customers? The answer is definitely the latter. As a result, retention marketing is an effective method to substantially boost your sales.
However, it is a complex process that has many moving parts. You need the right technology to measure and study existing users. Furthermore, it is important to understand channel-wide consumer behaviour and assess the product and service incentives you want to offer. At a time when consumer behaviour is fickle and competitors are coming up with new propositions, customer retention is anything but a simple task. However, technology is here to simplify that and help achieve life-cycle customer engagement and retention.
Why is customer retention important?
Customer retention metrics are a vital indicator of how far your business is successful in meeting the expectations of your existing customers. Acquiring customers can cost you six to seven times more than retaining your existing ones. Additionally, just a 5% increase in customer retention can boost your company’s revenue by 25-95%.
The bottom line is that retaining your existing customers is cost-effective. The potential for ROI is also beyond the usual. Remember, your loyal customers will buy frequently with higher ticket value than new customers. They are also more likely to promote your services in their social circle, leading to free visibility and likely customer acquisition.
How technology facilitates customer retention
Here are the different aspects that can help businesses understand their customers better and retain them.
Disparate information and data silos are a big roadblock to effective marketing. A robust data platform can help you promote a data-driven culture within your organization. You can integrate different data sources, consolidate the data, and track users in real-time. Integrating different data sources will also allow you to create a single source of truth. The problem of data silos will also get eliminated. Accurate data and the derived actionable insights will help you hyper-personalize your customer engagement.
Companies that adopt automated user engagement tools and funnel analysis manage to deliver improved user experiences. World-class experiences also help businesses increase the number of user transactions. Ultimately, it will lead to an increase in customer retention and associated revenues.
Data and analytics point to larger problems that may often go unnoticed. Your sales and marketing funnels may have invisible bottlenecks and drop-off points that drain your potential revenue. Fixing that is possible through an event-based funnel tracking mechanism. Analytics also give you channel-specific insights and help you visualize how your customers interact with your brand. Identifying drop-off points becomes much easier. You can overrun the problem by optimizing customer touchpoints across channels.
Data-driven insights also help you segment the customers into cohorts based on their usage patterns. For example, you can segment users based on how frequently they interact with your platform. It could be daily, weekly, or even monthly. Re-engagement campaigns will be an effective strategy to win these customers and increase their lifetime value. Egypt-based Gourmet Food Stores managed to recover 48% of abandoned carts and increase its retention rate by 20%. It was largely possible on the back of providing improved customer experiences and engaging with them at each stage of their lifecycle.
Segmenting your customers on a real-time basis helps you drive targeted marketing. You can leverage real-time user information and behavioural data to segment your users. If you do not need continuous refreshes on your users’ actions, you can create static segmentation. Live segments make it easier to understand the user’s action in real-time. It will allow you to create automated workflows for marketing and engage with your users persuasively. RFM (recency, frequency, monetary) segmentation is another essential tool that enables seamless customer segregation.
You can categorize your customers into loyal followers, ones that need additional attention, and high-risk ones that may break away. The predictive segmentation helps you take immediate action and suppress revenue leakage from dropped-off customers and avoid a problem that could potentially snowball into a bigger issue.
Customer retention is a continuous activity that requires you to leverage technology and automation capabilities to their fullest. You need to understand your customers’ requirements, offer better solutions, and improve their experience on your platforms. Technology solutions have simplified the customer data collection process. All you need are the right processes and automation workflows to retain your existing customers. This is perhaps why brands that are driven by retention-led growth are increasingly adopting single-suite, purpose-built models like the Retention Operating System, which empowers marketers to undertake all functions with minimal manual intervention and maximum efficiencies.