Techblog
Customer retention: Easy wins using technology
While it is important to focus on the growth of the business, it is important to make sure that you do not neglect your loyal customers. Without customer retention, your business will slow down.
Many businesses often focus on customer acquisition as it is a sure-fire way to ensure that a business grows. A study by Bain and Co showed that it actually costs more to attract new customers than it does to retain existing ones. Despite this, many businesses often allocate a higher budget for customer acquisition rather than customer retention.
However, research has shown that a 5% increase in customer retention can generate up to 125% in profits. This shows the importance of retention marketing.
How to approach retention marketing?
Firstly, it is important that a business knows not to take existing customers for granted. Existing customers are not guaranteed to be customers in the future. They do expect engagement from the business post-purchase.
It is also important to segment your existing customer information. This allows you to figure out exactly what marketing activities are most efficient in retaining customers. The segmenting can be done in a number of ways, including
- geographical region,
- age,
- gender, and
- industry, if you are running a business to customer business.
If you run a business to business enterprise, look at segmenting data according to sector, company size, and company life-cycle. It is important to track these segments over time to evaluate the progress of your retention marketing.
It is also important to track your customers online with the help of social listening or monitoring tools. Examples include Hootsuite, which allows you to monitor multiple social platforms and manage multiple accounts. Buzzlogix lets you know in real time what customers are saying about your products or services. Or you could simply set a Google Alert around relevant products or keywords.
Whatever tool you use the information will help you gain better insights to your customers and tailor your marketing strategy accordingly. If your customers aren't active on social media you can look at their website interactions. The Cohort Analysis in Google Analytics can tell you retention rates and where customers are dropping off your website. The insights gained can also help you to proactively engage with your customers in their preferred manner and this will be helpful in retaining them.
Below are three suggested strategies you can use to engage with your customer to increase customer retention.
1. Creating a loyalty programme
Research has shown that customers who are actively engaged with brands and their loyalty programs make 90% more frequent purchases and spend 60% more in each transaction. They are also five times more likely to choose the brand in the future. A loyalty programme also improves the chances that your existing customers will recommend your product or service to others close to them.
An effective digital loyalty programme ensures that customers receive targeted communication based on their needs and preferences, as well as their loyalty rewards.
For example, Sephora provides free samples of products with every purchase as well as a 10% discount if the customer has accumulated a certain number of points. Additionally, the customer also gets a free makeover with every $100 purchase. The cosmetic store also gives its customers special perks on their birthday month. It is therefore important to reinforce the perks through a customer’s experience to ensure a lifelong relationship.
A brand can also further personalise targeted communication by integrating real-time purchase data with a customer’s historical purchase data. You cannot draw information from just one piece of data. It is important to gather data over a period of time to make intelligent recommendations. Instead of just announcing a storewide discount, businesses can announce a sale by specifically highlighting products that your customer may be interested in. This will increase the customer’s engagement with the loyalty program.
To further engage the customer, points could be awarded if the customer posts reviews. This could lead to increased customer acquisition as 87% of consumers do not consider a purchase with a low number of reviews, according to an eMarketer survey.
2. Post-purchase communication
Effective post-purchase communication helps to lengthen the conversation with customers after they have made their purchase and this helps build a relationship between both parties, and this also inspires brand loyalty. There are many ways to communicate with a customer after their purchase. But the most common and, very often, the most effective is through e-mail.
Email content can vary. For example, it can be an after-care guide on a leather bag. It can also be personalised updates on the customer’s delivery if it’s an online purchase. Make sure to have a catchy subject line so that customers will open the emails. Personalisation is important, so adding the customer’s name in the subject line would entice them more to open the email.
Based on data, you can also email recommendations of what the customer may like. For example, if the customer has made a purchase from a certain brand, and that brand has just released a new product, this can be included in the email. Such communication improves the relationship between the business and the customer.
3. Do not ignore social media
Many consumers are now turning to social media like Facebook and Twitter to register their complaints, and it is important that businesses do not ignore these. In fact, it is vital that brands respond to complaints on social media quickly, or run the risk of gaining a reputation as a company that does not listen to its customers.
Social media monitoring tools can alert you whenever someone mentions your brand or company name. This ensures that you can respond in a timely manner. Doing so would also help to create the impression that you care about your customers.
Skyscanner did this well when a technical glitch resulted in a man being offered a 47-year layover when he was looking for a flight. He then tweeted at Skyscanner asking them what he could do during this layover. Apart from thanking the man for the head’s up on the glitch, Skyscanner offered witty suggestions as to how the man could spend the several decades waiting for his connecting flight. Skyscanner won widespread support for their response.
Summary:
- Customer retention can generate significant profits
- Segment your data so you know how exactly to target your marketing strategies to your customers
- Track your customers’ activities online with social media monitoring tools
- Create a loyalty program that ensures customers are engaged with the brand. Do this by offering personalised suggestions or by marking milestones.
- Effective post-purchase communication is crucial for customer retention. One way to do this is via personalised emails.
- Respond to customer complaints and concerns on social media in a timely manner.