In pursuit of growth, companies can choose to focus their efforts on new customer acquisition or customer retention marketing strategies. There is a place for both in a healthy marketing campaign, but you’ll get the best bang for your buck by keeping the customers you already have.
Customer Retention Statistics
Are customers “a dime a dozen?” Not anymore! Consider these statistics:
- 40% of overall revenue is generated by just 8% of customers.
- The cost of new customer acquisition has risen 50% within the last five years.
- Members of a loyalty program spend 12-18% more than non-members.
- Lowering the customer churn rate by 5% can increase profits by 25-125%.
Considering that 25-50% of your big spenders are also shopping with the competition, it’s clear there is a big opportunity to nurture your customers, educate them, incentivize them, and encourage them to shop with you again, rather than defecting to a competitor.
Examples of Customer Retention Marketing Strategies
There are many approaches to customer retention. Example strategies include:
- Using technology to capture data and personalize the customer experience.
- Starting a customer loyalty, gamification, referral, or rewards program.
- Offering more proactive and responsive omnichannel customer support.
- Nurturing relationships through email and social media marketing channels.
- Hosting contests and challenges that encourage greater brand interaction.
- Thanking new customers and providing coupons for the next purchase.
- Offering subscription services to maintain long-term ties with existing customers.
How Customer Retention Marketing Strategies Lead to Brand Loyalty
All of these customer retention marketing strategies serve the same objectives. They are ways of letting new customers know that you care, you understand, you are happy to have them, and you are fully committed to meeting their needs in the future.
Depending on the industry, some companies see large customer churn percentages each year, which is a terrible expense to shoulder. There are many reasons why customers churn:
- Customer service: Unsatisfactory customer service leads the pack of reasons for turnover.
- Choice: Internet empowerment encourages customers to self-educate and take their business elsewhere. Shoppers know there is increased competition for their dollars and want to make the best decision.
- Technology: Sometimes it’s a lack of functionality or a gap in understanding that is preventing perusers from following through with their purchases.
- Customer experience: Customers overwhelmingly seek a multichannel shopping experience where they can move seamlessly between retail, e-commerce site, and mobile device—and they’ll defect to a competitor if you’re not offering it.
- Availability: And quite simply, it may boil down to merchandising assortment, availability, and pricing. If you don’t have the right item, at the right time, for the right price—it’s likely you won’t earn the sale.
To combat all of these potential issues, you may need IT support and a fresh approach to how you manage your front-end staff members. Yet, you can also solve many of these challenges by partnering with technology aimed at improving customer experience and educating shoppers.
Yet, you can also solve many of these challenges by partnering with technology aimed at improving customer experience and educating shoppers.
Shopkick is an example of a program that drives brand loyalty through retention marketing. In exchange for reward points, consumers download the app and agree to receive branded advertisements throughout their shopping journey, boosting brand awareness. These incentives encourage consumers to interact with products and establish positive brand and retailer affinity. Overall, 57% of Shopkick sales are incremental, where the consumer buys more than what was originally planned. Furthermore, 27% of these incremental sales represent increased loyalty from existing customers.
Shopkick helps retailers and brands retain customers through our innovative shopping app. Contact us to learn more about how our partners use third party retail rewards app to improve customer retention marketing strategies.
Image courtesy of Syda Productions