With all the data showing that it’s cheaper to retain a customer than it is to acquire a new one, many companies are still so focused on acquisition strategies. Granted, retaining a customer long-term is harder than acquiring one, that doesn’t mean marketers should ignore it.
Some brands do have retention strategies, but many of these strategies aren’t working. There are two common roadblocks that we see affecting customer retention:
Problem: Many brands have a strategy to acquire customers, but not to retain them. So, brands use discounts and coupons to get customers to return. This creates a customer reliance on discounts, and they won’t purchase any product at full price. (Think of some stores where you shop. Do you ever buy full price, or do you wait for discounts?) It’s all about perception – you can’t put a brand on a pedestal if discounting is uneven, or everything is always discounted.
Solution: Brands are shaping strategies to keep customers without having them be discount buyers.
A couple of our clients are slowly weaning their customers off discounts by re-segmenting them for messaging. In 2018, customers were grouped by their discount buying behavior. Now, they are putting customers into two messaging categories: those who shop full price and those who shop at outlets/warehouses. The goal is to move the majority of customers to full price while those reliant on discounts will only receive outlet/warehouse communications.
Another client is going to launch a new, less expensive brand to keep certain customers engaged. There will always be people who want to buy full price, and some who are going to buy discount, because that’s what they can afford. There will always be one customer that spends $15 every month and another. customer that spends $500 once per year. Both types of customers are important to the brand, but they need to be targeted differently.
- Lack of Customer Education
Problem: Many customers have a lack of knowledge about the brand and their full line of products. If a customer buys boots, do they know you offer apparel, socks, or other types of shoes? Many customers think brands are siloed based on their needs, and forget about the other products, promotions, and programs they offer.
Solution: Put money towards knowledge. You need a strategy that focuses on retaining customers and gets them excited about coming back instead of just selling them the same products. You know these customers, and you have them in your database. You want to prove to the customers that you know them, so give them targeted, relevant product recommendations while also showing them products they may not know you have.
An example of a lifecycle campaign that retains customers is our Repeat Buyer Engagement campaign. This campaign targets customers who just bought and encourages them to purchase again. You thank them for recent purchase and offer other products that complement the product(s) they just bought. For example, if someone bought a purse, you could offer a wallet, or a phone case.
The purpose of the campaign is to keep customers engaged and educate them about the brand. It’s less about acquisition and pushing products, and more about the customer and their behavior. This campaign has no offers and no discounting, it’s just straight education.
Any marketer can set up a generic retention campaign – blast emails, create broad digital ads & templated direct mail campaigns. While this route may be easier for a quick win, they will see lower retention. To retain customers long-term, marketers need to put more focus and effort into their retention campaigns. Messaging should be targeted, personalized, relevant, and ultimately grow each customer’s lifetime value.