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Here we’ll discuss retention marketing, why it’s essential for your business and some compelling strategies that you can bank on.
You have a solid product. Naturally, you want new users to experience it. But you also want your former users to consume it and engage with its offerings. How do you make that happen? The answer is simple — retention marketing. Retention marketing is so effective that SEMRush states that a loyal customer usually spends 67 percent in their 31st-36th month on a brand rather than in the first six months of use.
In this post, we’ll discuss retention marketing, why it’s essential for your business and some compelling strategies that you can bank on.
Retention Marketing is a form of marketing strategy that targets existing customers and keeps them connected to the business. Most brands ensure their customers stay in the know via emailers or regular communication; they often bring them back to the brand via loyalty plans, exclusive offers, etc. In a nutshell, retention marketing is a strategy to retain your existing customer base and pique their interest enough to consume your brand and make any purchases.
While this form of marketing works in tandem with acquisition marketing, its intention is quite a contrast. As a brand, your communication is always active in retention marketing because your goal is to make the customers purchase and actively engage with your product. When your old customers return to your brand, it’s mostly to buy a product or increase sales. For that very reason itself, retention marketing is great because it’s a sure-shot way of increasing your brand awareness and revenue.
As per Profitwell’s study, the average retention rates across various industries are:
Retail: 63% Banking: 75% Telecom: 78%IT Services: 81% Media: 84% Insurance: 83%
To grow — it’s a no-brainer. But, here are some reasons for you to implement retention marketing:
Retention varies from one business to another, and it generally boils down to your business goals. An efficient way to calculate your user retention is to weigh your customers towards the end of a quarter (or a month) and subtract customers that you’ve acquired during this time, and divide it by the customers at the start of the time.
A simple formula is: Total number of customers (end of a quarter) – acquired customers (during that time) / number of customers at the beginning x 100.
Let’s say you have 30 customers at the end of a quarter, you’ve acquired 4 during this period and lost 2, and at the beginning, you’ve started with 35 customers. Let’s calculate your retention:
[(32-4) / 35] x 100= 80%
That’s your retention rate.
While this is how you calculate the user retention rate for any business, some tangible factors to take it to the next level are:
Other important factors to consider are if you’re retaining customers, what sort of actions are they performing? Are they generating revenue? And if you’re losing customers, are you
losing paying customers or monthly subscribers? All of these factors will help you gather a fine clarity on the revenue you’re generating from your existing customers.
Now, let’s discuss the user retention strategies that you can work on for your brand.
While email marketing may sound basic, it’s one of the cheapest ways of staying in touch with your customers. With an effective email marketing campaign, you can foster a great customer relationship. You can inform your customers about new product launches, discounts, coupons, etc. via email. According to SEMRush, email marketing is 56% more effective than other strategies. Besides, you can always indirectly promote your business by offering useful tips to your customers. For instance, if your business is an e-learning platform you can retain your existing customers by informing them about new courses, how they can enhance their career using certain courses, etc.
Your customers tend to come back to your brand because of loyalty programs. If you’d take a look at this article by TechnologyAdvice, you can infer that customers are likely to shop at least 80 percent more at brands with loyalty programs. Whether there’s an occasion or if your customers are looking for an upgrade from their current products, they’d possibly reach out to your business if you have a loyalty program.
If your customer experience is great, your customers will return to your product. If you think about it, we tend to go back to brands that offer a great customer experience even if the product isn’t phenomenal. For that purpose, any business must maintain a standard feedback platform so customers can rate and review your products. This doesn’t help in improving your offerings but also allows the customer to share their feedback directly. It also makes them realize you value their opinion.
Everyones loves free features. If your business can afford to offer customers certain features at no cost, you should certainly give it a shot. For instance, take Spotify that offers both freemium and premium subscriptions. They grew from 10 percent of total users in 2011 to 46 percent in 2018. In fact, as per Open View Partners, businesses can convert around 2-4 percent of customers. While you’re offering free features, you must also emphasize all the additional benefits a premium feature or full access to your product can give.
It’s important to realize what matters to your customers. As a brand if you’re standing up for a cause, it’s best to involve your customers too. For example, if you’re advocating pollution control, you can conduct an offline drive to generate awareness. This also gives you a rare opportunity to interact with your customers and get to know them better.24
Having a solid retention marketing plan isn’t enough. We’d recommend putting data to use. As a business, you’d naturally collect your customer data and purchase behavior data. Leverage that data to create user personas and formulate your retention marketing plans or an imperative remarketing plan. Apart from meeting your business goals, this will give you a strategic direction too. And as far as the facts go — retaining your customers isn’t just an excellent way of growing your business, but also great word-of-mouth advertising for your brand.
Rakhin has over 10 years of experience driving business development and client services. In his prior roles, he stayed close to customers to understand their requirements and help them achieve their business goals. He is passionate about customer success.
Published 3 Sep 2021, Updated 22 Dec 2021
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