How To Retain and Gain Customers In Today’s Marketplace
For many brands and businesses around the world, 2021 has marked the beginning of brighter days, after a very long, dark year. Many people have felt like tightly compressed springs, cooped up in their homes for many months, and now these persons are ready to jump at anything new-whether that is a destination, a new experience, or a new product on the shelf.
As the world begins to return to normal, many retailers and brands are also facing a new set of challenges in retaining their existing customers, whether this is due to purchase habits transitioning from online back to offline purchasing, to new competition, as well as pickup and curbside shopping-where customer choose products online, and then only briefly stop into retailers to collect preordered items and last minute purchases.
What is Customer Retention Marketing
This new landscape of shopping behaviors makes customer retention marketing all the more important for both brands and retailers that sell them to implement. Also known as lifecycle marketing or loyalty marketing, customer retention marketing is the process of engaging existing customers to continue buying from your business or brand. In today’s market, this means continuing to keep customers engaged, positively interacting with you, and spending their hard earned dollars with you, instead of your competition. It applies in every business category and industry: from destination hotels to wine, whiskey to pasta sauce, home goods to personal care, as well as health and wellness products.
Why, however, should customer retention be such a high priority for a mature brand or retail experience? Won’t former and current customers simply continue to buy the way they used to do? In a word, no. Statistics show that behaviors in purchasing have been permanently impacted by the events of 2020, and in addition, the value of retaining a customer has a direct impact on a brand’s bottom line. Studies show that acquiring a new customer can cost an average of seven times more than retaining an existing customer, with some industry cost analyses indicating closer to 25 times the cost! Additionally, research shows that just a 5% increase in customer retention can result in 125% more profits for a brand.
So, how does a business or brand retain customers and keep them buying from their brand or locations, instead of a competitor?
Use ‘Churn’ To Analyze Behaviors, Not Just Metrics
With all businesses, customer turnover, also known as ‘churn’, is going to occur. Simply put, this is the percentage of customers who end their relationship with your business over a given period of time. The importance of analyzing this from a behavioral perspective matters, because you may be marketing incorrectly, or targeting the wrong customer. Churn can be lessened if you understand the bigger picture of the buying cycle: from why that customer chose to do business with you in the first place, as well as why the relationship may have come to an end. A brand can also lessen churn by ensuring that ongoing marketing and brand stories connect with their customer base, showing how their brand can continue to fit into their personal lives.
Know and Target the ‘Right’ Customers For Your Business
For a customer retention strategy to be effective, you have to be sure your message and brand is reaching the right kind of customers. For example, if a business is marketing primarily based on price, or through deep discount retailers, deal–seeking consumers will be highly disloyal and will leave as soon as a competitor offers a lower price. If the value of the unique products or services a company offers is highlighted, or other features like top notch customer service, shoppers will be more likely to be loyal and purchase more than once.
As the world begins to open up, part of the challenge that many brands have is in retaining existing customers, getting them to continue to purchase in a time when anything shiny or new might easily attract them. It can be easy to focus on a single engagement or sale, which can lead established brands to offers things like deep discounts or flash sales, in hopes that a customer will return. However, the real value is in creating ongoing engagements and a series of purchases, when possible, in order to strengthen the loyalty connection between a brand and their customer.
Define Lifetime Customer Value, Instead of Single Sales
Future revenue can also be more accurately predicted if a business understands the full lifetime value of a customer. Measuring in this manner will generate a clearer picture of potential net profit from each individual, especially if your product is not a once in a lifetime sale.
The lifetime value of a customer (or CLV) should also be taken into consideration with attribution to referrals and word of mouth, as even high value purchases like automobiles, homes, boats, and recreational vehicles can frequently be attributed to previous sales or brand engagements. These measurement tactics are often overlooked, although a better indicator of future revenue, because they require analyzing a longer term customer relationship, instead of a single sale.
There are, however, marketing methods to avoid in customer retention marketing. Here are three frequently overlooked areas when recapturing a customer’s business.
Avoid One-Size-Fits-All Marketing Tactics
The key to effective customer retention also means treating them like a human beings, not just a number in your sales cycle. Do you want to lose customers fast? In the same way, as a clothing retailer that sells only a ‘size 2’ will alienate customers of other sizes, a one-size-fits-all approach to marketing will have a similar effect. Instead, whenever possible, invest in getting to know your customers personally. Find out what matters to them, what they’re interested in, and their connections within the community. Segment marketing messages, including social media advertising, to fit their current needs and interests, and you’ll be more likely to retain their business.
Pay Attention to Granular Data Points
In order to personalize your marketing, you’ll need information and data about your customers and those who are engaging with your business. Although customer data used to come with high costs, many third-party vendors are now available to help you better gather and analyze that data, as well as connect it back to real ROI and potential future sales. You can also use social analytics, both from your business and your competitors, to gather customer data. Use these data analytics and pay attention to granular details, including age, location, seasonal trends and purchases, as well household and income details. Monitor not just your own brand mentions and awareness, but also those of other brands in that space, and you’ll have a clearer picture of the overall landscape-not just your own back yard.
Have a Strategic Customer Service and Communications Plan
Most of us have experienced bad customer service when we’ve had a problem, and each person in the company gives us a different answer. This inconsistency in communication and policy is not only frustrating for your customers, it can make them choose not to do business with you. Unhappy customers are also likely to air their grievances on social media and review websites, and statistics show that an unhappy customer will tell at least 10 people about a bad experience with a brand. Instead, make sure that a corporate communications plan is in place, and that all staff receives ongoing communications training, so they’ll be more likely to generate consistently positive customer engagements.
As competition increases with both online and in person retail, your communications plan also should include leveraging multiple audiences to reach both new and existing customers. Have a new collaboration you’re doing with a fellow online brand? Or perhaps you’re launching a limited time offer or gift set, just in time for the holidays. Make sure local and national media know about it early, and get them excited to share the news. That former customer might not be watching your feed, but if they follow an outlet and read their channels, it’s possible that the timing might be right for them to see you and buy again.
Find Creative Ways to Use Your Products
Even during difficult economic times, including a pandemic, there are customer retention strategies that can be deployed. It just takes some creativity, and sometimes out-of-the-box thinking to get the job done.
For example, as an imported wine portfolio, Tussock Jumper was already experiencing challenges with tariffs when COVID shut down all but essential retailers in early 2020. The brand was also planning a second year in Citi Field stadium and expansion into additional concession retail, but that opportunity evaporated. Instead of discontinuing marketing like many major wine brands, they doubled down to help customers ‘taste around the world virtually’, with over 35 million consumers reached during April 2020 alone. Their sales team was trained to educated retailers on how to upgrade takeout orders by adding single serve wines to curbside orders. The attached cup and personal bottle (no touching the same bottle with friends!) were ideal for ‘socially distanced sipping’ and outdoor tastings, like the one pictured above at a local food truck gathering. Their importer reported an increase of 50% in sales during March and April, with an overall increase of over 35% year over year.
Find Ways to Delight and Entertain Customers
During lockdown and early summer reopening phases in New York, South Shore Dive Bar had to get creative to stay open, as well as keep from laying off a bulk of their staff. To retain customers, they put a $10 gift certificate off a future purchase in with every takeout order to encourage repeat business. They also actively started using TikTok, created fun new menu items, and did Virtual Trivia and Bingo nights on Instagram Live, which encouraged brand-to-customer engagement. The restaurant reported approximately 30-40% redemption on the gift certificates, and because of its success, relaunched the program again in early 2021.
Invent New Ways to Engage With Customers
Like many other brick and mortar shops, boozy ice cream brand Tipsy Scoop had to do more than just close their barlours to customers, they had to complete shift to new business models, including a heavy focus on online sales. They also had to figure out how to service catering clients like Viacom and Pandora-who were now working from home, but still needed ways to entertain employees and advertisers. Our team worked on revised sales decks and strategies, while the Tipsy team set up virtual cocktail classes, with cocktail kits shippable to homes across the country. Their virtual ice cream socials turned into a weekly sell-out hit on Instagram, and they expanded their wholesale business by helping local restaurants and bars create new dessert menus using their ice creams. Now over a year later, they’re expanding the brand through pop ups at hotels like Atlantis Paradise Island in the Bahamas as part of their guest appreciation program, opening new stores, and continuing to grow their online ice cream business. Expansion into big box retail is also on the table, with more growth to come.
Reassure Customers They Can Safely Shop
Calabash Tea & Tonic, a Black woman-owned teahouse with two brick and mortar locations in Washington D.C. had to fully shift to online retail in March of 2020 due to COVID, and quickly determine how best to service their existing customers. This meant rapidly developing their eCommerce footprint in just a few short months, as well as new products for online sales. Current clients were invited via email and social to shop safely online, and the result was a 400% increase in sales, with retained and new customers in every state in the continental U.S., as well as other countries. Although vaccination rates are now up, some customers in certain parts of the country are still nervous about in person shopping experiences. Offering safe alternatives can retain those customers and drive more sales.
Customer Retention Can Future Proof Your Brand
Like all marketing initiatives, customer retention marketing is an investment in your business. It takes work, and it’s not an overnight fix. Brands that invest early in customer retention marketing help to future proof their brand, versus brands that sit back and wait to see what will happen, continuing to take the same marketing approach that they had pre-pandemic. Proactive brands can take advantage of market hesitancy to strengthen their position against competitors, and if they’re willing to do what it takes to reach customers, they may just find a windfall opportunity is available to them. If you’d like to know how to take advantage of today’s new shopping behaviors and marketing strategies, contact our team at VIP@fkint.com to schedule a complimentary consultation.