One doesn’t need much business experience to realize that retaining existing customers is a more sustainable strategy than continually acquiring new ones.
Not having to find and appeal to new customers saves considerable resources.
But how much, exactly? Various studies have shown that it costs five to 25 times more to acquire a new customer than it does to keep an existing one.
What’s more, existing customers spend more per order than new ones. They’re also more receptive to new offerings.
What does all this mean in terms of business value? Improving customer retention rates by just 5 percent can drive profits by as much as 25-95 percent!
Because you don’t need any more convincing, let’s discuss how you can use marketing data to drive customer loyalty.
Focus on segments most likely to become loyal customers
Consumers care about more than convenience, selection and price points these days; they crave personal experiences with brands and want the communication they receive to be increasingly tailored to their interests. This is a central reason why companies need to collect as much data on customers as possible without overstepping their boundaries.
But having this data available doesn’t mean insights will be clear to see. This is one way AI-driven marketing analytics platforms like ThoughtSpot make the jobs of the sales and marketing departments easier. User-friendly search tools give any marketer the ability to find answers instantly from a company’s entire data archive. But AI goes a step further by automatically highlighting insights employees may miss, such as finding micro segments that can be used to deliver more customized messaging and drive better engagement.
Identify common reasons for churn
The wealth of data brands have at their disposal provides a roadmap of what’s working and what isn’t. Customer churn is inevitable regardless of the effectiveness of a brand’s efforts, but that doesn’t mean they can’t be improved. Depending on the nature of your business, you might want to calculate churn rates monthly or quarterly.
From here, you can assess the churn rate by gross or net revenue. Your gross churn rate is the revenue lost from existing customers during your tracking timeframe while your net churn rate is the revenue lost from existing customers during your tracking timeframe minus the revenue gained from upsells during the same period. But these things only tell you the rate; they don’t clarify the why. Tracking the customer journey gives you a visual representation of the last step a customer was on before they vanished.
Vet customer scquisition
If you’re struggling to retain customers, it might be that you’re attracting the wrong ones in the first place. Consumers are curious creatures; many will try anything once. A product or service that sounds intriguing enough will elicit some bites. However, marketing through channels—and to customers—that don’t align with your business model creates a flawed foundation from the start. For instance, if you make quality products, you shouldn’t base advertising efforts around price.
Incorporate buying data into recommendations
Online shopping offers us a wealth of options. At the same time, the endless choices can become paralyzing, especially when we’re not as familiar with a brand’s offering. An effective way to entice new customers to keep shopping with you is to make their buying decisions easier. By reviewing data from past purchases and developing purchasing narratives, you can put together curated product lists that show you have your customer’s best interest in mind. Just be sure that your buying data is of substance. The last thing you want to do is take one narrow cue and run with it. After all, the goal of product recommendations is to enhance the customer’s experience, not frustrate them.
Experiment with user-generated content and social proof
Traditional mass advertising methods don’t resonate with today’s consumers (particularly millennials). Instead, consumers trust recommendations from their social circles, and even strangers, over any marketing jargon a company wields. Leveraging social proof and user-generated content into your marketing strategy help convince both new customers and existing customers alike that your brand is one they should care about.
Turning new users into devotees requires thoughtful analysis and hard work, but the fruits are more than worth the squeeze. Consider these five strategies as you focus on building a brand of loyal customers.