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Customer Retention Marketing
Attracting new prospects with effective customer acquisition marketing is important, especially when a B2B business is just starting to get established. However, spending time and resources on customer retention is just as key to their overall health, growth, and reputation.
Research has proven the benefits of customer retention marketing. For instance, increasing customer retention rates by 5 percent can increase profits by 25 to 95 percent. The probability of selling to an existing customer is 60-70 percent, versus the 5-20 percent probability of selling to new prospects. Furthermore, the cost of acquiring a new customer is, on average, 5 times greater than the cost of retaining a current customer.
With results like these, it’s no surprise that customer retention marketing has emerged as a strategic priority for many B2B companies. They have shifted from acquiring new prospects to also deliberately engaging existing customers so they will continue buying products or services from their business.
Customer retention objectives include forming lasting relationships with consumers and building brand loyalty. Ideally, they will turn into brand advocates, spreading awareness of your business within their own circles of influence.
The importance of customer retention is especially apparent during times of economic uncertainty or a downturn. More than trying to attract new prospects, companies should do everything in their power to keep their existing customers. A loyal customer base can be critical for the health of your business when new customers are hard to come by and people have more cause to hold on to their money.
Customer Retention Strategies
Before you try to execute any type of marketing you first need to have a plan. This applies equally to both customer acquisition and retention strategies. Otherwise, your team won’t know what to shoot for, which tactics to use, or how to optimize performance.
The first step is calculating your current retention rate by using this formula:
Retention = ((C-N)/P)*100, where C = current customers, N – new customers, and P = previous customers.
You’ll find that quality customer retention strategies in CRM systems often perform this calculation for you, automatically updating as new information becomes available.
Once you know your current customer retention rate you can start setting goals for your customer retention strategies. For instance, you want to improve customer retention from 81% to 90% over the next quarter.
It’s important to set achievable goals that include a timeline and milestones to hit. Also decide what key performance indicators (KPIs), will be able to help you measure the performance of individual tactics and your overall strategy. Finally, develop a philosophy or “why” behind your actions that your team can get behind. All of these elements are important for team organization and motivation.
A great starting point is to refer to the customer retention strategies PDF or customer retention strategies PPT of brands you admire. You can learn about all sorts of different applications and tactics from these kinds of resources. For instance, how to use negative customer retention strategies to gently encourage loss-makers to go elsewhere.
What is Customer Retention?
So, what is customer retention, exactly? A common customer retention definition by authors is, essentially, the number of customers an organization can maintain over time. More specifically, it refers to the activities and actions businesses take to reduce the number of customer defections.
A high level of customer retention means the business is doing well. It’s successfully attracting new prospects and is doing the right things to keep them happy and maintain a long-term relationship. A low level of customer retention means the business is failing to keep its hard-won customers – often resulting in a shrinking bottom line.
As previously mentioned, the main components are customer attraction and retention. A customer retention strategy begins with the first contact a prospect has with a company and continues throughout the entire lifetime of the relationship. This means providing excellent service to generate customer attraction, build customer loyalty, and convert existing customers into brand ambassadors.
However, if you read a literature review on customer retention PDF, you might come across more nuanced definitions. For instance, a strict customer loyalty and retention definition doesn’t really cover negative customer retention strategies.
Furthermore, customer retention definitions and standards can vary dramatically, depending on the industry or type of business. For instance, a small realtor isn’t likely to have significant customer retention, seeing as most people don’t purchase or sell houses very often. In comparison, you would expect a dentist to have a high customer retention rate since clients will return year after year for check-ups and cleanings. This will be discussed more in the next section.
User retention can mean different things depending on the industry or type of business. It doesn’t just apply to customer retention strategies in service marketing. It can also refer to employee retention for businesses or student retention at educational institutes. It could mean users for a basic app on your iPhone. It could mean returning customers for a car dealership. It’s also important to be careful regarding what you compare yourself against when it comes to user retention strategies.
For instance, the Amazon customer retention strategy will look very different from something like customer retention strategies in automobile sector businesses. Quite simply, Amazon’s customer retention data will not be very relevant to them, since they use a different model and are targeting a different audience. Similarly, how can Amazon improve customer service if it tries to compare itself to a boutique health and beauty spa?
As a B2B company, it’s especially important to measure your team’s numbers and success with benchmark data most related to your industry and business size. This is because you’re dealing with a more specialized market where your customers have very specific needs and expectations. A retention tactic that works in the B2C context, or for a much larger corporation, might not apply to your audience.
However, this doesn’t mean that you can’t still learn from something like Amazon’s strategy. For instance, asking questions like how does Amazon attract customers and why is Amazon customer service so good can help generate ideas for your own user retention strategy. Take, for example, the fact that there is an Amazon customer retention department phone number. This allows existing customers to get direct assistance without having to repeat the entire marketing and sales journey.
How to Retain Customers
There are a number of the different components that go into creating a customer retention plan and an effective customer retention process.
To start, you need a team of skilled people focused on answering the question of how to retain customers. As previously discussed, this is not just about finding how to retain customers who are leaving. It’s also about identifying which segments you want to strengthen your relationship with and which customer segments represent a loss for your business.
Another critical element of effective customer retention is having the right technology to support your team. For instance, an integrated customer retention platform, like Terminus, makes it easy to organize and implement your strategy. Terminus has the data and channels needed for customer success, marketing, and sales team to reach their most important customers. Not only that, teams will have access to all of the numbers and KPIs that measure their impact.
These tools can help you better understand the scope of customer retention needs for your business. You’ll also be able to use more advanced techniques, such as building a customer retention model in python that pulls in data from your marketing team, sales, and your client management system. Having access to all of this different information allows you to create a sophisticated customer retention strategy template.
The final component is strong leadership to keep all of the pieces of your strategy coordinated. When everything is correctly aligned you’ll be able to effectively work towards the retention goals and objectives you need to maintain business health — even during economic downturns.
Customer Retention Examples
We understand that starting a customer retention plan for scratch may seem overwhelming and difficult. However, by taking a phased approach, you can gradually build up a retention strategy that works for your organization.
The best place to start is by compiling customer retention examples from other teams or brands that you admire. This includes doing competitor research and looking at what other members of your industry are doing for customer retention. This will help you get a better sense of what does and doesn’t work for your specific market. It can also reveal opportunities to engage with customers in ways that they won’t receive from competitors – helping your business stand out.
Customer retention strategies case studies can provide examples on which to model your own customer retention marketing tactics. A well-researched customer retention PDF can also be a great source of information. To help you get started, here are some examples of customer retention that you can look to for inspiration when developing your own strategy.
Remember, the goal isn’t to blindly copy the strategies of others. Rather, you want to find what you like, don’t like, and what elements are most relevant to your business. There’s no one-size-fits-all solution for customer retention. Something that works for a large corporation like Amazon won’t necessarily apply for a boutique online retailer.
Also, keep in mind that there is no ultimate conclusion of customer retention. Rather, you will need to continually analyze your customer retention strategy to optimize performance. A solid strategy, framework, and leadership will help your team continuously improve upon your set KPIs and, most importantly, better serve your customers.