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Retention Marketing Strategies
Retention marketing: It’s a proactive, strategic approach to customer retention, often involving synergy between marketing and sales teams. Through retention marketing strategies, companies are able to reduce their overhead and improve their bottom line—but they need to develop a strategy first. Companies need to develop additional customer touch points, provide for a different organizational infrastructure, and plan ahead. Ultimately, this leads to happier customers who also cost less to keep.
Some popular customer retention strategies include:
- Identifying at risk customers and connecting with them.
- Engaging customers who are close to their renewal date or about to make another order.
- Regularly connecting with customers who haven’t engaged with the business recently.
- Remarketing and retargeting towards customers who have made purchases previously.
Customer retention strategies are all about making customers feel valued. But the strategy part is important because it ensures that the business remains consistent. Consider the example: “identifying at risk customers and connecting with them.” There are many questions that need to be answered:
- How are customers analyzed and determined to be at risk?
- How frequently are they analyzed and communicated with?
- Whose responsibility is it to connect with these customers?
- What is the strategy being used when connecting with the customers?
How can organizations develop their customer acquisition and retention strategies? Often, it starts with study: a customer retention strategies PDF, customer retention strategies PPT, or a literature review on customer retention PDF. Positive customer retention strategies can be explored through case studies and other businesses, as well—the Amazon customer retention strategy, for instance, can be broadly applied to other eCommerce businesses.
Today, there are also customer retention strategies in CRM solutions, embedded within the platforms themselves. But companies still need to develop an in-depth understanding of the philosophy behind customer retention because it varies from industry to industry. Customer retention strategies in service marketing will be different from customer retention strategies in automobile sector businesses.
Customer Retention Definition
There’s a basic definition of customer retention and a more complex one. The simple customer retention definition is as follows: The amount of customers you retain. That’s it. But consider a customer retention definition by authors, and it becomes a little more complex. What is customer retention?
“Customer retention” generally refers to the actions and methods by which organizations seek to reduce the amount of customers leaving their business.
This encompasses much more than many would think. This customer retention definition is an important jumping off point, but it’s also more than just a jumping off point. It’s about a company’s relationship to its customers.
Though the definition of customer retention may be simple, the implications are not. Why would a customer leave a business? What value is the customer seeking? How can you keep a customer from leaving a business? Exactly how much money is lost when each customer is lost? How much is a customer’s lifetime value, and how much is actually being spent on retention and acquisition?
Companies need to start from a basic framework to begin improving their customer retention. Customer retention is an incredibly important number for most businesses. Businesses retaining customers are successful businesses: They are growing. Businesses losing customers are on the path to failure: They’re doing something wrong. Investors look towards customer retention first, especially in certain industries such as Software-as-a-Service. Consequently, customer retention can also directly impact how much funding is available for a company. So, customer retention is really about building a stronger business by ensuring a growing clientele.
How to Retain Customers
It’s obvious that everyone wants to retain customers. But how? It starts by scaling a customer retention strategy. A team may need to build a process or template for other team members to follow, and will need to troubleshoot and test this process. Processes should include the scope of work, what to say, what to do, when to escalate, how much budget can be spent to keep a customer, and so forth. Here’s an example:
A business may already know that some of its customers are leaving because they perceive the cost of service as being too high. Think about how to retain customers in retail. The customer retention strategy template may therefore be based around this premise: Customers are likely to leave because of the cost of services. When looking into how to retain customers, managers may have discovered that acquiring a new customer costs $100.
Thus, the customer retention process may empower sales representatives to give a customer a discount of up to $80 when they call to cancel. The customer retention strategy template will be clear about how to offer these savings and when, as well as the scope of customer retention for the sales rep—it will also include when the sales representative should escalate to a manager.
By doing all this, the representatives will be able to give discounts but still save the company money. But they need that data first: They need to know how much getting new customers costs, or they don’t know how much of a discount they can offer without losing the company money. Further, over time, the company will discover how much of a discount is most optimal.
Customer Retention Examples
Let’s take a look at some customer retention examples, using one of the biggest and most successful businesses in the world: Amazon. Amazon has done quite a lot to invest in customer attraction and retention, because its customer base is also part of its power. Some of the best customer retention strategies case studies involve Amazon, though naturally scale does matter.
How does Amazon attract customers? First, it has a very broad market. Its platform consists of its online store, music, videos, grocery services, and more. In doing this, Amazon seeks to create a complete relationship with its customers. It wants to become indispensable to them regardless of their personal needs.
When people think of Amazon, they often think about customer service first. At some point, an executive at Amazon considered “How can Amazon improve customer service?” and moved from there. Why is Amazon customer service so good?
An easy example is returns. There’s more here than meets the eye. Amazon is known for facilitating very easy returns. You don’t need the Amazon customer retention department phone number: The whole system is automated. They’ve even networked with UPS and Kohl’s stores so that people can easily return items without having to ship them themselves.
But Amazon’s customer retention data also tracks how much money it “loses” on each customer, and it’s been known to cancel accounts if customers appear to be costing them too much. It’s this invisible limitation that means that Amazon is able to retain their highest value customers without having to worry about the “squeaky wheel” customers that could actually be costing them money to retain.
And there are other examples of Amazon’s superlative customer retention. Amazon pushes its mobile apps, so it “lives” on the devices of its customers, and is able to interact with them on a daily level. Amazon pushes its hardware, like Alexa and the Kindle, so that it can also push its software solutions. All of this, when fostering the customer relationship, is also fostering customer retention.
Benefits of Customer Retention
Customer retention may very well be the most important single metric for a business. Why? Because it tells so much about the health of the business. It means that the business is growing, its branding resonates with people, it’s sustainable, and it’s ripe for acquisition or funding. Here are the major benefits of customer retention
- It means that income is stable. High amounts of churn within a business mean that a single misstep could indicate that the company is no longer self-supporting. Companies have to endeavor to have as stable income as possible.
- It shows that the company is growing. Companies that have low retention rates are usually failing on some level, whether their product or service quality has gone down, or whether they just haven’t been able to capture their market.
- It’s a clear and obvious metric. Many other metrics are highly complex and require in-depth analysis. While customer retention is more complicated than it may seem to be, it’s still one of the easiest metrics to use.
For more about the importance of customer retention, you can look at a customer retention PDF or customer retention PPT. Ultimately, it’s crucial to understand that while customer retention isn’t the only important metric, it’s a very important singular one. Absent of any other context, customer retention is almost universally a good thing.
Customer retention is a fast, easy way to tell whether a company is currently succeeding or failing. Of course, it isn’t the be all and end all of analysis because it isn’t the final step. Whether you have positive or negative retention, you still need to work towards understanding why that is.
Analysis and strategy is critical for understanding why customer retention is rising or falling, and making adjustments to these numbers.
Improving Customer Retention
How do you improve customer retention? First, a team needs goals, numbers, metrics, and KPIs. They need to be able to map out their goals and know what they need to work towards so they can measure their success. If they find that their numbers are low or decreasing, they will need to put together a more focused plan within their greater strategy.
Collecting data, getting info from team members on why customers are leaving, and sending out customer surveys are excellent tactics. Some popular customer retention strategies include:
- Engaging with customers more frequently, either one-on-one or through things such as newsletters.
- Discussing what to say to a customer who is leaving, and training employees on how to react.
- Looking into the “why” of “Why do customers leave?” and figuring out how these issues can be addressed.
- Sending out coupons to customers who appear to be high risk, or otherwise courting them.
- Marking similar products to customers who have purchased products in the past.
But above all, improving customer retention requires developing a customer retention model and strategy. Otherwise, a company isn’t going to be able to consistently retain its customers. The ultimate conclusion of customer retention isn’t just about how to retain customers who are leaving, but also to understand the reasons why clients leave and why they stay. Building a customer retention model in Python or CRM is simply the path that is taken towards this.