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Retention marketing is a strategy that focuses on retaining current customers. The goal of retention marketing is to turn new customers into loyal customers. Furthermore, retention marketing aims to increase the frequency of purchase as well as the amount of money spent per purchase. The retention rate is the most relevant metric for measuring the effectiveness of retention marketing.
There have been debates about the importance of acquisition vs retention marketing. While retention marketing focuses on retaining current customers, acquisition marketing is intended to attract new prospective customers. Traditionally, many businesses have identified the acquisition of new customers as their primary focus. In the past few years, retention marketing has emerged as a strategic priority for many B2B companies. Businesses are beginning to recognize that it is just as important to spend time and resources on current customers as it is on prospective customers.
During times of economic uncertainty, it is important for companies to do everything in their power to keep their existing customers. The importance of customer retention is even greater during economic downturns when customers have more of an incentive to hold on to their money. Examples of marketing techniques that can help improve customer retention include direct mail, targeted digital advertising, B2B retention emails, personalized email, and a loyalty program.
Due to the emergence of retention marketing, B2B companies are beginning to hire more for retention marketing jobs, such as retention marketing manager, CRM marketing manager, and crossover marketing manager. When you look at the typical job board, you can reasonably expect to see at least one retention marketing manager job description. The retention marketing manager salary has risen in the past few years in response to the growing popularity of B2B retention marketing and email marketing retention strategy.
The broad, universal definition of the term retention is the ability to hold or keep onto something. Of course, the meaning of this term differs depending on the context. For example, employee retention refers to the ability of an organization to keep its employees. Likewise, customer retention is the ability of an organization or product/service to keep its customers. Student retention in the context of higher education refers to the continued enrollment of a student from freshman to sophomore year. Overall, retention is the ability of an organization to keep an audience coming back or together.
Both customer attraction and retention are essential for growing a customer base. When it comes to the customer retention and acquisition psychology, customer acquisition is important because it is the most literal way to grow the size of your customer base. Furthermore, you cannot have customer retention without customer acquisition. However, customer acquisition can become less effective over time as a strategy for growth because the number of potential first-time customers decreases as your customer base grows.
According to research, the use of retention techniques to increase customer retention rates by 5 percent can increase profits by 25 to 95 percent. Also, the cost of acquiring a new customer is five times more (on average) than the cost of retaining a current customer. In the early stages of growing a B2B company, it is worthwhile to focus more on customer acquisition when it is difficult to take advantage of strategies like customer retention. However, in later stages, many B2B businesses recognize the importance of customer retention after acquisition. Investing in retention vs growth is arguably more important for B2B businesses. Of course, acquisition expansion retention strategies are all important no matter the industry or size of the B2B business.
Customer Retention Strategies
When it comes to customer retention, it is important for a company to have a strategy and a set of goals. Your customer retention strategy plan should include a layout of the team, a description of who is responsible for what, milestones to shoot for, and metrics for the measurement of success. It is also essential to consider customer retention cost factors when it comes to your customer retention strategy. Customer retention cost refers to the amount of money spent to keep an existing customer. The customer retention cost should not be greater than the revenue your B2B business earns from retaining a customer.
One of the best ways to create customer retention strategies, customer acquisition and retention strategies, and customer retention strategies in CRM is by getting feedback from your current and past customers. Based on the feedback you receive from these customers, you can create a new strategy or make changes to one of your existing customer retention strategies. You can use surveys, recorded interviews, live chats, and even email correspondence to get feedback from customers.
If your marketing team needs a good starting point to build their own strategy for customer retention, there are several customer retention strategies PPT, customer retention strategies PDF, and customer acquisition and retention strategy PPT resources available on the internet. Your B2B marketing team can get ideas from customer retention strategies from these resources. Minor or major changes can be made to these strategies so that they are well-suited to help your B2B business meet your goals. You can also find a customer retention strategy template online and go from there. These resources are especially helpful for those who are new to the world of customer retention.
Customer Retention Definition
The customer retention definition in the context of marketing is the process of encouraging current customers to continue purchasing products/services from your company. The key difference between customer retention and customer acquisition is that the former is focused on customers who have already been converted one or more times.
There are many benefits of customer retention. In this day and age, the amount of choices that customers have is higher than ever before. The attention spans of customers are far lower than in the past. A customized experience is more important to customers than ever before. Companies need to adopt customer-centric approaches to adapt to these changes.
Research studies indicate that current customers are worth more to companies than newly acquired customers. The Gartner Group found that 80 percent of the future revenue of a company comes from just 20 percent of their existing customer base. Adobe found that online retailers use about 80 percent of their budget for digital marketing to acquire shoppers. Overall revenue for online retailers increases by about 10 percent for each 1 percent of customers who return for a second visit. This means online retailers can double their revenue by retaining just 10 percent of their existing shoppers.
Not only are retained customers more valuable than newly acquired customers, but it’s also easier and cheaper to keep a customer than it is to acquire a new one. You may be wondering: “how much does it cost to acquire a new customer?” The customer acquisition cost is anywhere from $100 to $5,000 in most cases. However, it is possible for the customer acquisition cost to be as high as $100,000. The cost of customer acquisition depends on a number of factors, such as the industry. However, as stated above, it costs five times as much to get a new customer than to keep a current customer. Therefore, even though there are many benefits of customer acquisition, it is the best interest of many B2B companies to focus their attention on customer retention.
For more information about customer retention, you should refer to the literature review on customer retention PDF available online.
How to Retain Customers
If your B2B marketing team is new to customer retention marketing, it can be hard figuring out how to get started. Referring to examples is incredibly important and can help a team come up with new ways to retain their customers. Therefore, you should use resources and customer retention examples from other brands when it comes to customer retention for new ideas or inspiration. You can replicate these strategies without making any major changes, or you can apply these strategies in a way that makes the most sense for your business.
A customer retention model is intended to help a company target their customer customers more effectively based on the desired goal. For example, a company may want to retain current customers and grow customer lifetime value. It is also possible that a company may want to know how to retain customers who are leaving. Many B2B marketers find that customer retention models are the best way to yield the most ideal outcome. The customer retention process can be difficult, and a customer retention model is a great way to make your life easier.
Some of the best sources of examples for customer retention strategies include customer retention strategies case studies, customer retention PDF, and customer retention PPT.
Average Customer Retention Rate by Industry
As touched upon above, the average customer retention rate by industry differs in most cases. Some industries have very low customer retention rates while others have very high customer retention rates, on average. Therefore, when setting goals and evaluating the performance of your company when it comes to customer retention, it is important to consider the average customer retention rate of your industry.
Mixpanel reported that the average customer retention rate for most industries was below 20 percent in the 2017 Product Benchmarks report. In the finance and media industries, an above average customer retention rate is 25 percent.
While the average customer retention rate by industry differs, the customer retention formula does not change depending on the sector or industry. The customer retention formula is as follows:
Retention Rate = ((Number of customers at end – Number of customers acquired during the period) / (Number of customers at the beginning)) * 100.
One reason for the differences in the average customer retention rate by industry is differences in customer retention strategies by industry. For example, customer retention strategies in service marketing will differ from the customer retention strategies in automobile sector examples. Likewise, the average customer retention rate restaurants will differ from the average customer retention rate in the airline industry.
Of course, average customer retention rate and strategies will differ within an industry depending on the size of the company. For example, the main Amazon customer retention strategy will probably differ significantly from the customer retention strategy of a small online retailer.