Attention: The evolution of retention marketing is here!

After writing this past Tuesday on retention marketing methods, I realized that some of you readers would not know much about this term or how it can affect your business. You might even think it does not apply to your store, and be tempted to stop reading. Don’t! Regardless of your trade, customer retention is a valuable concept to learn and consider, especially when planning and budgeting marketing drives. Today I will go into more detail of how retention marketing became so important, and what it means for your business.

Retention marketing is getting on importance

Until recently, customer retention marketing was seen as second in importance to acquisition marketing. The budgeting was virtually nonexistent, retention-focused roles were few and far between, and there was no discussion in the public forum around the subject. Most company retention programs were relegated to loyalty programs, discounts, and automated mass messages – generic approaches, with no option to tailor the approach to the individual client.

The evolution is here

There are several reasons why the focus on retention marketing has grown; For one, we are in a culture where customer choice has reached a zenith, while attention spans are at an all-time low. The rise of the smartphone and mobile internet have created a world where you are just a click away from your customer – if you know how to reach them.

Consumers have gotten smart to traditional modes of marketing, and in response, native advertising continues to grow, in order to reach people in an organic fashion. Customers now demand a greater personalized experience, catered to their needs; if you do not provide a customer-centric experience, you will not keep business.

Do not stay behind…

More recent observations of the industry have revealed retention marketing gaining ground rapidly. Companies are increasingly allotting resources to this sector, with good reason: a recent Retention Science study shows 70 percent of marketers say their Retention Marketing is average at best, with room for improvement.

It all adds up

Monetarily, customer retention makes sense. According to Gartner Group, 80 percent of your company’s future revenue will come from just 20 percent of your existing customers. At Adobe, they found that for every 1 percent of shoppers who returned for a subsequent visit, overall revenue increased by 10 percent. Ostensibly, you could double your revenue by simply keeping 10 percent of your customers. This surely must be more than enough monetary incentive to pique your interest in retention marketing!

Customer acquisition vs. customer retention

There are still companies not yet onboard with such a retention-focused approach, and who continue to throw money into acquisition marketing. Even Adobe, which realized how valuable their returning customers are, still spends up to 80 percent of their digital marketing budget on this. Why? For one, a single-time shopper can create a very tempting return on investment (ROI). ROI translates to how much you spent on marketing versus how many customers made a purchase.

Retention marketing represents a much more complicated equation; factoring in how much a customer spends over months and years with you can make the effectiveness of a campaign harder to calculate.

The secret of getting repeat customers

The key part of customer retention to focus on is customization – getting to know your customers, and what they like. The best way to figure this out is through analysis of customer buying patterns over time. This is a huge undertaking, and until recently smaller companies did not have the resources to attempt this in-house.

However, as this area of marketing has grown, so has the demand for affordable third-party services offering data analytics. With a variety of vendors offering outsourcing solutions, or even the tools at your fingertips, even small companies can use customer data to build their campaigns – effectively leveling the playing field with giants like Amazon. Look at tools and brands such as Google Analytics, InsightSquared, Canopy Labs, Tranzlogic, Qualtrics, or even your Net Promoter Score to help your business.

Find out what your customers need

As technology and the internet continue to change and impact business, so too will your relationship with customers. Although they might only be a touchscreen button away, when the entire world is accessible to them, the trick is making sure they keep coming back to click on your store.

Embrace the technology and analytical tools available to create personalized options for your customers. The sooner you find out what your customers want, the more effective your campaigns will be in keeping them.