Are you a business looking for growth through organic repeat customers? Then retention marketing is what you must focus on.
Acquisition costs are always higher than retention costs. Hence, the best practice is to, fully utilize your already existing customer base to generate results. Encouraging older customers to associate with you is always easier, as they already come with prior knowledge about your company and services, as compared to new customers.
Retention marketing as the name suggests helps work on cost-effective and time-sensitive strategies to retain your customers while encouraging them to transact with you again. This can either be through activities or strategies employed by businesses to increase spends, profitability, and value from existing customers.
Which retention marketing strategy works for your business?
Depending on the stage of your business, the products you sell, pricing and your target audience: your marketing strategies will vary. It is essential you pick the right strategies in order to get effective results.
Based on the stage of your business, here is how you should approach retention strategies:
- Early-stage businesses: If you are a business who is relatively new, retention strategies would not be of much help to you. As an early stage business, it is essential you focus on first growing your business and customer base.
- Growth-stage businesses: If you are a business with a decent customer base and revenue numbers, you can start introducing retention strategies into your routine. A combination of acquisition and retention strategies is ideal for businesses in this stage. Start off with loyalty programs and referral programs to build customer loyalty, instead of only a customer base.
- Steady-stage businesses: If you are a business with a known brand image, it’s time you focus on fully optimizing the already exisiting customers. Since you already have a customer base, work around strategies to encourage them to spend more with you.
Key metrics to measure for retention marketing:
Repeat Customer Rate (RCR):
This is the most important metric for you as a business to measure. RCR is the percentage of customers who are willing to buy again from you.
To calculate the RCR, you would need the following:
- The total number of customers who have purchased more than once with you over a defined period of time.
- The total number of unique customers who have purchased with you for the first time over a defined period of time.
RCR = The total number of customers who have purchased more than once with you / The total number of unique customers who have purchased with you for the first time
Purchase frequency (PF):
The purchase frequency metric helps you understand how often you have repeat customers transacting with you.
PF = Total number of orders placed in a specific time period/ Total number of unique customers over a specific time period
Average Order Value (AOV):
The Average Order Value metric helps you understand the total amount of money spent by a customer on every transaction.
AOV = Total revenue earned over a specific time period/ Total number of order placed in a specific time period
Once you have these metrics calculated, you can calculate the customer lifetime value for your business. This is an important metric to understand to create effective retention marketing strategies. Click here, to know more.
Retention marketing strategies for your business:
Everybody likes some love. Personalized hand-written notes that thank your customers for associating with you is a gesture that can go miles in favor of you. In a world filled with automated emails which lack the human touch, personalization shows you care. This can not only help customers develop a soft corner for you, but also help in subconsciously building brand loyalty. Small gifts which can give a glimpse into your new launches can also be an ideal way of generating customer interest. This not only allows them a sneak pick into what’s in store for them but also helps make them feel privileged, leading to better conversions.
Referral programs encourage already existing customers to refer you to their peers, with an incentive for each referral. When this sort of word of mouth, comes with an added reward, this helps them spread the word more actively. Additionally, this is a perfect strategy for both customer acquisition and retention. Referral programs come with referral codes or discounts which encourage existing customers to shop with you again. The individuals they refer already have a discount coupon, which further encourages them to shop with you. Hence, referral programs not only help with keeping existing customers but also help get new customers, making it an ideal pick.
Loyalty programs motivate existing customers to continue associating with you due to the huge benefits they can avail. Customers can join these programs at a menial cost and are perfect to incentivize repeat orders. Some of the benefits you can offer your customers are reward points, additional discounts, free shipping, sneak peek into new arrivals and more. These programs are a profitable engagement for both the sellers and the customers. Additionally, they are an ideal way of generating new leads if your offerings are lucrative enough.
Attracting both repeat and new customers are only one part of the battle. Giving your customers enough reasons to talk positively about you and endorse you is the another. One way of doing so is by having an impeccable customer support group. Addressing their queries on time goes miles in building the brand image that you wish for your company.
Retention marketing is an ideal way of leveraging the networking connects of your customers to build a strong brand loyalty via social media marketing. Keeping your customer happiness as a priority is key.
Providing seamless and secure transactions covers the last mile, ensuring your customers are happy with their association with you.
With Instamojo, you can not only ensure successful transactions but also use our free services such as online store, invoice generator, SMS alerts, pro analytics and more to help your business grow on the internet.