So here’s a sobering fact.

We all know that persuading an existing customer to buy again is so much less expensive – sometimes one-tenth the cost – than acquiring a new customer. And we’re starting to see how excellence in customer retention can provide truly relevant data to acquisition teams. This ultimately enables them to recruit more valuable customers at lower cost.

So what keeps marketers from ramping up their efforts at customer retention, big-time?


That’s right. It’s most often not cost, access to data, or resources. Of course, all those things get cited from time to time, and there’s no doubt that at some organizations, some of them do play a role.

But the biggest factor that prevents marketers from excelling at customer retention is inertia. In partnership with Forbes Insights, Sailthru recently surveyed 300 retail and media executives to discover how they approach customer retention and how they leverage it throughout their enterprises. We found that 14% of companies favored retention over acquisition, so we called them the retention gurus. Another 14% did just the opposite – favored acquisition over retention, so we termed them the acquisition athletes.

Retention gurus vs acquisition athletes

On the other hand, 84% of the acquisition athletes do things “the way they have always been done.” Acquisition athletes are also more likely to compare themselves to others in the industry when it comes to customer strategy, which is not exactly a recipe for innovation. Retention gurus are more likely to go their own way. 81% of acquisition athletes say they evaluate themselves compared to others in their industry, compared to just 58% of retention gurus.

Defeating Inertia: Start Small, Think Big, Increase Retention

There’s room for improvement across the board. How can the way we determine customer strategy remain so stagnant when customers, and the tools they use to interact with brands, are changing so quickly?

One way to move forward, of course, would be to devote a bit more money to retention. But despite the clear economic imperatives of a modern customer retention strategy, more companies are continuing to throw money into acquisition. Our study showed that 79% of acquisition budgets increased last year, but just 42% of customer retention budgets.

The answer, as is so many things, is to start small. Researchers at the Stanford Graduate School of Business and University of Chicago recently did a study of two customer retention campaigns, across millions of email addresses, that used just the tiniest bit of personalization to help bring customers back. Really tiny. They simply included the recipient’s first name in the subject line of the email. That’s it.

StubHub - personalized email

In the first experiment, they worked with Mercado Libre, the largest online seller in Latin America. Open rates rose by 6%, click-through rates rose by 7%, and opt-outs dropped by 11%.

The second experiment was an attempt to re-engage some subscribers to a mailing list used by Stanford University. They used the same small tweak: First name in the subject line. And open rates went up 23%, click-through rates went up 32%. Opt-outs also dropped. However, because the sample size was smaller on this mailing, the drop was not statistically significant.

Of course, with results such as those, no marketing department worth its salt is going to be satisfied with really tiny efforts at using personalization to enhance retention.

Proof of the Power of Personalization

Once you’ve seen that personalization works, the payoff from a more sophisticated personalization strategy is too huge to ignore. Among our customer base here at Marigold Engage by Sailthru, we’ve found that clients cut their churn rates by 45% by sending email that features personalized dynamic content and product recommendations, rather than just static email. Publishers that dive into personalization do even better: a 75% decrease in churn, on average.

The academic studies show that putting just a little extra effort into customer retention can bring real benefits. The long game, though, is to expand those efforts to dramatically improve retention and steady, profitable growth.

But a simple test of the power of personalization doesn’t have to be particularly hard to set up. Nor does it initially have to run across multiple campaigns, and has the potential to pay off — and snowball — immediately. In other words, it’s inertia’s worst enemy.



Learn more here about the power of retention analytics and a personalization marketing solution.