Customer Retention is King: How to Foster Effective Customer Retention Management
According to Econsultancy, 44% of companies still focus more on acquisition than retention, even though it is 5 times more costly to acquire a new customer. Most companies still focus most of their efforts on acquisition and allocate a large portion of their budget to it. This is understandable, as effective customer acquisition is a core pillar of an effective marketing strategy.
What’s shocking is how few companies are effectively running customer retention management despite the fact that customer retention is less expensive that acquisition, has large ROI and creates significant, incremental revenue growth. Although acquisition can instantly boost your company’s bottom-line, retention efforts can secure revenue and customer loyalty in the long-term. But increasing customer retention efforts can often be easier said than done.
Personalization is a key factor for retention strategies that work. In order to build deep loyalty that drives continuous engagement, marketers need to build a rapport with each and every consumer. And personalization is the crux of building this loyalty.
Brands need to be collecting the meaningful data points on customers, including individual customer interests, so that the marketing messages sent are tailored on a 1:1 basis and giving consumers the content they want, when they want it and where they want it. Many marketers may ask, “How do I do this?” The answer lies in the right technology providers. By using a holistic marketing platform built for cross-channel engagement and personalization, executing on a personalization strategy becomes extremely manageable.
Customer retention management encompasses the following areas, all of which can and should be personalized:
The smartest way to acquire new customers is all about optimizing retention. The secret levers acquisition marketers can pull are clear as day once marketers dig into their retention data. By finding out which customers are most profitable over the long-term, and tracking it back to their acquisition source, marketers can easily adjust their acquisition spend and budget to bring in the customers that are most likely to produce revenue and stick around for the long haul.
According to Gartner 80 percent of your future profits will come from 20 percent of your existing customers. Another study conducted by Bain & Company, in coordination with Earl Sasser of HBS, says that increasing customer retention rates by 5% increases profits by 25% to 95%.
As with any management, communication is key to effective customer retention management. And in addition to personalized communications, marketers can take the approach a step further by integrating predictive analytics to help keep customers engaged and interested.
Find out more about how predictive marketing can help customer retention management.