Customer retention is critical for the success of any business today. And marketers agree that it’s 5 times more expensive to acquire a new customer than to retain an existing one. In fact, a business can be completely unsustainable without a loyal case of customers who stick around for the long haul. Many brands don’t know where to start when it comes to finding who their loyal customers are, let alone better retain them, yet this is key to reducing churn and making sure your best customers (aka, your most profitable customers) stay engaged.
Measuring Customer Retention Using Key Metrics
It’s not necessarily important to measure all customers. What matters is retaining the best customers, and the customers with the most potential to become your best customers. So it’s important for all retention-focused businesses to gain a deep understanding of who these customers are. Some easy ways to do this are by looking at Customer Lifetime Value of your entire customer base, and finding that spend the most. Another important metric to look at is purchase frequency – customers who purchase often, even if not in large quantities, are incredibly engaged and produce predictable revenue. Of course, the metrics that matter for your business may look quite different.
Traditionally, marketing metrics were focused on clickthrough rates and time customers spent onsite, but today we know that these “vanity” metrics don’t often shed light on a company’s bottom line. By focusing on key metrics like Customer Lifetime Value, marketers will be better equipped to both identify their top customers, and focus on engagement with those high-value customers in order to retain them.
Retain More Customers, Generate More Revenue
In order to grow a healthy customer retention-marketing program, there are 3 key strategies that are tried-and-true at increasing customer lifetime value, and decreasing churn. Any brand can adopt and adapt these strategies for their own marketing unit, and start achieving lift on the customer retention metrics that matter.
- Personalization – This is one of the most effective ways to effectively engage and retain customers. According to Gartner, by 2018 the brands who have extended personalization to cross-channel experiences with fully dynamic content, messaging, recommendations, discounts and calls-to-action will outperform their competitors in revenue by at least 20%. Customers crave a better experience, and want to be treated like an individual. The more marketers implement personalized, automated strategies across their email, web and mobile ecosystem, the more each consumer will stick around for the long haul.
- Advanced analytics – It can feel difficult to take huge volumes of data and transform it into insights that drive action, engagement and revenue. But the right analytics gives marketers the ability to view and manipulate marketing metrics from multiple channels and quickly report on both day-to-day and long-term ROI for every marketing decision.
- Predictive intelligence – With the right predictive intelligence, marketers can predict individual customer’s next action, and then use this knowledge to deliver communication based on the action they are most likely to perform. Marketers can identify who recently purchased, how many times, for how much, etc. You can also predict when a specific customer is 99% likely to purchase. This translates directly into revenue!
Looking for more insights on how to retain customers? Download our Definitive Guide to Predictive Marketing.