4 Ways for Marketers to Maximize Customer Retention
Customer turnover is not a new phenomenon, especially when it follows the holiday season or a brand’s major sales event. But in 2021, the result and impact of a major customer exodus on brands is even greater. Between the lasting effect of the pandemic and a sluggish 2020 holiday season, many brands are looking to rebound this year, both in terms of acquisition and revenue. And customers are leaving more quickly for another brand if the experiences you provide do not meet their needs.
When you add together a year that turned marketing on its head, a rise in consumer expectations for how brands engage with them, and growing angst and regulation around data privacy, there’s no denying that brands must prioritize customer retention efforts in 2021.
The Business Case for Prioritizing Customer Retention
There are two reasons customer retention should be a centralized focus of your marketing team.
The first is cost. We all know that it is cheaper to retain an existing customer than it is to acquire a new one. And, of course, that is critical this year as marketing budgets are tight. Specifically, though, customer retention can play a key role in reducing your media spend, which is traditionally one of the biggest portions of the marketing organization’s budget. Using your CRM audience to run look-alike campaigns that target consumers who are similar to your best customers—and avoid those who aren’t—will help your media strategy be more efficient and cost effective.
The second reason is data. The focus on first-party data is only going to increase as cookies become obsolete in 2021. What does that have to do with retention? Well, consumers aren’t likely to voluntarily share their information with any brand that asks, and they won’t share in general without getting something in return. The easiest way to obtain first-party data and understand more about your customers is by fostering and engaging in relationships where customers feel comfortable enough to share that information.
How to Approach Customer Retention in 2021
The following statement applies to retaining customers but could also be taped to the monitor of every marketer for any initiative this year: What worked in the past may not work this year. Look at the behavioral and transactional data from the past year and see if you identify new patterns. What you find will likely lead to shifts in the following areas:
Segmentation: Your customer cohorts have likely changed in the past 18 months, and your best customers pre-pandemic may no longer be your best. Now is the time to reevaluate how your customer segments have shifted and identify new cohorts based on recent performance.
Content: Not only are customers engaging through different channels than they may have been previously, but what they are seeking from your brand is likely different than it once was.
Cadence/frequencies: Similar to content, the daily routine of your customers is likely much different now than it was early in 2020. The time of day and how frequently you are communicating in all channels may no longer align to the times when they want or need to engage most.
You know that your approach needs to evolve with the times. That is the first step. But you still have to give customers reasons to stick around. Here are four ways to make that happen.
- Start your customer retention efforts right away. In the past, your re-engagement or onboarding strategies may have been built on three- or six-month engagements, but if customers aren’t getting what they want from you, they won’t wait to leave. The first 30 days are critical. Engage them with great content from the start and drive interaction so that you can collect that all-important data to respond with even more relevant, personalized content.
- Add value for customers. Your customers know when your normal sales take place. But that doesn’t motivate them to open your emails or engage with your content on a regular basis. Show your customers where you stand and given them reasons to continue opening. Given the isolation most customers have lived in for the past year, anything that promotes a feeling of community and gives them a sense of belonging is worth promoting.
- Enhance your customer experience. The data you will have gotten from your reassessments will provide plenty of insights into what your customers are wanting from your brand and where you might be falling short. The question is, how can you evolve to make them want to stay? The answer could be a more holistic targeting perspective to ensure consistency and cohesiveness in your messaging, or it could be altering your merchandising planning. Many brands are even looking at how to reinvent or upgrade their products to meet the needs of their new customers.
- Be smart about unsubscribes. The reality is that no matter what you do, there will be the one-time buyer who purchased a gift and has no interest in continuing to engage. Don’t fight it. That customer would most likely be inactive anyway, bringing down your metrics in the process. However, this doesn’t mean they’re lost forever. Consider re-targeting these customers through paid social ads to keep awareness of your brand high and give them an avenue to come back when they’re ready.
The ways in which we shop and purchase products, and the reasons why we shop, are likely altered for good. There is just no way to unlearn the behaviors that have changed so significantly over the past year (and counting). This means that brands have to work harder, and smarter, to keep customers engaged and engender loyalty.
These strategies are a great place to start, but it’s not enough to set it and forget it. Consumers’ habits and demands will continue to shift as dramatically as they already have. Make sure you are continuing to adapt and pivot your messages and strategies to meet their needs, no matter how they evolve.
Jenn Horner is associate director of retail and consumer goods at DEG.