June 3, 2023
Retention strategy: a business opportunity?
A business’s depends on acquiring new customers and their retention. Without much effort, you can see that the customer retention cost is lower than the cost of acquiring a new customer with each new conversion, since this often occurs when the consumer has an incentive. These incentives reflect consumer acquisition costs (CAC).
However, defining effective acquisition and retention strategies is a significant challenge for most companies. With that in mind, we have listed tactics for both strategies to enhance your business.
What are leads? It is essential to distinguish them from customers. While a lead refers to a potential consumer, a customer completes the buying journey through conversion.
In this regard, lead generation campaigns mainly concern top-of-the-funnel (TOFU) strategies. On the other hand, actions aimed at customer acquisition involve tactics referring to all stages of the sales funnel.
Therefore, customer acquisition does not live without lead acquisition. That said, take note of the best practices for lead acquisition:
- Create relevant content
- Make personalized ads for your website visitors
- Pay attention to the SEO of your website to improve your positioning on SERP
- Create landing pages (CTAs have a crucial role here)
- Create sign-up forms for your customers to provide their data
- Carry out efficient management of your social networks
Customer acquisition strategy
A customer acquisition strategy refers to the tactics set to attract new customers. These strategies are sustainable when established over the long term, reducing marketing efforts in their maintenance.
Customer acquisition funnel
Customer acquisition is a process where the customer becomes aware of their problem, searches for a solution, and finally makes the purchase decision to solve their issue.
Conversion requires more than one touchpoint along the customer journey. This requires getting to know the prospect, overcoming their objections, and meeting their needs. Make this process easier by outlining the buyer persona of your business and analyzing your competitors and state-of-the-art.
Once explained the main aspects of an acquisition strategy, it is essential to understand the potential and benefits of a customer retention strategy. Its impact dictates the success of your business.
As we saw, customer retention is related to customer acquisition. To achieve success, attracting interested customers and keeping them coming back is essential.
What is a retention strategy?
This strategy is about implementing relationship and loyalty programs, driving repurchase and trust.
Retention strategy building
Your entire high-level brand strategy must be well-established for an efficient retention strategy. There is no point in a good retention strategy if your promise doesn’t match what you deliver. Your offer has to match your customer’s expectations, ensuring their satisfaction.
The importance of a retention strategy
In the long term, a business is not viable if it relies solely and exclusively on acquiring new customers who make one-time purchases.
Believe it or not, implementing a retention strategy reflects in your business returns. A loyal and satisfied customer is more likely to spend more on each purchase, thus increasing average order value (AOV) and customer lifetime value (CLV). Therefore, when a business acquires a faithful customer, CAC are easily supported by the margin obtained by retention. CLV must be at least three times higher than CAC for your business to be viable.
As you can expect, these factors impact your conversion rate, which is a vital metric for any project, showing its success or failure. Conversion rate also allows you to understand if your strategy fits your target audience. If a brand has several interactions, but a low conversion rate, its strategy is not congruent with its target audience.
Social proof is another benefit of retention. Therefore, we highlight the importance of a loyal community and consumer reviews.
Email marketing and advertising are good examples of customer retention tactics. These are necessary actions for one-to-one marketing.
Imagine two customers of the same brand with different interests. As clients, it doesn’t make sense for them to receive the same kind of communication. And this is just the tip of the personalization iceberg.
Email marketing in customer retention
Producing content through an email marketing strategy is key to customer retention.
In email marketing, automation is a must. The workflows allow the creation of a complete journey for the customer, directing them to a specific action through personalized communication. In this sense, this tactic is vital for a good email marketing strategy, affecting a retention strategy’s success. The main workflows are the welcome series, abandoned cart series, and up and cross-selling.
This way of communication increases the likelihood of customer retention. This challenge can be handled by hiring customer retention software that provides email marketing services such as Klaviyo. With this software, you can make targeted communications through triggers like:
- Website active users
- Viewed products
- Products ordered
- Order canceled
- Placing an order
- Checkout completed
- Returned products
- Order value
PPC in customer retention
Similar to the previous topic, advertising content must be personalized and targeted to consumers. Therefore, ads should be presented considering past events or audience interests. Through events like viewed or acquired products, it is possible to perform remarketing ads.
Together, email marketing and PPC allow for up and cross-selling strategies more relevant to customers.
Other customer retention strategies
Running email marketing and PPC campaigns alone is not enough and must be followed by other strategies:
- Customer-made service
- Omnicanality, allowing the consumer to have a 100% holistic experience
- Keeping customers involved, trying to understand their opinions and pains
- Implementing loyalty programs such as points systems or exclusive rewards to VIP consumers
- Stimulate the purchase of complementary products
To illustrate this situation, there is nothing better than our experience as an ecommerce digital marketing agency. One company from our portfolio sells clothing and accessories for professional use, such as uniforms. The client of this company markets items for catering professionals, physiotherapists, and even firefighters.
As you can imagine, these segments have different needs and value different product attributes. Through a registration form, leads provide their area of interest, and based on an email marketing automation strategy, each professional area receives fully personalized emails. Thus, the communication is 100% targeted.
Besides that, the ads displayed are also personalized, taking into account the consumer’s purchase history and interests.
Let’s wrap things up
As you have noticed, content marketing is critical for customer acquisition. Still, when it comes to customer retention and satisfaction, it becomes vital in the digital era.
Customer acquisition is a must to boost your business. However, maximizing your profits is dependent on a customer retention strategy.
At this point, you should be asking yourself which strategy is more efficient for your business. Both are very important, so too much focus on acquisition leads to customer churn and increased costs. Therefore, always strike a balance between consumer acquisition and retention strategy, never overlapping one over the other.