How to optimize your customer retention strategy
Customer retention is essential for business growth, however implementing a solid and effective customer retention strategy can be easier said than done. Figures published by CallMiner show that $136.8 billion is lost by U.S. companies each year due to avoidable customer switching. Customers now have a myriad of channels available to them, and due to fierce paid and organic competition online, combined with unpredictable customer behaviors, finding the most successful ways to retain customers and stop them from jumping ship is a focus for most marketers.
A survey by Invesp found that “increasing customer retention by 5% increases profits by 25-95%”, proving that directing your marketing efforts towards better engaging loyal segments is a worthy investment. In the case of one of BlueVenn’s UK online retail customers, they were able to improve their customer retention rates by a staggering 30% through the creation of a Single Customer View, a rebuild of their retention and churn analytics, and a new omnichannel strategy, focused on more effective and targeted upsell and cross-sell campaigns.
To start to achieve better customer retention, you need to look inwards to your customer database to better understand the reasons for customer churn, and then adapt by focusing on meaningful personalization post-sale, more relevant customer experiences, loyalty initiatives, and dedicated cross-sell and upsell campaign tactics.
So, what does looking inwards to your customer database mean, and how can you overcome obstacles that come as part of the process? Here are some thoughts from our VP Marketing, Anthony Botibol:
1. Gain access to ALL the customer data that you need
Unfortunately, marketing teams are often disempowered by not having access to all the data they need to start analyzing retention effectively. In a US retail example I’ve seen recently, all their retention calculations and segments had to be discarded and rebuilt, due to one critical data source relating to in-store returns being missed, meaning that customer value was being overinflated. If there are gaps in the data you’re analyzing to calculate customer retention or return transactions, for example if the returns data is not considered, then the value you are attributing to a returning customer may be inaccurate.
2. Ensure the retention data you’re analyzing is trustworthy
Unfortunately, most systems tend to have data quality and hygiene issues, so you need to make sure the quality and accuracy of your data is high and any gaps are filled. There are different challenges and solutions around this, but third-party data sources and postal address files are readily available in all markets to help you cleanse and enhance your customer data bank, whilst technologies like Customer Data Platforms can ensure that data is trustworthy and duplicates have been removed. These solutions require investment, but they ensure that the business and marketing team can make strong decisions based on accurate facts. If repeat transactions are assigned to duplicate customers in your systems (perhaps some online and some in-store), then you will never have a clear view of your retention metrics.
3. Unify all the data to get a clear view of retention segments
Information about your customers, their transactions and behaviors is often spread across various functions or departments within your business, held on disconnected systems and in varying states of quality. By unifying this data into a Single Customer View, you can start to build a more reliable profile of your customers. This can include information about their transactions, how they transact, and their order and payment methods (along with their returns, of course).
Data unification is by no means a straightforward process, but it is essential, particularly for multi-channel businesses, where a customer and their transactions could exist in an eCommerce platform, POS, ERP and loyalty reward system, all with transactions that need marrying together before any judgement about their retention potential can be truly seen. Once you have consolidated your data, you can then link this information with the behavioral touchpoints along the way, across all your marketing campaigns. This will provide you with the basic information you need for analysis and segmentation, measurement and attribution.
4. Analyze your customers to build retention segments
The quality of your data won’t be the only thing to contribute to the analysis. When you collect together your performance analytics, the answer can vary from team to team. Ask an email marketer how much upsell revenue can be attributed to their email campaigns and they’ll give you the answer based on the data in the ESP. However, if you ask the eCommerce team how their efforts are working out, it’s likely that you’ll get a different answer, with a skew towards an advert or social click that they attribute to the same sale. You’ll need to ensure that you have a full, helicopter view of your data from all channels, as this will ensure that you are working from a single, consistent and trustworthy view of your customers. If you don’t, your analysis may not be reliable and will have a knock-on effect on the success of the rest of your retention strategy.
As well, marketers are not always budding data scientists, so data analytics and segment creation can be left to an agency, third-party or other department to work on. However, we live in 2021 now, and there are many great, visual, easy-to-use business intelligence, analytics and data mining software platforms on the market that don’t require a university degree to master, as well as Customer Data Platforms and Multi-channel Marketing solutions that now have good analytics modules and are 100% built for everyday marketers. By dynamically analyzing and grouping customers into specific retention segments, you can start to treat them differently and engage them more effectively. Loyal segments, lapsing segments and lapsed segments will help you to understand where in the journey your customers are, and enable you to be more proactive by forecasting when and how a customer might lapse in the future.
5. Decide on your retention metrics and timelines
The way in which you measure customer retention is crucial and will differ for each business. In my ‘How many customers do I have? eBook, I address the need for all organizations to think very carefully about who their customers are before deciding how many they have. Depending on your customer counting methods, a single household could be anywhere from 1 to 6 people! Similar principles apply for retention, because you cannot start calculating that without first thinking about your retention timelines. For shorter sales cycles, such as those for FMCG, you are likely to measure your retention timeline differently to an annual insurance product in the financial services sector. Also, if you’re not able to join up your online and offline data, you may not be fully aware of the end-to-end process that your customers are undertaking. If you measure retention, or any other lifecycle, from the point of purchase only, you risk not considering the online research, app view or the web session that occurred in the lead up to the conversion, and will miss vital information when implementing a new retention strategy.
6. Execute retention strategies across multiple channels
You have to be mindful that all customers behave differently from others, or at least that clusters of customers behave differently. Some will prefer to transact offline, in-branch or at a store, while others may be online-only, and still others hybrid customers, equally comfortable online or offline. Certain customers may be naturally loyal, while will others need persistent reminders. Some will check their emails daily, others may not check at all. Some people like to use a live chat for support, others fear it. Some will offer up all of their data, whereas other ‘privacy guardian’ customers will block cookies, opt out from email communications, and never join a loyalty program, yet still come back year after year to renew or buy more.
Omnichannel Marketing Excellence: research paper on omnichannel marketing maturity
This new global research paper explores how companies are harnessing customer data to create a better CX, and explains why CDP-equipped companies are 2X more likely to synchronize cross-channel communications (online and offline).
Read it to learn how to improve your own company’s omnichannel marketing maturity.
Drilling into deeper behavioral segments of your loyal, lapsing and lapsed customers, and treating them differently according to their different behaviors, is critical for customer retention. Therefore, as a marketer, you need to be ready to deliver the most relevant retention experience to each customer, through the channel most relevant to them, with the most relevant offer, and at the most relevant time. Or, perhaps in the case of the ‘privacy guardians’, the ‘next best action’ is to do nothing at all!
Understanding and automating this across channels requires you to have a centralized place from which to make those decisions. It’s incredibly difficult to achieve this if your email, mobile, web, call center, social, and other channels are all being managed independently.
To optimize your customer retention strategy, you’ll need to move away from a channel-focused way of working, whereby each campaign team takes charge of an individual channel. In this siloed channel process, each channel execution system will have a siloed database, automation workflows that enforce siloed decisions, and therefore, will execute siloed channel messages. The major requirement to fix this is not only to be able to consolidate the siloed databases, but to also unify the siloed decisions that are being made across the channels.
By adopting omni-channel marketing, you’ll enable your marketing, CRM and campaign teams to reach a customer in the optimal way, regardless of the channel they are on, allowing you to use a single campaign workflow to decide the audiences, channels, offers and messages across all the channels that you have at your disposal.
Getting the basics right first for retention marketing
There are a plethora of tactics and solutions available in the technology market to help you optimize your customer retention strategy, including loyalty management systems, gamification, NPS surveys and VOC tools, which all help to create better experiences for your customer and improve retention. However, before investing in these solutions, your priority should be to ensure that your data flow is unified, your retention analytics are trustworthy, and that you are able to unify your marketing channels (including loyalty, NPS and survey tools) into one point of control.
Huge profitable gains can be achieved by focusing on customer retention, and doing so can benefit your acquisition strategies too. BlueVenn client Space NK, a high-end beauty and skincare retailer, was keen to drive loyalty and faster second transactions within its customer base by rewarding customers with points and discounts for providing product reviews. To make this happen, Space NK worked to engage their customers through their N.dulge loyalty program, which was driven from a Single Customer View that synchronized their GiveX loyalty system, their marketing automation, eCommerce and email marketing solutions. The result was a sizeable uplift in second purchases, retention and loyalty, as well as the added benefit of more positive reviews, to aid with the netting new acquisition revenue.
If you’d like to talk about how BlueVenn can help your business to improve its retention and returning customer revenues, then you can book a 1-to-1 demo or register for the next live webinar demonstration.
Build sales PowerPoint presentations in minutes with Qvidian
There’s a better way than cutting and pasting slides from legacy decks while racing the clock. Building sales presentations with Qvidian helps win more deals.
Collaborating on RFPs and proposals in Microsoft Teams and SharePoint
Collaborate on RFP responses with Microsoft Teams, SharePoint, Office Online, and Office 365. Qvidian for Microsoft Office is included for licensed users.
Creating sales proposals with Qvidian is like having a team of experts on call
Creating sales proposals with Qvidian is like having a team of experts on call 24/7 to automate away the dull and time-consuming parts of creating proposals.