How investing in customer loyalty & retention keeps your bottom line healthy
In times of economic instability, battening down the hatches and tightening the purse strings is the natural response to keep your bottom line healthy. And while making considered decisions around media budgets is wise, a switch in focus from new customer acquisition to loyalty and retention is even wiser.
According to Harvard Business Review, acquiring a new customer is “anywhere from 5 to 25 times more expensive than retaining an existing one.” For some organizations, this is a budget-breaker, especially for those with long sales cycles or expensive products. But while acquisition can multiply your spend five-fold, an HBS study shows just a 5% increase in retention rate can increase profits by 25% to an astonishing 95%.
But it takes more than just a switch in mindset to harvest the fruits of retention. And while some organizations may have laid the foundations back in the dark days of the pandemic, many marketing teams are underprepared from a technical, talent, and strategic perspective to compensate for the loss of media exposure and traffic when switching to a retention and loyalty strategy.
Developments in MarTech, data modeling, and personalization capabilities mean that loyalty and retention strategies have come a long way from simply firing off a discount code to all previous buyers; it’s about getting to know your customers, understanding their needs, and providing the service they need, when they need it. But we understand that knowing where to start when budgets are shrinking and timelines are tight can be tough, so we’ve broken down some key focus areas to support you with your loyalty and retention strategy.
The main goal when launching any loyalty and retention strategy is to increase the customer lifetime value of your existing customers by maximizing loyalty and retention, and driving cross-sells and upsells.
In order to target your existing customers, you need to ensure that you can isolate that data.
The first step is to get the basics right with your customer journey and CRM setup. This will enable you to build out the customer journeys from the first conversion, to repeat purchase, to loyalty.
Through data, insights, and a “test and learn” approach, you can grow and engage your customer base in both size and value, while identifying the customers who have the highest likelihood to churn so you can act accordingly. Data modeling can help you to create buckets of different types of customers and approach them with the right message at the right moment.
DEPT® supported a luxury retailer with this challenge. By garnering a deeper understanding of its existing customer base through data insights and utilizing the Google Marketing Platform (GMP), the brand was able to maximize owned/paid retention campaigns, identify lookalike audiences, set budget caps, and prioritize customer service cases. The data informed a customer contact strategy that ensured the right messages were sent to the right people, at the right time. The result? An 85% increase in sales.
In all positive stories, technology is the enabler.
In this instance, the Google Marketing Platform supported the retailer in its success. GMP is an integrated ad technology platform that enables advertisers to more effectively manage, measure, and grow high-impact digital marketing campaigns, and its suite of solutions has the ability to power all key elements of your campaigns, from automated campaign management to optimization, analytics, and real-time data visualization. If you’re not utilizing GMP already, it is well worth exploring.
Cross-sell & up-sell
Developing a strategy to support cross-sell and up-sell can move you from purely acquisition-driven revenue to adding revenue share from existing customers.
Having the ability to identify cross and up-sell services that your customers enjoy will grow their loyal behavior (and customer lifetime value) with your brand over time. Personalization plays a large part in this journey. If you get your customer insights set up right, then preference personalization becomes much easier.
By teaming data-driven insights with Creative Automation tools, you are able to create multiple cross-channel communications for various audiences. At the click of a button, you can generate thousands of creative variations from just a few inputs. Automated asset production allows tailored messaging to each individual customer segment, and iterates on the messaging quickly based on performance data. The tools make it easy to adjust copy and design so that you are always producing hyper-personalized content that truly resonates with customers across CRM marketing, onsite, social, and digital advertising. Creative Automation is a key solution in Ada by DEPT®, our proprietary MarTech platform, which offers best-in-class technology for performance marketing, creative, data, and media optimization.
For example, eBay was looking for a new way to engage existing customers with a particular product category, while at the same time wanting to test whether a personalized CRM strategy would boost customer lifetime value. DEPT® helped them to define three unique, enthusiast segments and develop a hyper-specific, highly personalized approach to communicate with these customers, which drove significant engagement and amplified conversion, with a 68% increase in click-to-open rate.
Tailored, one-to-one customer communication across all digital touchpoints is a key tenet of loyalty and retention. All content touchpoints, whether push notifications, e-mail, website, or chatbots, can have automated processes that ensure personalized messaging at any given moment.
Beiersdorf is a glowing example of how to get it right. The personal care manufacturer focused on its existing Nivea customers across Europe and developed a strategy that placed a strong focus on known customers in the ‘care’ phase of the funnel. This has a dual benefit; not only helping to increase loyalty, but also mitigating the impact of the death of the cookie as, by dealing with existing customers, you are still able to personalize customer journeys.
Utilizing Salesforce technology, DEPT® implemented automated journeys to engage the database and prevent churn, optimized the content strategy, contact frequency, and email design, and improved the acquisition campaigns for growing the database with high-quality profiles. The result was a 200% increase in open rates, and a 357% increase in click-through rates.
The Salesforce suite of solutions, such as Marketing Cloud, Tableau Analytics, and Experience Cloud, can play a vital role in developing a truly 360 view of your customers to enable success.
From consolidating all customer data to create rich customer profiles to automating complex processes to increase efficiency and productivity, creating cutting-edge tools to support end-to-end communication to optimizing workflows with machine learning, Salesforce is a solid base for any brand’s tech stack.
Chatbots are well worth considering as part of your loyalty strategy, helping customers to self-serve and providing personalized recommendations.
Ralph Lauren approached one-to-one communication with the development of a gifting chatbot for the festive season. The luxury retailer wanted to create an immersive and personalized method of picking the perfect gift, matching the users’ interests with compatible products available on the Ralph Lauren website.
By combining data-driven insights from previous gifting chatbots with innovative Instagram platform features, DEPT® built one of the first branded Instagram chatbots available in the industry and worldwide. In the first few months of launch, the chatbot attracted over 12,000 average monthly users with 3% showing strong purchase intent.
Act now to reap the rewards
Investing in building a good relationship with your existing customers really pays off in the short and long term. Whether you’re already refocusing your marketing efforts on loyalty and retention, or need some help in getting started, our team of experts can help.
From tech implementation to strategy, data, creativity, and beyond, we can support you every step of the way. Reach out to our experts today.