3 Reasons for Small Businesses to Use Retention Marketing
A lot of businesses are familiar with word-of-mouth marketing, but a lot really don’t understand retention marketing. Retention marketing is a valuable strategy that, when used correctly can really help your business flourish.
Acquisition marketing describes our efforts to create new business out of nothing. Customer retention marketing is where we focus on building and nurturing the relationship we have with our existing clients. There are three ways that using customer retention marketing can add great value to any business.
1. Customer retention marketing drives referrals and builds customer loyalty.
This is especially true for businesses with longer sales cycles such as mortgage, real estate, insurance and promotional products distributors. With these types of businesses, the churn rate can be quite high. If we are able to keep in touch with our current and past customers, we are able to stay at the front of their mind the next time they are wanting to do that particular type of business. This is most effective when using the channels like email and social media.
To get started, when we use our email marketing and social media marketing effectively, we can keep an open line of communication with customers that otherwise might not ever hear from us again. Customer Retention Marketing is most effective when we don’t try to upsell them, but rather looks for ways that we can inspire, entertain, and engage them in our marketing efforts. This will build loyal customers that will keep coming back to your business.
2. Customer retention marketing increases the lifetime value of a customer.
Increasing the lifetime value of a customer can significantly increase your profits. Imagine you have a high cost-per-acquisition, but a long lifetime value. By maintaining your customers, you’re delineating a number of times you’ll have to pay the initial high buy-in. We can build trust and loyalty through email and social media marketing and ultimately increase retention.
3. Customer retention marketing can lower acquisition costs.
Studies show that it is five to ten times more expensive to acquire new customers than to retain our current customers. It has also shown to be 16 times more expensive to get a new customer to the profit level of lost customers. This shows how much more valuable it is to put money into retaining our current customers which will increase our profitability exponentially.
When you are considering your budget, more specifically your marketing budget, you should consider focusing on retention marketing to drive your profitability rates. Customer retention marketing is the fuel that makes the engine go. Through this, you can build a loyal customer base which will get you more referrals, increase your customer lifetime value and reduce your acquisition costs. Overall, this will equal a higher return on investment.
What has your business done to increase customer retention?