There’s nothing better than landing a new account or attracting a new customer. It’s why we hustle, and it’s the lifeblood of our businesses.
Or is it?
Sometimes we get so preoccupied with looking for a new business that we fail to see what’s right under our noses. In our excitement to expand our customer base, we lose sight of one of the most critical truths in business: The only thing that’s better than acquiring a new customer…is keeping a current customer.
Studies vary on just how expensive it is to acquire a new customer compared to retaining one, but anyway you cut it, the data is alarming. The best-case scenario is that acquisition is “only” five times more expensive than retention.
If that doesn’t leave you cold, consider that in a worst-case scenario, acquisition can exceed the cost of retention by as much as 25 times. Though most studies estimate a figure somewhere between these two extremes, there’s simply no question that an emphasis on the acquisition at the expense of retention is a losing proposition.
Common sense alone says that it simply makes more sense to keep current customers happy and engaged than expend valuable resources searching for new ones, and research done by Frederick Reichheld of Bain & Company (the inventor of the net promoter score) shows increasing customer retention rates by just 5% increases profits by 25% to 95%.
At Zen Media, we learned early on that retaining our current customers was central to our larger growth strategy. Retaining current customers by taking good care of them is not only the right thing to do, but it’s also the very foundation on which your company’s reputation and market viability rest. (Without which, you can’t hope to grow.)
Investing in retention is a win-win proposition for businesses and customers alike. Here are some of the most powerful strategies we’ve found for retaining our own customers and ensuring our clients retain theirs.
Build relationships of trust across multiple contact points with email marketing.
The secret to customer retention is investing in building relationships of trust that go beyond any particular transaction. Email marketing builds these relationships across multiple contact points. From welcome email to promotional email, to purchase follow-up email, to rewards and loyalty-program email, email marketing is the “low hanging fruit” of customer retention.
And this approach makes as much sense for businesses as for customers. Among digital retention strategies, it’s one of the most affordable, personalized, timely, easy-to-use and easy-to-test.
Email marketing has a median ROI of 122% – almost 4 times higher than all other marketing approaches, beating out social media, direct mail, and paid search. Even a small-scale email program can engage and retain customers for less than pennies on the dollar. Compared to the costs of revising ad budgets to focus on retention or opting for print or pay-per-click advertising (which can exceed $10 dollars per click), email marketing gives us and our clients the most bang for the buck.
What’s more, email marketing can be particularly important for B2B companies since their customer base is comparatively small less likely to be engaged via social media, instead preferring email communication. In fact, 79% of B2B marketers credit email as the most effective distribution channel for demand generation efforts.
Apply the principles that work in personal relationships to your current customers.
Think about some of the nicest things that anybody’s ever done for you. Chances are, these things involved a gesture that offered exactly the kind of care you needed without you having to ask for it. (And you might not even have known how much you needed the gesture until it was offered.) These gestures, however small, mean so much to us because they tell us that somebody cares about us enough to pay such close attention to our needs that they often understand them even better than we do.
We’ve all had these experiences: the neighbor who catches our off-handed comment that we have to unexpectedly leave town and offers to care for our pet; the significant-other who somehow sees that when we’re at our prickliest, what we really need is a hug; the friend who notices that we could use a break from our young children and shows up at our doorstep to take them off our hands; the boss who notices our contributions are being overlooked by our team and goes out of her way to express her appreciation for the value we bring.
A key component of customer retention is showing our customers this kind of “anticipatory,” “pre-emptive” care. The principles that work in our personal relationships also work in our businesses. And just as in our personal relationships, this kind of care can be meaningfully conveyed through the smallest of gestures. Sometimes it’s as simple as reaching out to a customer before they’re in a position to come to you.
For example, NATA, National Athletic Trainers Association, worked with us on a campaign built around key influencers to raise awareness about how to keep kids safe while playing sports. This proactive campaign was designed to educate teachers and parents and lay the groundwork for more athletic trainers to play a more active role in schools’ athletics departments. It proved NATA’s worth to both its large membership base and to a wider community of potential members and allies. We helped position them as important allies and advocates for their current members, which in turn made them an attractive organization to join and be a part of.
At Zen Media, the nature of our business entails having our finger on the pulse of current cultural, social, industry, and even policy developments that relate directly to the well-being and promotion of our client’s businesses and brands. Our job is to be aware of these developments even before our clients, or at least to reach out to them before they have to come to us.
Again and again, our clients have expressed appreciation for the ways we anticipate and proactively help them capitalize on these developments. And this appreciation translates into tangible value. As our customers receive our anticipatory care, they recommit to long-term relationships with us and drive referrals of new customers that further help us grow our business.
Develop a new disposition toward data to redefine the value that retains customers.
For as “soft” as the kind of approach we just talked about can seem to be, it needs to have very “hard,” measurable metrics coupled with it.
Although we place a premium on our commitment to giving our best, we understand that we can’t rely on our subjective assessments or on objective analytics alone if we’re serious about constantly improving our performance and delivering on our value proposition in a way that retains customers.
But while we’re talking about value, here’s the tricky thing with analytics: in the age of the connected consumer, “value” is a very “slippery” concept that requires marketers to develop a new disposition toward data. Said differently, we need to have a very healthy respect for analytics, but we also need to recognize that without the right mindset in relationship to it, data can be highly deceptive and even undermine the value we’re trying to deliver.
As marketers, we need to be less wed to ROI and deploy metrics that are more sensitive to the complexity, ambiguity, and dynamism of the ever-evolving digital landscape we’re pioneering. A huge part of retention is about honing our sensitivity to the subtle yet potentially powerful forms of value that we’re generating in unexpected ways and in unforeseen channels. It is critical to recognize that these forms of value are often invisible from the limited perspective of traditional econometrics and fall outside of traditional KPI’s.
By adopting a new mindset for metrics, we can continually update our understanding of what value means to our customers.
Being able to accurately determine, for example, the difference between what value meant for your customer last month or even last week and what it means to them today is, well, incredibly valuable. Developing a disposition toward data that afford these kinds of insights all but guarantees the longevity of mutually profitable relationships with your customers.
The bottom line? Retention should be viewed as central to your larger growth strategy. Happy customers with whom you build and maintain long-term relationships are the basis of your brand’s good name and market viability, without which, you can’t hope to attract new business and profitably scale.