- Contest Factory
- December 6, 2022
Why Customer Retention Is Important: Best Practices
Why is retention important?
In today’s hyperactive, interconnected online business environment, a good product and a good message isn’t enough. Online marketplaces have no shortage of new products and brands to lure bored or dissatisfied customers away from existing brands. Businesses that want a lasting presence in online communities must prioritize consumer loyalty and retention.
We understand why customer retention is important. To give them stability, we help them develop targeted, adaptive digital marketing campaigns that stand out amid internet advertising to create deep and lasting engagement.
Consumer Retention Strategies
Successful marketing campaigns often include time-tested elements that rely on core principles of consumer psychology. Consumers respond to the psychology of gamification much like the addictive behavior of gambling. This is why a small population absolutely loves loyalty programs; these people seek out the best reward opportunity and spend their dollars in exchange for these benefits. This can provide a significant increase in market share for very little gross margin on the seller’s end.
Often companies are concerned that this could negatively impact their bottom line, but it’s exactly the opposite. The most successful loyalty programs in the world have 20% participation. So now add on the fact that these folks become brand ambassadors and spend 20% more than the average customer. This is a significant bonus to the bottom line.
The Customer Retention Math
Acquiring a new customer is much more costly than retaining existing customers. Once you have their contact information, you now have free marketing opportunity. Simply email, SMS, or direct mail and your only cost is sending. New customers cost 5X as much as retaining customers to get repeat purchases. After the second purchase, the chance of a 3rd purchase increases significantly.
Once you enroll a customer in your loyalty program you have gotten the keys to the kingdom for interacting and engaging your customer. You ask for basic demographic data that includes birthday and immediately you have a marketing opportunity by offering a special that will bring your customer in to spend money. You can also offer sign up bonus that gives them an immediate reward of points or a discount. You can gamify your program further by making mini games to earn more points; you could provide digital badges for a challenge and once all badges are collected, you get a point value. All the while, your customer is immersed in your brand.
Reward Loyal Customers
Consumers are sensitive to periodic rewards. Precisely why gambling is addictive, the excitement and pleasure consumers feel when you reward them can attach to your product.
A loyalty program conveys a commitment to customer satisfaction and a generous spirit—powerful incentives to maintain brand loyalty.
A loyalty program can also confer membership in an exclusive community. Consumers who need to belong and enjoy feeling special will often pay a premium to earn the perks of membership in an elite or VIP club.
Communicate Future Rewards
Providing your customer with the opportunity for participation in a program that is fueled by gamification has them strategizing over, “how to win,” all the while fixating on your brand. Be sure point accumulation is clear and concise. Be sure to share future opportunities with promises of bonus points where you more offer double points during slow season to infuse your sales during times where there may be less traffic.
Offer reliable email communication with points updates, bonus point opportunities, accompanied with your most gorgeous product and service shots you can provide. The reliability of the messaging supporting the gamification of shopping will have them hooked before you know it.
Customer Retention Bonus
Retaining customers provides stability in your business model as well as more affordable to sell more to existing customers than it is new. Nurture relationships with the important tips provided and you’ll earn exponentially.