Attracting new customers is cool and all, but do you know how to keep them around?
The lifetime value of your customers is entirely dependent on how hard you work to keep them around. Creating an engaging customer experience designed with the customer in mind will keep them coming back for more. Not only that, but it will turn your biggest supporters into brand advocates for your business online, on social media, and in person.
But creating that momentum around your brand powered by delighted customers takes work on your end. It’s not enough to have a great product. Customers expect an experience when purchasing products. Many companies are using customer retention marketing to provide that seamless customer service and brand experience.
What is customer retention marketing?
Retention marketing, also known as lifecycle or loyalty marketing, is a marketing strategy designed to surprise and delight current customers with the goal of upsells, contract renewals, or return business.
Customer retention marketing can get confused with acquisition marketing because they use many of the same strategies. The difference between the two is simple: acquisition marketing is attracting new customers, and retention marketing is about keeping them around. The best marketing teams in the business use both strategies to create a fully fleshed out customer experience.
Why does customer retention marketing matter?
Technology has given customers the power to choose which software works best for them. Online review websites and forums have made it easy for customers to research products before ever getting on the phone with your sales team. Customers are becoming increasingly informed. They expect more from the teams they do business with.
All of this adds up to one simple fact: if you’re not willing to give customers what they need, it’s easy for them to find a business that will.
It’s not all fear tactics; customer retention marketing has some incredible benefits that can directly impact your business goals. Just a 5% increase in customer retention budget can lead to an increase of up to 125% in profits. If you’re trying to more closely align your marketing with sales goals, customer retention marketing is the most effective way to do it.
A well-designed customer retention marketing strategy allows you to:
Build brand loyalty between yourself and your customers
Increase customers’ lifetime value and increases revenue
Minimize customer churn rate and renewal lapses
Improve product features through customer feedback
It’s five to 25 times more cost-effective to focus on existing customer relationships than it is to focus on new customer acquisitions. If you can convince your customers to become evangelists, you can create a powerful marketing flywheel around your product, company, or brand. Without an established customer retention strategy, you are missing out on revenue opportunities.
Types of customer retention marketing campaigns
Customer retention focuses on each stage of the customer lifecycle, delivering highly personalized marketing touchpoints at crucial buying stages. And while marketers should pay close attention to the entire customer lifecycle, customer retention marketing is the most important for the final three stages of the customer lifecycle: activation, renewal, and recommendation. These three crucial stages will set the tone for your entire relationship with the customer.
Don’t assume customers are yours for life once they sign on the dotted line: 63% of customers cite feeling unhelped or unappreciated as their reason for dropping a business. It takes constant work delighting and collaborating with your customers to build strong relationships. That means building and establishing a marketing strategy that focuses on the customer journey.
There are dozens of marketing strategies that can be used to strengthen relationships with customers. Here’s a look at six of the most common customer retention campaigns:
Welcome email campaigns
The moments after a new customer purchases your product are crucial for making a first impression. Savvy marketing teams know that a well-crafted welcome email series can make all the difference with new customers. These email campaigns don’t have to take up a ton of your team's time. Marketing automation software allows marketers to create entire email campaigns and automate them based on pre-existing customer criteria and behavioral triggers.
These campaigns allow you to deliver personalized marketing emails to new customers introducing them to your team, educating them about your products, and more. And the best part is they run automatically without the need for constant supervision.
Interested in doing more with your welcome emails? Here are some tips to help you dazzle your customers from the start:
Send your welcome email immediately after your customer signs up. This increases the chance of prospects opening and engaging with your email
Show off your personality! This is your first chance to make an impression on your customer. Don’t be afraid to let loose and use more fun, informal copy in your emails.
Provide value upfront by linking to hyper-personalized content relevant to your customers pain points and frustrations. Help them solve a problem early on, and they’ll always open your emails.
Include a “welcome gift” in your email in the form of discounts, giftcards, or exclusive content as a thank you for becoming your customer.
Customers expect to receive emails from your company after purchasing your product, so take advantage of the time you have in their inbox. Don’t deliver long, boring emails about how incredible your company is. Instead, use that email to educate and help customers get the most out of your product. Provide value early and often and customers will keep opening your emails.
Customer onboarding campaigns
Once you’ve established a rapport with your email email campaign, it’s time to start delivering the value. Remember, even customers can be skeptical about your motives. Don’t assume you have their trust just because you have their money.
Focus on getting your customer onboarded and familiar with the product. This can be done through email marketing campaigns, webinars, consultations, training sessions, educational materials, and more. It doesn’t matter how you onboard your customer, it just matters that you deliver practical advice for problems they expect your software to solve for them.
You should create a customer onboarding program if any of the following apply:
You have a complex or technical product
You have a product that requires extensive support
You have features unique to your product
You frequently update your product with new features
You have a subscription-based product (SaaS)
Customer education is about empowering your customers to become product experts. The more the customer understands about your product, the more they understand how much value it provides for them. But that can only happen if they become intimately familiar with what your product can offer them.
Educational materials and customer onboarding allow you the chance to point out the most valuable features of your product, increasing the speed at which your customers see the ROI of your product. Once they see the value, it’s easier for your team to upsell customers to a more expensive product plan.
Promotional email campaigns
As an e-commerce business, you don’t have the luxury of asking for customers attention under the guise of product education. Many e-commerce customers are buying single products at a time for your business. That’s why promotional email campaigns should play a special role in your customer retention strategy.
Coupon codes, online discounts, and exclusive deals are a great way to grab the attention of your customers without seeming pushy. They probably weren’t thinking about your business before you offered them 15% off their next purchase. But once the offer is on the table, it gets the customer thinking. These discounts provide something for the customer and give them a reason to go to your online store and browse.
Here are some of the most popular email campaigns for delivering discounts and deals:
Free shipping / gift offer
Pre-launch product offers
Holiday and seasonal discounts
Birthday promotions and discounts
Abandoned cart offers
Newsletter subscription offers
Exclusive social media offers
First-time shopper offer
Exclusive social offers
Customer loyalty offers
Retargeted promotion campaigns
Brand ambassador programs
VIP loyalty programs
Customer renewal campaigns
When customers start coming up on contract renewals, they often start wondering if the grass is greener on the other side. Suddenly customers are faced with the decision of whether your business is worth the budget. Creating a marketing strategy for these big decision making moments puts your team in control of the narrative.
Begin having these conversations weeks before renewals begin. Ask your customers what they like about your product, ask what you can improve. Have an open and honest conversation about what they need from your team and provide them with resources. While all of this is happening, run an email campaign to customers up for renewal.
Here’s an example of what your customer renewal campaign could look like:
First reminder email: Send this one month before the contract renewal deadline along with a call from their rep. This is a good time to try offering an incentive to resign early (i.e. account upgrade, discounts, extra features, etc.).
Second reminder email: Send this two weeks before the contract renewal deadline along with a call from their rep. This is a good time to remind your customers about everything they’ve accomplished with your product. Including account statistics in your communication here shows the value of your product.
Third reminder email: Send a few days before the contract renewal deadline along with a call from their rep. Focus this messaging on what happens if they do not renew their account (i.e. explain the features and customer support they will lose). Stress the urgency of renewing in this communication.
Account termination email: If a customer does not renew, there is one last chance to get them back. When you send the email confirmation of their account termination, add a clear call-to-action with messaging allows them to “renew now and save your account data”. This urgency might convince them to renew but your team will have to work overtime to show this customer value, or you risk losing them again the moment their contract is up.
Renewal campaigns should always remind customers of important deadlines and give them opportunities to renew within those communications. All of your emails in your customer renewal campaign should have a bold email subject line, personalized customer messaging, and specific calls-to-action.
The best renewal and retention campaigns span multiple emails. They also happen over a period of weeks, giving your customer time to consider their options. If your emails are sent too close together or the messaging seems frantic, you might turn customers off. Focus your messaging around showing the value they get out of using your product for a smarter campaign.
Customer retention marketing best practices
Building a few marketing campaigns and sending them off through automation software isn’t going to cut it. Customers expect solutions tailored to their needs. It will take a larger overarching strategy to deliver a retention marketing campaign that drives revenue.
Align your goals with sales goals
Anytime you create marketing collateral aimed at customers, it’s smart to loop in your sales team. Account managers and sales executives speak with customers every day. There’s nobody in your organization who knows your customers like your sales team does.
Take the time to chat with your sales team and ask them about their pain points with customer renewals. Why do customers decide not to renew? What information would be helpful for customers to have before a renewal?
Use the customer pain points you discover during these to tailor specific messaging for your customers. This allows you to show them that you understand what they need and increases the chances that they’ll renew.
Collect and utilize customer feedback
It’s impossible to build a customer retention marketing strategy without getting feedback from your customers. Collecting customer feedback can be done in a variety of ways: surveys, NPS scores, online reviews, social media listening, and more.
Whatever method you choose to collect this feedback, you’ll need a plan with what to do once you have it. Consider looping in your product and sales teams after you’ve analyzed the results of your customer feedback. There’s likely a lot of information among your data that can help them build a better product or improve the customer experience.
There’s a chance you’re already using most of these strategies. If that’s the case, you can take your customer reviews to the next level with G2 Review Automation. G2 Review Automation helps sellers on G2.com to collect more reviews in less time. Leverage the email, customer data management, and NPS tools you’re already using to effortlessly solicit new reviews about your software.
Review automation is the perfect way to empower your team to connect with customers. Online reviews can be one of the most valuable pieces of customer feedback. 95% of shoppers read online reviews before making a purchase. Online reviews have real value and review automation allows you to collect glowing reviews from your biggest fans.
Once you’ve started generating customer reviews that show the value of your product you can start using them in your marketing materials. Webinars, social media posts, case studies, and more. A quote from a positive customer review can instantly elevate any piece of marketing collateral. The possibilities are endless.
Lean heavily on email marketing
The hardest part of building a customer retention strategy is ensuring it can scale with your business as it grows. A couple of spreadsheets shared among scrappy marketers might work when you have less than a hundred customers, but as your business grows, so should your marketing solutions.
Email marketing paired with marketing automation strategy allows your team to automate repeatable and mundane tasks (like sending account payment and renewal reminders) and instead focus on creating marketing campaigns that delight your customers.
Here are some email marketing campaigns that keep customers engaged:
Welcome email series
Customer birthdays and anniversaries
Survey and feedback emails
Product updates and launches
This one-two punch email strategy ensures your customers receive all the important information regarding their account, while also receiving tailored marketing emails that build brand loyalty. It also prevents customers from feeling overwhelmed or abandoned after making a purchase. This is key for keeping your working relationship positive.
How to track customer retention rates
Tracking the success of your customer retention campaigns can be tricky. The measure of success will vary depending on which strategy your team uses. Oftentimes, it’s not the effort of a single marketing campaign that convinces a customer to renew or upsell, it’s a combination of all marketing touchpoints.
That’s why many marketers prefer to measure success with metrics that look at the bigger picture. This allows marketers to see how the combined efforts of all marketing campaigns impacted team goals. These metrics are better for big-picture strategizing and long-term team planning. All of this can be done with a handful of core customer retention formulas.
Customer churn rate
Customer churn rate measures the rate at which your business loses customers, relative to the number of customers you attain. Churn rates are measured on an annual basis. This allows consistency in your data which helps improve your sales forecasting and goal-setting.
Customer churn rate formula: (number of customers at the start of year – number of customers at the end of year) / number of customers at the start of year) x 100
Revenue churn rate
Revenue churn rate measures the percentage of revenue lost due to contract non-renewals or cancelations. This metric is specifically for companies with a subscription-based revenue model (online mieda, SaaS, video streaming platforms, etc.). This formula allows teams to measure both the number of customers lost and the percentage of recurring revenue lost.
Revenue churn rate formula: (monthly recurring revenue lost – new monthly recurring revenue gained) / monthly recurring revenue at the start of month
Repeat purchase rate
Repeat purchase rates show what percentage of your customers are repeat shoppers. This metric is the most effective for businesses that rely on returning customers for revenue. B2C and e-commerce businesses should pay special attention to their repeat purchase rate. A high repeat purchase rate indicates a loyal customer base who frequently returns to shop with your brand.
Repeat purchase rate formula: (number of returning customers / number of total customers)
Net promoter score (NPS)
Your NPS score measures how likely your customers are to refer your product to someone they know. Before you can find this number, you need to survey your customers and ask them one simple question: “On a scale of one to 10, how likely are you to recommend our product or company to a friend or family member?”
Once you’ve collected enough responses to have an appropriate sample size, begin sorting your respondents into three categories: promotors, passives, and detractors.
Promoters are customers who respond with a score of 9-10
Passives are customers who respond with a score of 7-8
Detractors are customers who respond with a score of 0-6
NPS scoring doesn’t count passive customers in the overall formula. Only customers who are enthusiastic about your business or passionately against it are scored. Once you’ve sorted all of the responses and eliminated the passives, use the following formula to find your NPS score.
NPS score formula: (percentage of promoters – percentage of detractors)
Collecting all of this data manually can quickly become a huge time-suck. That’s why many teams opt to use marketing information management software in order to track these metrics automatically. All of your marketing data is collected in a single place and reports are automatically pulled. This allows your team to save time interpreting the data and spend more time acting on it.
Personalized customers experiences drive value
There isn’t a price tag you can put on the value of customer retention. Satisfied customers are more likely to brag about your brand on social media, recommend your product to friends, and more. But before you can have all that, you need to show your customers what you can do for them.
Learn how G2Seller Solutions is making it easier to connect with both your current customers and our community of 5 million software buyers and counting.
Lauren is a Content Marketing Manager at G2. You can find her work featured on CNBC, Yahoo Finance, and on the G2 Learning Hub. In her free time, Lauren enjoys watching true crime shows and spending time in the Chicago karaoke scene. (she/her/hers)
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