- Keep what you’ve got. Customer retention is critical for business success, as it is more expensive to acquire new customers than to retain existing ones, and returning customers tend to spend more over time.
- Keep 'em happy. By investing in customer success, offering exclusive perks and expressing gratitude, businesses can create a positive customer experience that builds brand loyalty and withstands tough economic times.
- Collaboration is key. To implement these strategies, businesses need to collaborate with sales and customer success teams, incorporate new technology and data sources, take risks and experiment with new messaging, and reward top customers in a special way.
Nordstrom is known for its exceptional customer service, and there's one famous story that illustrates its customer-centric ethos and the power of retention. The story involves a customer returning a set of used tires to a Nordstrom store, even though the company had never sold tires. The employee who handled the return went above and beyond to help the customer, ultimately giving him a refund for the estimated value of the tires. This commitment to customer satisfaction is a key part of Nordstrom's success, and it serves as a reminder of the importance of customer retention in business.
As a recent Forbes article pointed out, it often takes five to 20 times the amount of resources for businesses to obtain a new customer than to retain an existing one. Returning customers also tend to spend 67% more over time than first-time customers, according to a Bain & Company report.
To boost customer retention, marketing executives recommend six strategies to help hold on to those all-important customers, especially during a time when consumers and businesses may be more price conscious.
Here they are:
1. The Importance of Focusing on Customer Lifecycle Marketing
According to Jeff Johnson, The Marketing Practice general manager, one of the main objectives of marketers is to make sure customers have a positive experience at every touchpoint. "Customer lifecycle marketing (CLM) is key to generating growth and delivering value by nurturing an already loyal customer base," he said.
CLM depends on marketers collaborating with sales and customer success teams to understand their strategies, identify opportunities for support and assess customer buying behavior.
Johnson emphasized, “It costs five times more to get a new customer than to keep an existing customer, and that’s in an average economic cycle. Now’s the time to focus more resources on keeping your current customer base happy and helping them adapt to this new reality.”
Related Article: Customer Retention Strategies for Driving Loyalty in Uncertain Times
2. Offer Exclusivity to Keep Customers Satisfied and Loyal
One of the most overlooked strategies for current customers is “surprise and delight,” according to Stacey Danheiser, CMO of Shake Marketing Group. She suggested keeping customers satisfied and enthusiastic about your brand or product by offering exclusive perks that non-customers don’t receive.
For instance, in B2C, this could include access to people such as private Q&A sessions with designers or celebrity influencers, exclusive discounts or early access to limited-edition merchandise.
Danheiser added: “In B2B, I've run private C-suite roundtable discussions, product roadmap sessions, special pricing and cross-promotion of people or brands into my network.”
3. Position Your Business as Indispensable to Secure Customer Loyalty
Dan Darcy, Qualified chief customer officer, suggested that businesses must position themselves as an indispensable line item, not only because their product is essential to the customer's business, but also because their solution is unquestionably superior to that of their competitors, even those offering a lower-cost option
“Right now, your customers are going to bat for every single line item in their budgets. You have to give them a reason to keep fighting for you, and that’s by investing resources into their success,” Darcy added.
Related Article: How to Optimize Customer Acquisition and Retention
4. Reimagine Your Relationship With Consumers and Personalization
Momchil Kyurkchiev, chief strategy officer of CleverTap, said brands need a different approach to customer personalization.
“In a post-cookie world, brands need to reimagine their relationship with their consumers. The marketing technology used by brands today has been borrowed from other spaces that weren’t purpose-built for marketing. The reality is that some of the largest companies in marketing aren’t known for pushing the envelope with what’s possible in marketing. This is why building digital meaningful relationships have been unsolved.”
To achieve this, companies need a different approach to technology, Kyurkchiev added. “The computing power required to manage hundreds of thousands of customer interventions that occur on a typical day, won't be solved by an off-the-shelf solution. Vendors in the business of customer retention need purpose-built technologies (databases) to run large-scale segmented campaigns in real time.”
5. Innovate to Stand Out and Retain Customers
Johnson suggested that during a recession, innovation is crucial for achieving growth and retaining customers. Here are some of his recommendations to be innovative:
Take risks: The ability to take risks, experiment, learn and adapt is fundamental in modern growth marketing.
Incorporate new technology, data sources: Intent measurements can help increase targeting and efficiency.
Change messaging: Consider changing your messaging in the short term to speak to customer or prospect pains, as this can draw them closer to your brand. Speak their language and focus on what’s influencing their lifestyle or business, instead of leading with your solutions.
6. 'Thank You' Goes a Long Way
Danheiser said that expressing gratitude by saying thank you may seem obvious, but it's often overlooked. “We take our current customers for granted. Many companies don't think of it at all unless it's the holidays. Thank you campaigns can be small — like sending a personalized card or big — such as sending them a special offer.”
Don't treat everyone the same — find your top customers and reward them in a special way, Danheiser added.
Final Thoughts on Customer Retention
The importance of customer retention is nothing new — it’s been an essential part of top marketing strategies for some time. But the expected recession will lead to lower customer spending, with consumers and businesses alike being more price conscious and looking to competitors for deals. Some will be pulled away by lower prices, or just to “try someone different.”
But the six strategies above can help you hold on to your most important customers. As exemplified by Nordstrom's tire story, going above and beyond for customers can create a lasting impact and strengthen brand loyalty.