Gartner in its hype cycle for digital marketing last month reported marketers are beginning this year to focus on transitioning from a focus on customer retention last year to now looking to new customer acquisition.
Undoubtedly marketing teams constantly strive for a healthy combination of each — acquisition and retention. If only it were so easy. Case in point, not all marketers are surging toward feeding the growth engine. According to August results from the CMO Survey, customer retention was up over 55% while customer acquisition saw modest gains (6.3%).
Where Are Marketers Focusing Resources?
So where do marketing leaders stand now? Acquisition vs. retention? “I can’t help but wonder if these are the right or even worthwhile questions to be asking,” said Kip Knight, senior advisor at Drake Star Partners. “The challenge of any marketing team today is to build sales overnight and a brand over time. These two questions are all about performance marketing — acquisition vs. retention — but unless you are building a long-term brand, you are only going to be successful as long as you keep putting money in the marketing machine. Once marketing investments stop, your business is probably heading south.”
The other challenge with these questions is the real answer is “it depends,” according to Knight. For example, if you are crushing it on acquisition but your retention is horrible, he said, you are living on borrowed time. “And I’m not sure you can credit marketing for a lot of what happens with customer retention,” Knight added. “Marketing efforts such as loyalty programs can help, but if your product is weak, your customer service is weak, your prices are out of whack, etc., your retention is going to suffer.”
Helping Customers Is Priority Number 1
Stephanie Buscemi, chief marketing officer of Confluent, said the No. 1 job is to help customers right now. “We need to always be helpful and relevant when it comes to empowering our customers,” she said. “While this is something that is a natural part of our Confluent ethos, it is important to live by example and something that has not wavered since the onset of the pandemic. I will also note that taking a data-driven and inclusive approach is of paramount importance.”
That data-driven and inclusive approach, she said, has helped retain existing customers as well as continue to attract new ones. "Understanding data can effectively shift marketing strategies and create compelling content that reaches people both head and heart,” she said. “Marketers should strive to nourish their existing customer relationships in order to create genuine connections and ensure their customers continue to make purchases.”
Loyalty, Retention Were Unwavering Through the Pandemic
Sara Spivey, chief marketing officer at Braze, said her team’s plan to build loyalty and retention with its own customers has remained largely unchanged in the past year and a half. It has had a dedicated customer marketing team within the larger marketing team since 2019 and used its own tool for customer engagement to communicate with customers and encourage them to look at new products, attend virtual events and participate in the Braze Bonfire Slack community. “Since its inception in 2019, Braze Bonfire has been a great resource for building strong relationships between our customers,” she said. “The Braze Bonfire community has grown to more than 3,000 members. During the pandemic, Braze Bonfire provided a way for marketers to share best practices for adjusting their strategies during a time when everyone needed help."
Within Braze, according to Spivey, customer marketing works with the business intelligence team to understand what is driving customer value and happiness, and also what is driving strong business outcomes for Braze. “Essentially, we evaluate what actions and behaviors are highly correlated with customer retention and expansion, as well as High Net Promoter and CSAT scores,” Spivey said. “We understand which messages and content drive up-sell and cross-sell and so we personalize our communications with customers to provide them value and propel our business forward.”
Once it’s identified these positive outcomes and behaviors, marketing teams work to understand the precursor behaviors, and then design multi-channel campaigns to educate and guide customers toward what is going to provide value for them.
Marketing Investments in Engagement, Paid Advertising, Content Syndication
Today, the Braze marketing teams have stuck with what it knows is true: customer engagement is key, according to Spivey. “We’ve leaned heavily into content creation to offer marketers more resources to help them create strategic customer-engagement campaigns that drive business results,” Spivey said.
On the acquisition side, the biggest change was switching from in-person events and activations to digital in general, Spivey added. Marketing teams increased commitments in paid advertising and content syndication to better reach target audience digitally. “The physical event landscape has been on pause for over a year but we’re starting to see some hybrid and in-person events take off in certain regions,” Spivey said. “In fact, we just held our own 100% in-person customer event in Berlin.”
Telling the Brand Story Clearly
Perhaps more so than acquisition vs. retention, some marketing teams just want to tell their story clearly. That’s top of mind for Doug LaBahn, chief marketing officer of Cin7. “Our marketing team understands that — at the core — we are communicating authentically to internal customers, team members, prospects and software consultants and influencers,” LaBahn said. “Our priority is telling our story clearly. We enjoy knowing that by acquiring more customers and assisting all of them to increase their use of modern technologies, we’re ultimately helping to create more jobs as a result of their success.”
Meanwhile, they’re focusing on customer retention and acquisition: great service and customer marketing to existing customers, and clear and compelling sharing of customers’ successes to attract new business, according to LaBahn.
“We believe that if you’re not authentic and delivering exceptional value from the moment a prospective buyer hears about you, to their 10th or 20th year on your platform, then your business is going to struggle, your talent is going to go elsewhere, and your competitors will outperform you,” he said. “It’s really like whole health — you need to have vision and execution on what your business does really well, understand who gets the best value from your services, and build a team that really cares about exactly these types of customers and the problems you solve for them.”
Attention to Mobile Sparks Retention
MAX Burgers Chief Marketing Officer Maria Ziv said when it comes to retention, marketing teams want to provide a super smooth user experience in the company's mobile app with personalized offers and ordering preferences. “We also want to decrease the churn rate through campaigns to users with low frequency and a loyalty program with high customer value,” she added.
When it comes to acquisition, with first party data, the company’s marketing teams can be more effective in their advertising. And, therefore, they can get more people to download the app with less or same media spend. “We want to create a loyalty program that attract new users,” Ziv said.
A clear focus on mobile ordering, with customer-centric features, has led to more users signing up for the MAX app, according to Ziv.
“This also means more customer data which in turn opens up opportunities to provide better and simpler solutions for our guests,” she said. “We believe that our mobile share will increase the coming years and that we will be using marketing automation, personalization, etc. to an even larger extent. We also see that when we use first party data in our offers and communication, we can be more relevant in our communication with our guests.”