Did you know that 70% of companies believe it’s cheaper to retain a customer than to acquire one?
Unfortunately, not all of them actually succeed at customer retention. This could be for a variety of reasons, like high prices, low demand, or even poor customer service.
But the good news is that it’s not impossible to keep customers around for longer, or to convert first-time buyers into loyal shoppers.
The key to success is using the right strategy. Here are a few tried and true methods of retention that you can use to turn things around.
1. Capitalize on Paid Advertising
Paid advertising is a great tool for generating new leads, but it can also be used for customer retention. You do this through remarketing.
Remarketing allows you to display ads on other websites targeted to existing customers who have already visited your site.
Source: Straight North
Instead of enticing new users with promises that “you have what they’re looking for”, you’re creating ads that appeal to a their FOMO – Fear of Missing Out.
They’ve already seen what you have, and they were interested, but maybe they didn’t make it all the way to the finish line. These subtle reminders tell them, “We’re still here.”
Remarketing campaigns work by targeting all visitors that land on your site. If they leave without converting, they will receive ads designated by Adwords that will hopefully entice them enough to come back. But this isn’t always the best way to use remarketing.
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To get the most out of a campaign, you will most likely need to segment your audience based on what content they viewed. This is also called “dynamic remarketing”. With this technique, you can create customized ads that connect with previous shoppers based on data from your website, like abandoned carts.
Your audience will receive much more tailored ads that will encourage them to come back and purchase again.
You can also use dynamic remarketing on social media sites like Facebook using Facebook Custom Audiences. You can upload lists of emails or phone numbers and display ads specifically for certain users.
2. Email Marketing
Aside from targeted ads, you can (and should) use email marketing to reach out to existing customers.
Most existing customers will fall into one of three categories:
- Currently active – These are already your loyal customers who return to your site regularly
- Partially active – These are customers who have purchased from you once, and may still occasionally purchase from you, but are somewhat “inactive”
- Completely inactive – These customers have purchased from you once, but haven’t been back to purchase again, or maybe have abandoned their cart multiple times.
You don’t want to target each of these customer groups the same way. Many businesses will send blanket re-engagement emails that fail to engage because they’re targeted to the wrong users.
Instead, it’s best to create segmented email lists that focus on different outcomes. For example, currently active customers will respond better to transactional emails like receipts, invoices, notifications, or reports.
Most transactional emails are actually opened by active customers at up to 8 times the rate of promotional emails. Reports in particular can be helpful for currently active or even partially active customers.
TripAdvisor, for example, frequently sends out reports to user with analytics about price changes, recent browsing history, and strong calls to action.
But transactional emails won’t work with a user who is completely inactive, in which case a promotional email or a discounted “we miss you” offer may be a better option.
3. Capture Data
Of course, both of the above strategies only work if you know how to pull the right data, which can be difficult.
One of the best ways to capture data for returning customers is using a customer loyalty metric to determine overall customer satisfaction. Tools like Net Promoter can help you survey customers to assess their happiness with your business.
Customers are generally asked one question like “How likely are you to recommend this business to a friend or colleague?” If a client responds with a 9 or 10, they’re considered to be “promoters” or more likely to return to purchase and to bring in new business.
You may also find that promoters fall into the “active” category, which can help you target your ads and emails.
Scores for surveys like this – combined with other analytics like site visits, purchases, or abandoned carts – can also tell you whether or not someone is likely to fall into a partially active or inactive category.
Userlike has a few other options for measuring customer satisfaction.
4. Turn Customers into Ambassadors
Once you’ve identified which customers are likely to promote your brand or re-buy from you, you can further target them by offering them a chance to become a brand ambassador.
Brand ambassadors are typically associated with direct-selling businesses that rely on “customers” to become salespeople, but eCommerce and other businesses can turn loyal customers into ambassadors in a different way.
Customers in an active category are more likely to recommend your product to others, and you can capitalize on this by offering referral programs or discounts for return shoppers.
Whatever incentives you offer don’t need to be expensive. Many industry leaders are relying on what’s called the “frugal wow”, or creating reciprocity through small, thoughtful gestures. Psychologist Norbert Schwarz found that a benefit of as little as 10 cents can create reciprocity.
You can even increase brand loyalty by simply calling frequent buyers by a special name. Buffer, for example, refers to their premium customers as “awesome” members, and even named their upgraded payment plan the Awesome Plan.
The goal in this case is to target already happy customers and help them spread the cheer.
5. Loyalty Programs
You can also turn disengaged users into active ones by offering a loyalty program.
Loyal customers have a significant lifetime value, but many customers fail to become “loyal” because of a bad experience.
In fact, a Mattersight study of consumers found that just one bad customer experience caused 70% of consumers to not buy again from that brand. But the good news is that most bad experiences are preventable.
Part of this will come down to your processes and procedures – how quickly a product is shipped, how much it costs, its overall quality, etc.
But much of a “bad experience” can happen after a product has been purchased the first time around – no email notifications, no follow up from the company, or no ability to track shipping. By finding ways of making customers happier post-purchase, you increase the likelihood that they will come back.
One of the best ways to do this is through loyalty programs that offer incentives for future purchases. Even if someone has a bad experience with one purchase, if they know they can get 10% off their next purchase, they may be inclined to try again.
Creating a loyalty program can be as simple as rewarding customers on their second purchase at your store or after a set dollar figure, or by offering them discounts if they create a customer account, sign up for a membership, refer a friend, or make purchases.
Combined with excellent products and customer service, a loyalty program can do wonders for reengaging customers and turning them into repeat shoppers.
Customer retention doesn’t have to be an all-consuming or expensive process if you know how to do it. You can start by gathering data about your customers and segmenting them into three categories: active, somewhat active, and inactive.
Once you have that data, select strategies that will target each group. Engaged users may benefit the most from an ambassadorship or loyalty program, whereas disengaged users may do better with promotional emails or paid advertising.
Just remember that ultimately, great products and service will do the most for customer retention, but if you already have that down, try a few of these strategies to help your customers realize just how awesome you are.
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Author: Bogdan Chertes
Bogdan has helped dozens of ecommerce businesses grow sales and acquire more customers by using data driven PPC marketing strategies.
At Adfix, he leads a team of top class PPC and Social Media experts that help clients maximize ROI from their campaigns.