What is retention marketing?

It is a proven fact, backed up with actual data, that suggests customer retention is cheaper than customer acquisition.


In today’s target driven marketing space, a significant focus is put on customer acquisition and one-off transactions. Why is this? Often organisations and marketing functions are driven and targeted on delivering value and effectiveness through transactions in the here and now, while this is important, true growth and value lies in the customers that have already interacted with a brand. Nurturing and providing value that results in further engagement and sales is what’s known as retention marketing. Customer retention marketing switches the focus from transactional to relationship because its primary goal is not to get more customers, its primary goal becomes about encouraging repeat purchases and product usage from existing customers. 

Why is it important for organisations to have a customer retention strategy?

Research has shown that acquiring new customers can cost up to five times more than keeping existing customers. If it costs a business one-hundred pounds to acquire a customer and their one-off transaction equates to a thirty-pound sale there is no positive return on investment, ROI. With a retention strategy in place, it allows organisations to realise repeat purchases for a lower cost. Customer retention strategies give organisations the ability to realise the LTV, lifetime value, of their customers.  

In addition to monetary value, effective customer retention strategies help organisations promote brand loyalty, positive word of mouth and greater data learning opportunities. For years marketing has focused on demographic segmentation, where sweeping generalisations are made about age and gender and how that equates to product and service sales. Focusing on the retention of existing customers allows organisations additional opportunity to start to collect data that observes customer behaviour that leads to engagement and transactions. Behavioural data segmentation, switches the focus from generalised marketing to personalised, meaning organisations can more effectively target services and products to the right customer, at the right time.  

Why are customer retention strategies important for the customer?

The goal of a customer retention strategy should be to add value to a customer at every touch point throughout their journey so that when they require a service or product they know where they want to get it from.  They are important to your customers for several reasons:

  1. Consistency: Effective retention strategies ensure that the customer experience remains positive and reliable
  2. Value: Customers are always looking for that sense of value. The feeling of added value can come in man y forms such as perks, discounts and personalised offers, making your customers feel more appreciated and seen.
  3.  Cost Savings: Staying with familiar brands can be seen as saving customers money, time and effort, especially if you use your retention strategy to build your loyalty programs or discounts.
  4. Feedback: Giving your customers a chance to voice their opinions and concerns, with brands listening and actioning what that feedback brings again makes customers feel valued
  5. Long Term Benefits: Building a long term relationship with a brand mean that customers can enjoy a steady, predictable experience, which is important for peace of mind and budget planning. This can be anything from reminders and market insights.

Customer Retention Strategy Top Tips

There are many elements to consider when creating an effective retention strategy, we’ve included our top three tips: 

  1. Provide a personalised customer experience – While it may be easier to apply a one size fits all approach to retention, no person is the same and this should be reflected when thinking about putting a strategy in place. When individuals receive blanket email welcome journeys and discounts for products or services that are of no interest to them, the communication quickly becomes white noise. Ask customers what adds value to them and start to tailor communication so it’s relevant. 
  2. Create a strong on-boarding experience – Our recent survey revealed 72% of participants wouldn’t engage with a brand again once they’d received bad customer experience. Creating an intended process for an on-boarding experience at every touch point for the customer is vital and often ends up setting brands apart from competitors.  
  3. Start a customer education program – A customer education program demonstrates a long-term investment to brand loyalty and customer advocacy. Creating content and self-service tools such as a knowledge base or community forum help customers to location solutions to product and service problems before having to reach out to support teams. Alleviating frustrations and providing educational content should form part of any retention strategy.  
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