What is customer retention?
Customer retention focuses on providing quality customer service, encouraging repeat purchases, and improving customer loyalty to reduce churn.
Ultimately, customer retention is a key metric that helps marketing and sales teams understand the efficacy of their engagement strategies, and their ability to maximize the value of their customers.
Customer retention also helps to increase market share, reduce customer acquisition costs, and reduce price sensitivity compared to new customers.
Additionally, creating campaigns or incentives that reward loyal customers can help promote positive word-of-mouth and referrals which can lead to increased sales.
Long term, customer retention leads to a stronger brand identity and greater profits for the business.
What are the top five marketing strategies to improve customer retention?
The goal of customer retention is to maximize the lifetime value of each individual customer and strengthen their loyalty to your brand. Many marketing professionals are now turning to unique methods such as personalization and analytics to increase customer lifetime values.
Here are five top strategies to help improve retention:
- Use personalization
Personalization allows companies to create meaningful connections with customers by providing tailored content that resonates with each individual. When customers feel recognized and appreciated, they are more likely to make repeat purchases from that brand.
- Track & monitor customer data
Utilizing tools such as analytics and customer feedback can give marketers a better understanding of their customers’ behaviors, preferences, and satisfaction levels. This information can greatly improve customer retention.
- Develop loyalty programs
Offering discounts or special offers can motivate customers to stay engaged with your brand over time and encourage them to keep coming back for more purchases in the future.
- Send targeted reminders & notifications
As long as they are not too frequent or intrusive, customers will appreciate timely reminders that keep them updated on important information such as promotions or product releases that may interest them.
- Optimize the customer experience
Customer experience is a major factor in customer retention. Marketers need to continuously strive to improve the customer experience by leveraging data and insights in order to provide targeted, personalized communications and interactions. By continually optimizing customer experiences, marketers can increase revenues and brand loyalty, as well as reduce customer churn rates.
How do marketers calculate customer retention?
Customer retention can be calculated by dividing the number of customers at the end of a period, such as a month or quarter, by the number of customers at the beginning of the same period. The result is then multiplied by 100 to get the customer retention rate, which is expressed as a percentage.
For example, if a business has 97 customers at the end of a month and 105 at the beginning, its retention rate is (97 / 105) x 100 = 92% retention rate.
Businesses should strive to improve their customer retention rate in order to increase customer loyalty and reduce customer churn.
Customer retention with Emarsys
Emarsys works with leading brands like PUMA, Pizza Hut, and Nike to increase acquisition, purchase frequency, average order value and retention by using a rich set of customer, sales and product data to automate omnichannel campaigns.