By Nathan Breidenbach, Technical Writer @ Stratifyd
I'm a blockchain believer, and I've been using Coinbase for over two years as my preferred cryptocurrency exchange. There are lots of wallets and exchange platforms, but few are as streamlined as Coinbase. They retain me as a user because they consistently offer a higher instant buy limit and easy to view price charts, as well as options to buy Ethereum, Bitcoin Cash, and Litecoin. Transactions are relatively fast and my wallet connects directly with my bank.
Despite their insider trading debacle in Q4 2017, they're still the #1 app in the App Store. That's some serious loyalty from its userbase given that there are plenty of other options. Coinbase lets the product speak for itself, and focuses on customer retention above acquisition. They understand that momentum generates exponential returns when customers speak highly of the app. Once they became king of the App Store, there was even less of a need for acquisition marketing.
The unfortunate truth is that most marketers STILL have a love affair with acquisition marketing, and it makes absolutely no sense. According to Invespcro, 44% of companies have a greater emphasis on customer acquisition while just 18% focus more on customer retention. They do realize that the cost to acquire new customers is at least five times that of customer retention, right? Perhaps not.
To continue our parade on marketers, despite the fact that I am one, they're at least 60% more likely to successfully sell to existing customers compared to the maximum 20% likelihood of selling to new customers. According to Bain & Company's Fred Reichheld, increasing customer retention by just 5% increases profits between 25-95%. To really pour salt in the wounds here, existing customers spend 67% more than new customers.
All the statistics should have you wondering, "What can my marketing department do to increase retention and reduce churn?"
1. Invest in Artificial Intelligence
Sure, your churn rate and retention rate KPI's might be telling you that you are losing customers to competitors, but you aren't going to know why until you can extract reasons from customers who are considering or have already jumped ship. You can mine this information from unstructured data such as reviews, call center voice to text, social media posts, email complaints, and chat logs.
Text analytics platforms equipped with machine learning AI extract the sentiment, product features, most impactful words and phrases, locations, post dates, and other metadata for each customer document. Now your marketing team can pinpoint succinct reasons attached to customer chrun and personalize targeted marketing messages at these customers to make things right. It shows that you care and that they aren't just another number in your income statement.
2. Simplify Your CRM
If you're bogged down in Salesforce due to too much customization and too much data to make sense of or even retrieve in a timely manner, then your CRM system is too rigid, and it will cost you. Just because a CRM system has lots of features doesn't mean you should use them.
As a marketer, you're relying on the CRM to provide a holistic, data-driven view of current customers. You need this data to be up-to-date, easy to find, easy to analyze, and easy to share in order to reach out and make contact with the right message at the right time in the customer's lifecycle. Plus, most of this data can be integrated with AI platforms for deep analyses of customer behavior.
3. Automate the Contact Calendar
A contact calendar is a scheduled delivery of emails, phone calls, thank you notes, loyalty offers, survey follow-ups, life event moments, and personalized messages to customers at various points in the pre-sales, sales, and post-sales phases. This should be automated to ensure that you reach all your customers and remind them that their business is appreciated. It shows that your company cares about and listens to their feedback while rewarding the customer with special offers that generate repeat sales. It is essential to building a loyal customer base.
4. Track Customer Lifetime Value
Customer Lifetime Value (CLTV) is a much more useful metric for retention marketing. Why? Because if you don't know how much a customer is worth, then you don't know how much to spend on retaining them. Think of CLTV as the counter to Customer Acquisition Cost (CAC). A good business has a a low CAC and a high CLTV. Smile.io has a great blog on how to do simple CLTV calculations. Kissmetrics has a fantastic infographic using Starbucks as their case study on the importance of LTV.
It's much easier to focus on improving components of CLTV one at a time rather than attempting to increase all of them simultaneously. Here are some ways to increase various components:
- Reduce churn by reachning out to customers with targeted marketing, resolving issues, rewards, or incentives
- Increase the average revenue per customer through bundling, special offers, discounts, etc.
- Regular contact with existing customers may also increase their purchase frequency along with limited time offers.
5. Engage Customers on Social Media
PwC found that 40% of shoppers are heavily influenced by social media posts and reviews. That number jumps to 86% for millennials. A lot of your followers across Twitter, Facebook, Instagram, and Pinterest have probably purchased from your company in the past. Engage this existing customer base with polls and targeted marketing campaigns on the social media channels they enjoy the most.
Tiffany & Co. launched the hashtag campaign, “#TiffanyLoveNotes”, to invite customers to contribute their narratives to Tiffany’s brand journey. This hashtag is featured in 4 of the top 10 most liked instagram posts by Tiffany, one of which received over 1 million likes. Tiffany regularly posts the user submitted “love notes” as Instagram pictures on a Tiffany Blue background. This idea is as brilliant as the diamonds Tiffany sells because it humanizes the consumer experience and gives Tiffany’s social media team a break with some free content to circulate.