Businesses put a lot of time, thought and resources into customer retention. It’s vital to ensure cash flows through your business. If customers are happy and interested in your product, they’ll probably continue shopping with you.
When it comes to smaller businesses, customer retention is usually much less of an issue. Under a certain size, it’s all about bringing in new customers, i.e. customer acquisition.
But when does the focus switch from bringing in new customers to keeping the old ones around? Is it the same for all businesses?
It all depends on where a business sits in its business lifecycle. This is very similar to the customer lifecycle (see below) which outlines the different phases customers pass through when buying from a brand.
Buinesses also have a lifecycle with distinct phases. They require different strategies to ensure the business remain on course.
The number one priority for young businesses is finding customers to buy their products.
Sufficient market research prior to release will give you a good idea of the customer profiles that are most likely to buy from you. Then it’s a matter of getting your name out there and increasing your sales as quickly as possible.
Common promotional techniques for attracting first-time customers include:
But retaining the customers that have already bought from you can be a bit trickier. They’ll already have an opinion about your product and service. And for all you know, they might like your competitor’s product better.
Once you’re up and running with a sufficient number of core customers, it’s probably time to start thinking about customer retention.
If you only ever target new customers, you need to be certain of continued high demand. This is a pretty rare privilege for most businesses.
This is when customer retention becomes a top priority. Turning those first-time customers into regular ones.
Getting your customer retention strategy right isn’t as simple as attracting first time customers. But it can be much more valuable over the medium-to-long term.
It’s also much cheaper. According to Bain and Company, it can cost anywhere between 5 and 25 times more to attract new customers than it does to retain existing ones.
Many promotional techniques are well geared towards customer retention. But they need to be accompanied by a wider strategic plan to achieve their full potential.
A consideration of positive brand image in other areas of the business is vital. Without this, customers are unlikely to build the emotional connection needed to stay loyal to your brand.
Additional aspects to consider include:
When these additional factors are taken care of, loyalty programs are generally the most effective promotions for customer retention.
The rewards provided through loyalty programs are often similar to those available to other customers through standard promotions. But the key difference is the way these rewards are earned.
Loyalty programs provide rewards depending on how much customers spend with a brand. This way they incentivize spending and reduce the likelihood of losing customers to competitors.
Showing customers that they are valued is key to increasing retention rates. For this there's arguably no better promotional technique out there than loyalty programs.
To increase the chances of customers returning to your brand to purchase time and time again you need to demonstrate the benefits of doing so as clearly as possible. You can do this with:
It doesn’t matter whether you’re at the customer acquisition stage or the customer retention stage of growth. Promotions can do wonders for both.
If you'd like to find out more about how our Promotion Engine can help your business, get in touch or take a look at our Content Library.
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