Basics of retention marketing to stay close to existing customers and concrete examples of methods
Posted: Tue Dec 03, 2024 5:55 am
table of contents
What is Retention Marketing?
Why is Retention Marketing Important?
Acquiring new customers or retaining existing ones: which should you prioritize?
Specific examples of retention marketing measures
MA tools are the key to successful retention marketing
summary
" Until now, we've focused on acquiring new customers internally, but as time has passed, our efficiency in acquiring new customers has decreased. "
I'm sure there are some marketers out there who have had similar experiences.
Acquiring new customers is an essential part of marketing, but it is also true that this is becoming more difficult due to factors such as a declining population, diversifying consumer tastes and preferences, and an oversupply of similar products.
Given this background, the somalia business email list/ importance of " retention marketing ," which builds good relationships with existing customers, has increased over the past few years .
In this article, we will introduce the basics of retention marketing and specific examples of measures that anyone involved in marketing or promotional activities should know .
By reading this article, you will understand the basics of retention marketing and have some concrete ideas about what kind of strategies you should use to utilize it.
Please read to the end.
What is Retention Marketing?
Retention marketing is a general term for marketing strategies and measures aimed at encouraging continued or repeat use by existing customers and increasing customer loyalty .
Retention is the English word for " maintaining or keeping ," and in the marketing field it means " maintaining existing customers ."
Why is Retention Marketing Important?
The main reason why retention marketing is important is that even if you are selling the same .
This is supported by the " 1:5 rule " and the " 5:25 rule ," which are well-known in the marketing industry .
The law states that it costs five times as much to acquire a new customer as it does to retain an existing one.
The law states that if you can reduce customer defections by 5%, your profit margins will improve by 25%.
These two laws are said to have been proposed by Frederick F. Reichheld, who served as director emeritus at Bain & Company, a major American consulting firm.
In order to acquire new customers, various costs are required, such as advertising expenses to raise awareness of the brand and promotional expenses to increase interest in products and services.
On the other hand, existing customers are already aware of the product's value and have an attachment to the brand, so they are more likely to make repeat purchases without incurring large costs.
In other words, the theory is that in order to expand sales without reducing profit margins, it is more important to increase the loyalty of existing customers and prevent them from churn than to compensate for sales losses caused by existing customers defecting by acquiring new customers .
Acquiring new customers or retaining existing ones: which should you prioritize?
Both of these measures are important, and it is not necessary to focus on just one of them.
However, priorities vary depending on the business situation and the characteristics of the products and services.
Situations where retaining existing customers should be a priority
First, let's look at some examples of situations where you should prioritize retention marketing to keep existing customers. In the following cases, it can be said that prioritizing retention marketing over acquiring new customers will increase sales.
[Products with high repeat rates, such as restaurants and service industries]
Restaurants and the service industry are businesses where customers are likely to return if they like the establishment.
If your business's strength is cost performance, it's easy to attract new customers, but for high-price, high-quality businesses, it becomes more difficult to acquire new customers, so it's easier to increase sales by prioritizing retention marketing to hold on to existing customers.
[Subscription services and other services that require continuous use]
In a subscription-based business model where a single customer purchases a service on a regular basis, it is important to provide existing customers with long-term value and encourage them to continue using the service.
For example, businesses such as IT cloud services, video and music streaming services, and subscription product purchases fall into this category.
[A business that continuously monetizes through after-sales support and maintenance]
For example, in the automobile industry, regular maintenance such as vehicle inspections, regular maintenance, oil changes, etc. In addition, B2B businesses that manufacture and sell industrial machinery also require repairs and regular maintenance, so it is important to take measures to prevent customers who have already delivered products from alienating them.
If you are an ongoing business and have already built up a sizable customer list, prioritize retention marketing to your existing customer list.
On the other hand, if you do not follow up with existing customers sufficiently, you may end up increasing the number of dormant customers or customers who have left, so you need to be careful.
[Mature and competitive market]
In mature markets like online shopping, differentiation with competitors and price competition are fierce, so a retention marketing strategy that encourages repeat purchases by locking in members and increasing LTV is important.
What is Retention Marketing?
Why is Retention Marketing Important?
Acquiring new customers or retaining existing ones: which should you prioritize?
Specific examples of retention marketing measures
MA tools are the key to successful retention marketing
summary
" Until now, we've focused on acquiring new customers internally, but as time has passed, our efficiency in acquiring new customers has decreased. "
I'm sure there are some marketers out there who have had similar experiences.
Acquiring new customers is an essential part of marketing, but it is also true that this is becoming more difficult due to factors such as a declining population, diversifying consumer tastes and preferences, and an oversupply of similar products.
Given this background, the somalia business email list/ importance of " retention marketing ," which builds good relationships with existing customers, has increased over the past few years .
In this article, we will introduce the basics of retention marketing and specific examples of measures that anyone involved in marketing or promotional activities should know .
By reading this article, you will understand the basics of retention marketing and have some concrete ideas about what kind of strategies you should use to utilize it.
Please read to the end.
What is Retention Marketing?
Retention marketing is a general term for marketing strategies and measures aimed at encouraging continued or repeat use by existing customers and increasing customer loyalty .
Retention is the English word for " maintaining or keeping ," and in the marketing field it means " maintaining existing customers ."
Why is Retention Marketing Important?
The main reason why retention marketing is important is that even if you are selling the same .
This is supported by the " 1:5 rule " and the " 5:25 rule ," which are well-known in the marketing industry .
The law states that it costs five times as much to acquire a new customer as it does to retain an existing one.
The law states that if you can reduce customer defections by 5%, your profit margins will improve by 25%.
These two laws are said to have been proposed by Frederick F. Reichheld, who served as director emeritus at Bain & Company, a major American consulting firm.
In order to acquire new customers, various costs are required, such as advertising expenses to raise awareness of the brand and promotional expenses to increase interest in products and services.
On the other hand, existing customers are already aware of the product's value and have an attachment to the brand, so they are more likely to make repeat purchases without incurring large costs.
In other words, the theory is that in order to expand sales without reducing profit margins, it is more important to increase the loyalty of existing customers and prevent them from churn than to compensate for sales losses caused by existing customers defecting by acquiring new customers .
Acquiring new customers or retaining existing ones: which should you prioritize?
Both of these measures are important, and it is not necessary to focus on just one of them.
However, priorities vary depending on the business situation and the characteristics of the products and services.
Situations where retaining existing customers should be a priority
First, let's look at some examples of situations where you should prioritize retention marketing to keep existing customers. In the following cases, it can be said that prioritizing retention marketing over acquiring new customers will increase sales.
[Products with high repeat rates, such as restaurants and service industries]
Restaurants and the service industry are businesses where customers are likely to return if they like the establishment.
If your business's strength is cost performance, it's easy to attract new customers, but for high-price, high-quality businesses, it becomes more difficult to acquire new customers, so it's easier to increase sales by prioritizing retention marketing to hold on to existing customers.
[Subscription services and other services that require continuous use]
In a subscription-based business model where a single customer purchases a service on a regular basis, it is important to provide existing customers with long-term value and encourage them to continue using the service.
For example, businesses such as IT cloud services, video and music streaming services, and subscription product purchases fall into this category.
[A business that continuously monetizes through after-sales support and maintenance]
For example, in the automobile industry, regular maintenance such as vehicle inspections, regular maintenance, oil changes, etc. In addition, B2B businesses that manufacture and sell industrial machinery also require repairs and regular maintenance, so it is important to take measures to prevent customers who have already delivered products from alienating them.
If you are an ongoing business and have already built up a sizable customer list, prioritize retention marketing to your existing customer list.
On the other hand, if you do not follow up with existing customers sufficiently, you may end up increasing the number of dormant customers or customers who have left, so you need to be careful.
[Mature and competitive market]
In mature markets like online shopping, differentiation with competitors and price competition are fierce, so a retention marketing strategy that encourages repeat purchases by locking in members and increasing LTV is important.