Nothing boosts profits more than customer retention. Increasing retention rates by 5% can make a business at least 25% more profitable. Entirely because you don’t have to work as hard to get them to convert.
It can be five times more expensive to acquire and convert a new customer as it does to convert an existing customer.
Obviously the ideal scenario is customers simply convert again and again because they had a positive experience the last time. However, despite the cost of conversion being so much lower with returning customers, even after five purchases, there’s only a 57% chance customers will come back for purchase number six.
So while customer retention is still easier than customer acquisition, businesses still have to work hard to retain customers. Especially in the face of growing competition in almost every industry.
While good customer service and brand presence – or even product offering, can help with customer retention, businesses need to do so much more than be the cheapest or offer the best returns policy.
Understanding the Emotional Connection
Whatever you call your audience (players, customers, shoppers, bettors), they spend with you because you have what they want. They engage with you because of how you make them feel.
There’s no single feature or benefit that can make a customer love your brand. It’s all the moving parts working in harmony.
The product or service, the brand identity, the marketing strategy, the advertising. It all creates an identity that your audience wants to be part of.
If you deliver great service and engage with your audience on social media and other channels then that connection only becomes stronger.
This is largely due to a quirk of human psychology. When we think of, buy from or otherwise interact with a brand, we perceive them as a single entity, not as a collection of people.
It’s the reason why loyal customers will not only advocate for a brand but defend them as well. And why audiences can support a team while, at the same time, being critical of the coach or individual players.
The team is a single entity that is being harmed by poor performance of others. The emotional connection results in fans wanting to protect the team by attacking the individual. It’s abstracted tribalism, essentially.
The point is, the more you engage with your audience on a personal level, the deeper the connection will go. This cannot be done through your products unless you produce your own goods and have a powerful brand story for customers to latch on to.
For everyone else, businesses need to find ways to engage with customers and create a dialogue that makes them feel valued.
Engaged customers are more likely to spend, will do so more often, and will spend as much as 66% more than a new customer.
Your ability to sustain that engagement will have a direct impact on customer lifetime value and profitability.
Understanding Buying Behaviour
Understanding the emotional connection customers can form is half the story. The other half is their buying behaviour.
What motivates customers and what their expectations are can inform your marketing and communications strategy. Moreover, it helps you to understand what your audience will respond to.
If we know that there is only a 57% chance of a customer returning to make a sixth purchase, then retailers need to determine how to increase certainty in customers.
Low prices, good service and free shipping won’t get you very far because everyone is offering the same thing.
Insider Intelligence reports that 88% of customers believe the customer experience matters as much as products and services. 73% want the businesses they spend with to understand their needs and expectations and 62% expect those businesses to anticipate those needs too.
When nearly nine out of ten customers value the experience as highly as the product or the service, there exists an opportunity.
Creating a rewarding experience for customers beyond the obvious will significantly increase the chances of customers making that sixth visit. And their seventh, and their eighth. Whatsmore, you’re increasing the chances of returning customers transitioning into loyal customers. And advocates beyond that.
Understanding your customers and what really matters to them both as a community and as individuals will drive that change.
When 56% of respondents from Insider Intelligence’s poll feel businesses they shop with treat them as a number, you can gain ground. And quickly.
However, before you can devise engagement strategies to boost customer retention, you need the tools. And the data.
Utilising Technology to Drive Customer Retention
To understand buyer behaviour and your customers, you need the right tools. Furthermore you need an entirely different set of tools to communicate with them in a personalised and meaningful way.
The good news is that there is a huge amount of technology available to gather actionable data.
Obviously tools like Google Analytics will help you to understand things like your customer journeys. Analytics, and tools like it, can tell you where your customers are entering and leaving the site. And which pages they hit in between and how long for.
This can help you to understand any problem areas of your website. Whether it’s broken links, bad optimisation or a product or service that doesn’t fit with the rest of your offering.
Correlating any potential problem pages with your sales data will help to clarify the picture. If you have products that rarely get purchased, Analytics can help you to understand why. If traffic is low to that page there could be a lack of demand. If traffic is high, then it could be a pricing issue. Analyse and test to help resolve these issues.
Additionally, your website or platform can tell you what products, games or services customers are interested in. And what order value or deposit size they place on average.
CRMs, CDPs and other platforms can help to harvest and consolidate all your customer data into one place. From there you can start to segment your customers across any data point you want.
The deeper you delve the more insight you will glean. Information like average order value is good. Knowing which customers pay full price over sale price is better.
Customers who shop all year round are worth more to you than customers who only shop the sales.
Audiences
Your customer data platform should be able to segment every datapoint it ingests. The greater the segmentation the more insight and the more actions you can take.
Using player or order history helps you understand what they’re interested in. Using search history helps you understand what might interest them. The frequency of those searches helps you understand the level of intent.
By creating a Single Customer View you are in the best position possible to talk to your customers about the things that matter to them.
Remember, your customers want to feel emotionally connected to your brand. Showing you understand them through analysing their behaviour is a big step towards that goal.
Personalisation and Automation
The modern marketing landscape brings with it a plethora of communication methods. Social media, email, SMS and push notifications are among the most common.
However, however powerful the technology is, it’s far less effective without the data to power it. it’s not enough to send an email or a generic push notification. Again, with more than 50% of consumers feeling like ‘just another number’, generic comms will only reinforce that view.
You’ve got the data so it’s time to put it to use.
Combined with the ability to create and automate communication sequences, with some careful planning, engaging with your audience gets easier.
Without personalisation, you can use push notification to promote a flash sale to some effect. Or you can personalise that push notification to suggest products in the sale based on customer data, including recommended colours and sizes.
If your communication tool has conditional logic then you can create sequences that can nudge customers if they don’t immediately engage.
Automation is a very useful feature. Although you still have to build the sequences, it takes care of the rest, guiding your audience to desired outcomes.
The more time and effort you put into the sequences at the start the more effective they will be. More so if your CDP is integrated with your communication channels.
The greater the level of personalisation, the deeper the connection and the more positive response.
AI and Machine Learning
AI is a term that comes up with increasing regularity but is often applied incorrectly. Some Customer data platforms and CRMs have AI integrated into it. That is to say that it can intuit behaviours and communicate with audiences on those terms. The AI can then learn from the outcomes.
Machine learning, on the other hand, performs specific tasks and attempts to identify patterns to provide accurate results. So while similar, machine learning has a fixed objective that it will use patterns in customer behaviour to drive success.
AI’s capacity to mimic human intelligence means, within the context of customer engagement, can be used in a number of ways.
The obvious use is chatbots. AI can be highly effective at engaging with customers and sustaining a conversation for several minutes.
However, on a deeper level it can be used to refine and iterate campaigns. AI can analyse the performance of an email or push notification and improve upon it, boosting the chances of conversion.
Some AIs are sophisticated enough to even rewrite the body copy based on what that customer has engaged with in the past.
This isn’t to detract from the usefulness of machine learning. Providing you have clearly defined goals and the data available, machine learning can be highly effective at getting the results you want.
The only thing to be aware of is pushing customers down a desired outcome rather than the outcome that’s right for them.
To learn more about how you can consolidate and leverage your customer data to retain your customers and drive conversions, request a demo of our omnichannel customer engagement platform with built-in CDP.
