Why your local business needs retention marketing
Why your local business needs retention marketing
Retention Marketing: A Battle for Hearts & Minds.
What is retention marketing?
Retention marketing is simply the action a business takes to keep and sell to as many previous customers as possible. On the other hand, acquisition marketing is the action a business takes to find and sell to new customers.
As you can imagine the tools needed to engage both activities are vastly different. Make no mistake, you need to engage in both activities to create a stable, profitable business. Without a mix of both acquisition and retention, you are spending too much for additional sales, losing too much on customer attrition, and leaving goodwill and incremental revenue on the table.
A small business owner has virtually unlimited opportunities to engage in acquisition marketing. How many sales people walk through your door every month offering ad space, sponsorship opportunities, radio or TV spots, or web and social media services? A lot, no doubt.
How many opportunities are presented to you related to retention marketing? I bet that number hovers right around zero. But why? Good question, and we'll get to that a little later.
Why should your local business engage in retention marketing anyway?
The numbers speak for themselves. It costs 6 to 7 times more to acquire a new customer than to retain an existing one (1). You are, on average, 10 times more likely to sell to an existing customer compared to a new prospect (2). Increasing customer retention rates by just 5% can increase profits by 25% to 95% (3). Those are just three eye popping stats. There are plenty more.
My business has a loyalty rewards program, so we're good.
Not so fast. If you currently operate a successful loyalty rewards program that is great. However, an effective and efficient loyalty rewards program is just one piece of the retention puzzle.
Retention marketing is a battle for hearts and minds.
You want to reward your best customers. You want customers to think about your business often. You want the ability to communicate with them directly. You want to create fun and goodwill so customers feel good about your business. You want all of this for the express purpose of generating significant additional incremental revenue.
If you can't explain how you're accomplishing all of these things, you're not effectively leveraging the power of retention marketing.
So, how does my small business engage in Retention Marketing?
You should reward your most loyal customers for their continued support. They are your most valuable asset. As a general rule 80% of your sales is derived from 20% of your customers. Using some type of loyalty rewards program is essential. In fact, they are built in to many POS systems. If your system doesn’t have one, or you don't like how it works, use a third party system. Simplicity is key. If your loyalty program is complex and convoluted, neither you nor your customers will use it. Read “Loyalty. Come out Come out Wherever You Are”
Loyalty apps for small business may seem the solution, but this one app statistic is disheartening. 75% of downloaded apps are deleted within 90 days(4). The odds of your app, or any app maintaining home-screen space aren't good.
You must be able to reach out to and speak with your customers at a time of YOUR choosing. You need to implement a VIP Offers program. This allows you to have flash sales, send notifications about new inventory, offer exclusive specials to move old stock, and keep your best customers updated about your company. This means you need a customer list and a contact method. The email list may still have a place, but today is about instant communication. Text messaging.
Email has an open rate of less than 25%(5). That’s not good.
Text messaging has a 98% open rate.(6). That's much better.
Creating goodwill can help build relationships that ensure the long-term success of your business. A comprehensive retention program aids in cultivating that goodwill. A loyalty rewards program creates goodwill among repeat customers. Presenting exclusive offers to your most valuable customers is another tool. Creating a Birthday Club is a simple and effective way to generate goodwill and increase incremental revenue.
Gamification is an Nlocation exclusive for capturing your customers minds while driving significant incremental revenue to your small business. To learn more about this innovative retention tool read “Give Away to Increased Revenue”.
Lastly, retention marketing must be a priority for you and your staff in order to reap the rewards. Retention efforts are drastically less expensive than acquisition, and your ROI for investing in current customers is far greater than constantly chasing new ones.
If retention marketing is so great, why is no one beating down my door to offer it?
There are several reasons. First, the legacy media infrastructure in every community is designed for acquisition marketing only. Local sales reps only have acquisition tools to offer you. Second, it is only recently that the people and technology needed to create effective retention marketing have combined. Third, previously available retention tools were simply unaffordable for small business. So, trying to sell them to you would have been fruitless.
All has changed...
Nlocation provides a retention marketing tool that is affordable, comprehensive, simple, and effective. See it for yourself at www.nlocation.com.
1. Bain & Co.- https://hbr.org/2014/10/the-value-of-keeping-the-right-customers
2. Forbes - https://www.forbes.com/sites/patrickhull/2013/12/06/tools-for-entrepreneurs-to- retain-clients/#6622ece22443
3. Bain & Co. - http://hbswk.hbs.edu/archive/1590.html