The Value of Successful Consumer Retention

As traditional business models continue to evolve, companies have been turning to new and exciting methods of client acquisition. This can include producing targeted ad campaigns, developing a strong social media presence, or even doing stunts such as sending a car into outer space. However, many businesses fail to recognize the massive benefits of shifting focus from client acquisition to the often less glamorous world of client retention. In fact, retaining a customer is estimated to be a staggering five to 25 times less expensive than acquiring a new one; and studies suggest that an increase in customer retention by 5% leads to profit increases of 25% to 95%. 

Measuring Client Retention

The most commonly used method of calculating client retention is the aptly named “churn rate,” which is expressed as a percentage of clientele that discontinue business with the company within a certain time period. A high churn rate indicates that the business is struggling to retain consumers, and this often leads to stagnant or negative growth. As a result, small businesses should track the number of consumers who either switch to a competitor or forego the product or service altogether. 

Strategies for Successful Client Retention Campaigns 

Convincing consumers to keep coming back doesn’t have to be a challenging process. Relying on the traditional methods of email marketing and loyalty programs can be massively successful if applied correctly, and adding small touches that show the business cares, such as sending a happy birthday email, will lead to happier consumers and therefore an increased likelihood of them returning for business.  

To begin an email campaign, consider that personalization increases consumer engagement by an estimated 74%. That isn’t to say that every email must run on complex AI-generated email services to personalize emails for each consumer; however, utilizing strategies to understand the company’s consumer demographics will add increased value to emails. Consumer data software such as Google Analytics or Facebook Insights give comprehensive demographic data that can be used to assist in this. 

Once the demographic data is gathered, the email campaign can be as simple as sending a series of welcome emails detailing the company and its values, and then sending periodic emails to encourage consumers to use products and/or services that the business  offers. This, of course, must be carefully balanced to ensure a  focus on quality over quantity when engaging in a targeted email campaign. 

Businesses should also use technology to assist in email campaigns. There are a number of email services that offer a variety of free or paid options such as Constant Contact, Moosend, and MailerLite.

Gamifying Rewards Programs 

Incentivizing consumers to return to a business through loyalty rewards programs offer small businesses a fantastic opportunity to improve consumer retention. Using “gamified” reward systems that allow the customer to feel as if they are “leveling up” or competing with other consumers for a certain reward can lead to large increases in customer engagement. These increases are well documented as a survey by Colloquy suggested that 27% of millennials would continue a loyalty program if it was competitive or gamified in any aspect. 

To capitalize on this, small businesses should find a balance between offering too many rewards at once and or not frequently enough to keep consumers satisfied. This goes hand-in-hand with ensuring that the rewards are incentivizing consumers while remaining cost effective for the business. Rewards programs can range from giving a discount or free item for a given number of visits or purchases, to providing access to items or services unique to loyalty program members. Creativity with the rewards program will be appreciated by consumers, and offer a multitude of ways to entice customers to keep coming back. 

As a social impact initiative, Rem and Company also offers free consulting services and resources to small businesses and nonprofits impacted by COVID-19. Our pro-bono consulting teams provide small businesses with the opportunity to identify and prioritize issues facing their business, propose innovative strategies, and facilitate execution. If you are a small business or nonprofit in need of assistance, learn more about how we can help.