5 ways to increase customer retention in 2020


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At the start of 2020 many brands will be reviewing their customer growth strategies. Customer expectations have changed dramatically in recent years with the competition continuing to up the game. 2020 will be no different. The challenge for many is keeping up with your customers and the competition trying to steal them.

As you’re planning and preparing your marketing budgets for 2020, let’s pause for a minute and consider where and how you are investing your money. Is it on technology? customer attraction campaigns? How much of your budget are you planning on dedicating to customer retention? As that’s the route to genuine customer growth! 80% of your future profit will come from less than 20% of your existing customer base¹.

We have outlined 5 simple steps for you to increase your customer retention in 2020 and ultimately grow your revenue today and into the future.

Step 1: Find your best customers
This is where some brands come unstuck. They have so much data but don’t really know what to do with it all, or even the real value it holds.

Through some simple, yet effective segmentation, you’ll get a clearer view of who your customers are, their behaviours, interests and lifestyle preferences. We recently shared the below segmentation model (RFM), which stands for Recency (when the customer last shopped with you), Frequency (how often does the customer shop with you) and Monetary value (how much the customer spends with you).

These three simple measures will give you so much insight into your customers – you can segment them into different groups and begin to have a targeted and relevant conversation with each segment. Here is a model we use:

Superstars: Customers who spend the highest amount and shop most frequently.

Regulars: Customers who have made multiple purchases.

Lapsed Repeats: Customers who previously made multiple purchases, but don’t come back as often as they used to.

Recent One-offs: Customers who have recently made their first purchase.

Lapsed One-offs: Customers who previously made a single purchase, but never returned.

Lost Superstars: Customers who used to spend high and shop frequently, but have not returned.

Step 2: Love your superstars and find more just like them
So now you know which customers you cannot survive without, we refer to these as ‘superstars’ right down to the customers that are actually costing you money, and sadly the high value customers who haven’t returned.

Already you’re likely thinking of different ways you would communicate with these customer groups. Referring back to step 1 – how have you communicated to your superstars and active repeats? Did they receive any additional value than the lapsed one-offs? Chances are, probably not!

Step 3: Continue the conversation and measure what matters
Conduct an audit of your previous campaigns and customer communications. Review the messaging (i.e. sale or product focused), depth of personalisation (more than using a first name!).

How often do you take a step back and think about how the customer will feel or react to the marketing message? This is so important! How will it benefit them, add value to them, or make their lives easier? That’s all they care about at the end of the day.

What would you do if you received this email? and what would you do differently if you had the opportunity to resend the email? If you sent the same email to everyone on your database, then there is A LOT you should’ve done differently.

Determine what overall level of engagement you have achieved (including the subscribes/lost customers), how much you spent, and how much ROI you have realised – find the actual number (per campaign if possible).

Step 4: Think beyond the to path to purchase
Once you have acquired a customer, what next? They become another number on the database ready to be spammed every other day with irrelevant messages? No, brands have a window post purchase in which the customer will be feeling very positive about the brand (on the assumption they received a good experience). We refer to this timeframe as ‘the moneymoon period‘. What you do next is crucial – don’t allow buyers remorse to set in by delivering a poor post-purchase experience. Instead of sending a generic ‘we have a sale on’ email (nothing worse than receiving one of those after you’ve already made a purchase, or asking for an NPS score – thank the customer. It’s that simple! The customer will feel valued and appreciated.

Instead of dedicating the majority of your budget in the path to purchase, consider the path to re-purchase. How can you build and enhance your relationship with the customer. The more data you have, the more you will be able to predict (and importantly, influence) their future behaviour.

Step 5: Invest in genuine customer growth not just acquisition
We recommend dedicating at least 10% of your marketing budget to keep your existing customers happy and engaged. Keep it completely separate from the rest of your marketing budget. Technology cannot be included in this budget. This is for ad-hoc ways in which you can reward and recognise your customer for their loyalty.

We understand the intense pressure that marketers are under to deliver. Tasked with sending so many marketing messages per week (or day) to hit the ridiculous KPIs which have been set.

Remember – just because you think something looks great does not mean your customer will. Your marketing needs to be relevant to them. Don’t forget that once a customer unsubscribes, they are lost forever, along with the potential for them to spend in the future.

Create customer segments to help you understand your customers better – once you have this, you will know the best way to continue the conversation with them.

Think beyond the path to purchase, also don’t focus too much on what your competitors are doing. Look for ways in which you can enhance the relationships with your existing customers. Recognise them, and their loyalty to your brand.

¹ Gartner

Michael Barnard
Michael oversees a team of Customologists with combined talent across strategy, data science, and technology, who help brands understand and influence customer behaviours. Michael’s experience in human centred design is foundational in our principles of design thinking and starting with the customer, focusing on how brands engage, keep, and grow customers.


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