The Art of Keeping Customers
Diving into The Four Top Challenges of Keeping Customers Coming Back.
As a child, I loved playing the military strategy game Age of Empires (AoE 4, Age of Kings to be specific for my fellow nerds), which taught me a crucial lesson about the importance of consolidation. If you’re investing all your resources in offense, capturing new territory, you’ll soon find that your existing territories are being encroached upon. This forces you to reinvest in reclaiming the territory, a process far more expensive than simply consolidating and defending your wins. This lesson proved invaluable as I entered the business world.
It costs 7 times more to attract a new customer than it does to retain an existing one
— Neil Patel
In the realm of marketing, 85–90% of an average team’s resources are spent on acquiring new customers, leaving just 10–15% for retaining existing ones. In weaker companies, this figure drops to single digits or even decimals. It’s a well-known fact that acquiring a new customer costs significantly more than retaining an existing one, yet this is exactly what most businesses do.
Consider a business that loses 5% of customers each month, a churn rate possibly accelerated by inconsiderate marketing and incessant pestering. In response, they allocate more money and effort to acquire new customers to make up for the lost 5%, despite this costing significantly more than what it would take to retain the same number of existing customers. This approach is hardly rational.
This method of putting all bullets in the acquisition barrel persists because it’s tried and tested. Only in industries like insurance, where acquiring new customers is exceptionally challenging, do the average marketing manager focus inward on retaining existing customers. Marketers focus on retention, only when acquisition becomes harder than retention.
Meaning, retention isn’t easy, and the challenges it presents mean that marketers shouldn’t be blamed for all difficulties in keeping customers. Here are four key challenges and their solutions (this apply mostly to internet businesses and in particular, D2C and SaaS):
1. Irrelevant Communication.
Problem:
Personalizing customer communication with sophisticated tools is still challenging. Many attempts lead to guesswork, resulting in pitches that often miss their mark. When customers view communication as irrelevant or unengaging, they tend to withdraw. This forces businesses into a cycle of re-acquisition to restart communication.
A common approach taken by businesses that fail is focusing primarily on the final stage of the Buying Decision Journey (BDJ), seeking immediate conversions. This strategy might yield short-term gains, but often delivers untimely or irrelevant information to the majority of the audience, causing further disengagement.
Solution:
When communicating to the entire audience base, or when targeting isn’t reliable enough, the key is to create content that resonates with audiences at any stage of their BDJ. For example, a health supplement company should consider sharing value-adding tips on selecting the right supplement or providing healthy recipes, rather than pushing another ad for their product. The objective here is:
- to ensure your brand remains prominent in the minds of potential customers, so they recall your brand when they need a supplement.
- Your communication attracts an audience that is exactly your target market, who will increasingly become familar with your brand with each piece of value-adding content they consume.
To sum it up, this approach fosters a connection with the audience, keeping them engaged and informed, regardless of their immediate intent to purchase.
“Great marketers have immense empathy for their audience. They can put themselves in their shoes, live their lives, feel what they feel, go where they go, and respond how they’d respond. That empathy comes out in content that resonates with your audience.”
– Rand Fishkin
2. Cookie-Cutter Customer Experience:
Problem: The success of personalization engines like those of Netflix and Amazon has raised customer expectations. The main challenge, especially in Direct-to-Consumer (D2C) businesses, is that many users are anonymous, providing little insight into their preferences.
Solution: Incentivise Data Sharing: Encourage anonymous users to share their data, perhaps through offers like a free trial, consultation, or a relevant e-book upon signing up. This initial engagement can provide valuable insights for personalizing their experience.
3. Forgetting Your Service:
Problem: Marketing efforts are wasted if customers don’t recall your brand when they next need a solution. A brand that is not top of mind loses out to those with more robust marketing.
Solution: Employ strategic direct communication. For instance, a local pollution test business contacts customers only when necessary, like a reminder for a mandatory test. This approach reaches customers at the right time, adding value without overwhelming them.
4. Misguided Impressions
Problem: If customers feel misled or receive the wrong product initially, they are unlikely to engage again. This makes retention nearly impossible.
Solution: Focus on mindful acquisition. High acquisition costs mean it’s vital to convert the right people, not just anyone. The goal is not just revenue from the first purchase but the customer’s lifetime value.A satisfied customer is the best business strategy of all.
Michael LeBoeuf
Wrapping it up
At the heart of all good marketing is empathy. You understand and deliver to the customer, not what is convenient or what you think is right, but what is right for them, at the right time, on the right platform. If technology has helped marketers in a significant way, it is to help them be more empathetic. Not just in their thoughts and words, but in their actions.
Empathetic marketing works if it results in a customer experience that is more relevant and personalised to the individual. Doing this right is the best way to ensure people stick around. Because people stick around with those who understand them and act accordingly.
