If you want a clear cut example of why customer retention is a critical aspect of running any business, consider literally any of the following statistics:
According to one recent study, your chances of selling to a new customer are anywhere from five to 20 percent. Your chances of selling to an existing customer, on the other hand, increases to between 60 and 70 percent.
Another study revealed that for the average business, roughly 80 percent of its future profits will come from just 20 percent of its existing, high value customers.
In general, about 65 percent of a business' total revenue comes entirely from people who are already customers.
Despite this, a major 27 percent of all small business owners estimate that somewhere between 11 and 20 percent of their first time customers will make a purchase and then never, ever return.
Not only is it easier and more effective to sell to an existing customer, but it's also far less expensive to do so - creating something of a perfect storm of benefits, regardless of the industry you're operating in. But retention marketing for your e-commerce strategy in particular is an incredibly valuable resource that is far too important to ignore.
Running a retention marketing campaign and running an effective one are two totally different things, however, and the latter requires you to keep a number of critical factors in mind.
Everything Revolves Around Value
In order to truly execute a successful retention marketing campaign as part of your larger e-commerce strategy, perhaps the most essential term to drill into your head is "value." Absolutely everything that you do has to display raw, tangible value to the people you're trying to retain or your efforts are never going to get off the ground.
Case in point: oftentimes e-commerce businesses will leverage email addresses to send out coupons and other promotions to new prospects who have gone cold, or current customers that they want to reward, in an effort to improve their retention efforts.
Where Will You Get The Email?
But the success of this depends upon your ability to get someone's email in the first place, which is oftentimes easier said than done. For existing customers, it's simple - just draw from your order histories and go from there. But for someone who has expressed interest in your brand and who hasn't made a purchase yet, you need to go a bit deeper.
People aren't going to give you their email address out of the kindness of their hearts - they expect (and in fact, deserve) something in return. So you'll need to build a landing page that offers something of value.
Maybe it's an eBook or other type of content marketing collateral that helps them learn more about the purchase you'd eventually like them to make. Maybe it's a "free sample" offer that will push them farther down the line towards a sale. It doesn't actually matter what it is, so long as you're asking someone to trade something valuable (their contact information) for something valuable (your offer) in return.
There are many different benefits to this approach. For starters, it's a low-cost way to not only increase engagement (and thus retention), but also improve your brand experience and start building loyalty - all at the same time. On the internal side of things, you also get to improve your larger marketing strategy because you suddenly have a larger pool of emails to draw from that you know are both A) active, and B) accurate.
You can use this information to cleanse your existing lists and improve the data in your CRM solution, removing outdated or incorrect email addresses and replacing them with all of the new intelligence you've just gathered.
Retention Marketing Is All About Testing
Another critical thing to understand about retention marketing is that there is truly no "one size fits all" approach to what you're doing. One of the most efficient ways to leverage retention marketing to your advantage is to make tailored content and product recommendations a part of your email marketing, for example.
But to do that, you need to make sure that every single one of those emails is as personal and as specific it can possibly be.
In order to do that, you'll need to roll up your sleeves and start testing nearly every aspect of your campaign to find out what works and, more importantly, what doesn't.
A/B testing can be a major benefit in this regard, as it allows you to segment your existing contact lists down into a series of similar customers and then break those groups down further, sending "Version A" to one group and "Version B" to another to see which ends up performing the best before you roll your efforts out across a larger scale.
You can use this to get a better indication of everything - from which email subject lines elicit the most "opens" to what tone you need to take to "how many words are too many words?" and much, much more. All of this allows you to experiment on a smaller scale until you find the right combination of elements to increase customer engagement in the way that you need, thus increasing customer retention along the way.
Build From the Right Perspective
These are just a few of the many, many ways to leverage retention marketing in your e-commerce strategy. But again, it could not be more important for you to remember that everything you do needs to start with your customer and work your way back to your business, not the other way around.
If you start with an offer or other promotion that is created in a silo, away from your customers, it will essentially exist in a vacuum. You may capture the attention of a few of them, but on a larger scale the results won't be nearly what you'd hoped.
But if you start with your customer and ask yourself "who is this person?" "What does he or she want?" "What do they need in order to continue their relationship with my e-commerce business?" Then work your way backwards from the answers to these questions to the techniques you should use.
Success more or less becomes an inevitability when you have finished to this point. Rest assured that this is a very, very beneficial place to be in for any business.