Acquiring a new customer can be up to five times more expensive than retaining a current one. Similarly, just a 5% boost in customer retention can increase profits by more than 90%. Rhett Power shares tips for company leaders looking to gain loyal lifelong fans.
In 2021, companies should focus their marketing just as much on driving loyalty as they are on acquiring new customers — or more. Why? Consider the numbers.
Customer acquisition is up to five times more expensive than customer retention, and a mere 5% increase in retention can boost profits up to 95%. Obviously, strategies for customer retention and loyalty should be at the top of your marketing list.
However, creating loyal customers isn’t as simple as it used to be. Today’s consumers have more options than ever, and repeatedly winning their business requires brands to deliver tailored experiences that aren’t easily forgotten. So how exactly can you create memorable personalized experiences that foster customer loyalty? Here are four tips:
- Use artificial intelligence for data and marketing.
Customer journey maps have long been a favored tool among marketers for identifying engagement opportunities and visualizing the complete customer experience. Today, they’re as important as ever, but as customer journeys grow more complex, journey maps must become predictive rather than merely reflective. That’s where marketing AI can help.According to Diane Keng, CEO of Breinify, AI-based tools are essential for delivering the actionable insights that modern journey maps must incorporate so you can offer personalized experiences. “Predicting consumer behaviour is challenging when a person’s preferences can change based on the time of day, day of the week, or season,” said Keng. “AI can help brands tweak loyalty programs to best appeal to consumers in light of these factors.”
This is especially important when addressing newer customers. Rather than treating these customers as complete unknowns, Keng advocates for an “anonymous personalisation” approach that incorporates data on device usage, location, and referral sources to lay the groundwork for a tailored experience. As you learn more about customer preferences, AI can help you design more personalized journey maps that build in incentives for repeat engagement.
- Develop a more personalized social media strategy.
It’s no secret that leading brands use social media to spread awareness and deliver advertising, but they also blend online social interactions with real-world experiences to cultivate loyalty. By incentivizing customers to take certain social actions (whether that’s sharing photos, liking content, or participating in polls), brands can simultaneously expand their online footprint and drive offline purchasing behavior.Starbucks is one company that has been especially successful at using social channels to enhance customer experiences. The company frequently reshares images and comments from fans to start conversations about its products and then regularly participates in those conversations to foster personal connections with customers. Even seemingly small, yet engaging experiences on social media can create long-term brand affinity that translates to positive offline results.
- Create an innovative rewards program.
A well-designed loyalty program can be a brand’s greatest retention tool. In fact, studies show that emotional connections can triple an individual customer’s lifetime value to your business. Moreover, these high-value customers are more likely to be brand advocates and can play a big role in keeping acquisition costs down and driving sales.The best programs take a holistic approach to deliver incentives to customers, rewarding both online and offline engagement. Predator Nutrition, for example, has made an integrated loyalty program one of its core sales drivers. Rewarding customers for purchases, referrals, reviews, and social actions has helped it increase average order volume by 33%. An omnichannel rewards program that provides customers with plenty of ways to opt in (or out) and offers a range of incentives that increase as customers take more impactful actions can generate loyalty in ways that few marketing tactics can match.
- Leverage special occasions.
A study from Fulcrum, an analytics and technology firm, recently revealed that sending a personalized message on a customer’s birthday improved brand perception in 75% of customers. A tailored birthday email is an easy way to remain top of mind, and it could include a “gift” such as free shipping or an exclusive discount to incentivize a purchase.SoFi, the online personal finance company, took this tactic a step further when it organized a grand “debt graduation” party for a customer who had recently paid off her student loan debt. Although not every company can pull off this type of marketing stunt, even small messages of recognition can make a big impact. Whenever you have the opportunity to collect personal data from a customer, whether that’s via a newsletter sign-up, a point-of-sale transaction, or elsewhere, incentivize them to include their birthday or other special dates that might be relevant to your brand. When the time comes, use that information to surprise and delight them.
Building loyalty isn’t just about ensuring customer satisfaction. It’s also about giving customers a reason to choose you over competitors — especially in highly competitive markets. By consistently delivering surprising, personalized customer experiences, you can help make that choice easy.
Written by Rhett Power.
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