Why B2C marketers must strike a better balance between customer acquisition and retention
By Eric Keating, vice president of marketing, Zaius
Are you spending too much of your time on customer acquisition?
Many B2C marketers are. It costs five times more to acquire a new customer than it does to keep your current customers, according to Forrester Research. However, online retailers and other e-commerce businesses invest nearly 80 percent of their digital marketing budgets on new customer acquisition.
All too often, you're focusing on the hardest business to win when there are easier wins right under your nose. Ecommerce retail marketers should spend more time and resources turning existing customers into repeat buyers, while simultaneously growing their overall customer base.
This requires you to be more aware of how you're already engaging with customers. It can actually be tougher to turn a one-time buyer into a loyal customer than it is to acquire a new buyer. But once you do, it pays back rapidly.
Here are four steps you can take to find a healthier balance between keeping your best customers happy and expanding your customer base.
1. Understand omnichannel customer behavior.How do your customers buy? It's usually not a straight and narrow path to purchase. Many of today's tech-savvy buyers engage with your brand on multiple channels before they decide to make a purchase. They come to your company's website, open an email, see a Facebook ad, and maybe visit a brick-and-mortar store before they finally buy.
Retailers have to understand the full omnichannel journey customers make in order to retain them. Your customers could use up to five different devices within the same purchasing cycle, according to DigitasLBi. If you don't understand the path customers take to purchase, you can't repeat your past successes. The first step in retaining customers is to unify your view of their activity across web, mobile, email and other channels.
2. Create a consistent experience. Now that you know exactly how your customers interact with your brand, you have to engage them at each step. The goal, of course, is to make them happy so they have a positive experiences with your brand. This includes every interaction a customer has with your company, from emailing them a discount tied to past purchase behavior to creating a beautifully designed and easy-to-use website.
The worst thing you can do is overpromise and under deliver for your customers. If a one-time buyer feels let down in some way, they'll never become a repeat customer. As a retailer, you not only have to make a great first impression; you have to keep that positive customer experience consistent. Surprise and delight your customers at every turn — personal touches can work wonders. Start with a welcome email to kick off a positive relationship, and then, think about birthday campaigns, special discounts and more.
3. Nurture to drive repeat purchases. A consistent experience also means an ongoing experience. Don't leave customers ignored and unengaged for months at a time. As a brand, you want to be top-of-mind for your customers. Use email to re-engage them periodically, reminding them of the great experiences you provided and offering them products they may be interested in buying.
A great nurture campaign starts as a reminder and then slowly nudges a buyer toward a purchase. Offer rewards and other incentives to drive repeat purchases and create a sense of loyalty in your customer base. These campaigns are traditionally done via email, but now could include ads across all platforms, including in stores. With replenishment campaigns, for example, you can send an email at the exact moment customers need to refill a product they already love, like makeup or specialty snacks. They may have bought the products in a store, but your email campaign could turn them into online shoppers instantly. Think outside of the box and find ways to turn a one-time buyer into a loyal customer.
4. Engage at-risk customers. Unfortunately, not every customer will respond to a nurture campaign. Keep a close eye on customers that have not engaged with your brand at all in 30 days, a sign that they may be at risk. Try running an at-risk campaign to re-engage this group and drive another purchase. Get a little creative and do what you can to catch their attention. For example, Dollar Shave Club has a campaign that explicitly says, “Stick Around This Time,” targeting customers who have been unengaged with a cute image of a sad teddy bear.
Since these are buyers who haven't responded, they may need a larger discount or a bigger offer in order to convert. Don't be afraid to do what's necessary to get the sale, and if it doesn't work immediately, don't give up. These customers are almost always worth the effort. According to research from "Marketing Metrics" by Paul W. Farris, you have a 60 to 70 percent probability of selling to an existing customer. That number drops to as low as 5 percent for new shoppers.
Stop devoting the majority of your time to convincing completely new customers to buy, and focus more of your resources on your most lucrative customers: the ones you already have. If you can retain just 10 percent more of your existing customers, you will actually double your revenue. It's hard to beat that ROI.