Marketing Campaigns to Retain Customers                                      Home

 Most people in business are aware of the research that shows that it costs many times more to recruit a new customer than it does to retain an existing one. Fewer are aware of the impact on profit of spending on retention, but in businesses that I have worked, the impact has been many times greater. In some businesses retention is a major problem, while for others there customers are reasonably loyal. What is common to all businesses is that competition is increasing and that means loyalty is reducing. Here are some things to consider which can increase loyalty in almost any business. 

1 Resources 

How much of your marketing budget is spent on retaining customers? In my experience, most businesses spend 80% of their money on general advertising, directory listings, and a web presence. If this spending has any value, it is in finding new customers. Retention is achieved through personal selling, which is effective but expensive.  

It is far more effective to invest this money in campaigns that will deliver something specific. If you plan and run them correctly, you can have marketing campaigns that retain customers by making them spend more. What is more you will be able to measure the results of what you do and you will be able to see the financial returns of your efforts. You will be in control of your promotions. So cancel your sending on general activities and work on some specific promotions.

2 Group your customers 

While every spending customer is valuable, some are more valuable than others. Generally, the amount that they spend with you is a good approximation for their value and loyalty to you. The length of time that they have been trading with you is also good. I once worked with a business where analysis showed that businesses that traded with them for 85 years spent more than the businesses that traded with them for 80 years. Even over that time spend increased as the relationship aged, even though different people must have been making the decisions. Either way, you will know your business and you will be able to group your customers into three groups. You then need to target the groups as follows: 

Group 1.  These are your most loyal customers and should get your best attention. They will probably account for at least 80% of your profits, so they should be where your personal selling efforts should be focussed. The likelihood is that they like your business and your products well, but if you have one or two that seem reluctant heavy spenders, treat them as a special case. Because they like what you do, this group will respond better to information than to promotions. For example, make sure that they know everything about what your business can do for them. You may be surprised at how few of your products or services that they are using. Involve them in your product selection or development process in a way that makes them feel valued. Don’t only communicate before the sale is made. Phone after and order is placed to make sure that they are satisfied. Don’t just ask the question though. Design your call script to say something positive to reassure them that they made the right decision by buying from you. Promotions, particularly priced based ones may do more harm than good in this group, because they are already buying your product and a price drop may just reduce your margins and damage the value that they attach to your product. 

Group 2.  Typically this group of customers will either not use your products or services that often or they will use your competitors to sometimes source their needs. The key marketing task is to keep you in the front of their mind when they do need to buy. Emails, direct mail, and newsletters are great ways of staying in touch with this group economically. They will respond to “offers of the month” promotions and deals are a great reason for keeping in touch. Be careful not to bombard them as that will switch them off. Ask them to quote a special code for the offer when they place their order. That way you can monitor the results. You can use the response results to experiment with what categories of products work well and what level of discount you need to give. The frequency of the offer can also be varied to get the best results. As with everything in Marketing, a mix of activities works best, so do include some information based communication with your offers and also offer free add on products or bundles as well as discount based promotions. If you don’t you run the risk of training your customers to wait to place their order until your discounted offer lands on their desk. 

Group 3. In most companies this group accounts for -10% of the profits, so you may well ask yourself why you should invest any effort in them at all. Certainly some of them are a waste of resources, but will be others in this group that are worth communicating with. For example, new customers will be here, as will business that are small, but are growing fast and as they grow the amount that they spend with you may increase. Use low cost methods like email to promote to these customers. If you want their business, you can use price promotions to this group. Again, measure the response using special product codes. Response levels from this group are usually lower than in group 2, because they are light users of your product or because they mostly spend with your competitors. However there may be some people in this group who just need a timely reminder about what you can do for them. Keep your communication with this group simple; not much information content with the focus on the offer for your product or service. 

In this article I have focussed on using promotions to retain customers and get them spending more. This is a one sided approach, which needs to be balanced out by using service strategies in retention. In our next newsletter I will be covering this topic, so sign up now to get your copy.

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