5 Important Retention Marketing Strategies Every Retailer Needs to Know
Retention marketing is the new way of the e-commerce world. A study done by the Harvard Business School shows that increasing customer retention rates by just 5% can increase profits by up to 95%. Another study done by the Gartner Group shows that 80% of a company’s future revenue will come from just 20% of their existing customers. Retention marketing tactics are complementary and work best when several are used together.
In this post, we’ll share five retention marketing strategies that marketers can mix and match until finding their own personalized marketing plan.
Leverage behavioral data. As a business, if marketers can take the step to analyze consumers’ browsing and purchasing patterns to provide tailored product recommendations, brands can create an experience that fosters brand loyalty.
According to Invesp, 56% of online shoppers are more likely to return to a site that offers personalized recommendations. It is impossible to deny the success that Amazon has achieved. The world’s largest online retailer ranks amongst the very highest for customer service, in spite of their extraordinarily high order rate of receiving and processing over 35 orders worldwide per second.
E-commerce retail giants like Amazon have embraced personalization through every piece of the consumer journey, which has in turn resulted in very high customer retention rates. For example, 96% of Amazon customers that have subscribed to their Amazon Prime service for two years will renew for a third year.
2. Retention Emails
Most e-commerce marketers are already utilizing email marketing. However, it is less likely that they are doing so with retention marketing in mind. Marketers can foster better customer retention rates by strategically utilizing email marketing to encourage or incentivize existing customers to return and shop again. Dollar Shave Club does an exceptional job of executing well-timed and well-worded retention emails. For example, if a user signs up for their membership but doesn’t go through and add a credit card to their account, it will trigger the email shown below.
Marketers have no excuse not to adopt a retention email strategy. All you need to do is restructure and re-target the campaigns you already send to existing customers. It takes a bit of effort and a lot of creativity, but is a vital piece to include in an e-commerce marketer’s retention marketing repertoire.
3. Reward and/or Loyalty Programs
At Emarsys, we truly understand how important it is to create successful loyalty programs. Sephora, a luxury cosmetic retailer, is one of the best examples for this retention marketing strategy. Sephora’s membership program is a merit-based program that separates consumers into three different member tiers: Beauty Insider, VIB and VIB Rouge. Each tier hosts its own set of exclusive rewards.
The reason this retention marketing strategy is so effective is that they put in place certain yearly-spend thresholds that need to be reached in order to increase the membership status. The rewards in the highest tier (VIB Rouge) are so appealing to consumers that it provides a heightened incentive to spend more so they can breach the price threshold. This extremely successful loyalty program has nurtured 11 million members that spend 15 times more money on Sephora.com than the average user.
4. Exceptional Customer Service
When looking to create stronger customer relationships and enhance retention rates, look to the most critical point of contact between retailers and the consumer: their interaction with the brand. Creating these relationships is simply a case of looking back the age-old golden rule: treat customers the way you would want to be treated if you were shopping at a store. While some may think this is more for the brick-and-mortar experience, marketers can provide the same exceptional customer service via the online shopping experience as well.
5. Shared Values
A shared value is a belief that both the brand and consumer have about a brand’s higher purpose or philosophy. Research done by the Corporate Executive Board (CEB) polled consumers from around the United States on their relationships with brands. Of the consumers who had the strongest relationships with a brand, 64% stated shared values as the primary reason for such a strong relationship.
One e-commerce retailer that is excelling at this principle is Patagonia. Patagonia has a very loyal following due to their principles and the shared values of their followers. Read this excerpt from Patagonia’s mission statement:
“For us at Patagonia, a love of wild and beautiful places demands participation in the fight to save them, and to help reverse the steep decline in the overall environmental health of our planet. We donate our time, services and at least 1% of our sales to hundreds of grassroots environmental groups all over the world who work to help reverse the tide.”
This statement resonates heavily with their consumers, which fosters stronger relationships and, in turn, greater retention rates.
Retention marketing is too critical for marketers to ignore. B2C e-commerce marketers must adapt and change to adopt this new principle in order to stay relevant and create personalized marketing strategies that cater to their customers.