Many a top digital agency will be the first to tell you that customer retention is both cheaper than customer acquisition and can deliver a higher ROI.
A recent joint study by BIA/Kelsey and Manta surveyed nearly 1,000 small business owners (SBOs) and found they now spend more than half of their time and budget focused on existing customers because they recognize that it can be up to ten times more costly to acquire a new customer, and sometimes less effective. Their research further identified that the same businesses determined that their repeat customers spent a total of 67% more than a new one. So it seems pretty obvious, right? Set your digital agency’s focus on retention because it’s better for the bottom line. Actually, that’s not always the case. Sometimes retention may require more than retention marketing.
Acquisition = good, but retaining your existing customers is vitally exponential.
Building loyalty with just 5% more of an existing customer base could lead to an increased average profit per customer of between 25% and 100%. And it’s staggering data like this that has sent many a business into a race to invest in relationship marketing over acquisition marketing.
But in the fast and furious world of retention and relationship management the answer might not be to just to pile on more marketing.
Alas, not all customers want a deep relationship with the companies they transact with. Sometimes they just want a great product/service and, if your product or service is out performed or just falls short, it’s going to take a lot more than a top digital agency to get them back. Further, too much retention marketing can make (insert your favorite product, brand, service name here) come off as inauthentic, or worse, strangely robotic—leaving the sense that the company has collected too much personal information you (but that’s for another post). Slow down for a second and let that one sink in. So how do you increasingly retain your customers and manage your relationship with them without CRMing your relationship with them? This is starting to sound like a job for a product development agency.
Here’s an idea: focus on your product. Not your funnel.
Get better at engaging, not enraging the user. Many top digital agencies try to help companies build products, but can’t (and likely won’t) be able to jettison their marketing underpinning enough to be able to objectively look at and fight for the user. The same analogy can hold true for internal teams. Through iterative design and analysis, product teams need to grow in their understanding of and appreciation for the branding and marketing by-product of their efforts. Your product and service should grow as your customers do, with a design philosophy that starts at their end.
Good User Experience Design Can make a Good Product.
Good UX is, simply put, simple. Fun but functional. Bad UX is almost everything else and can possibly render your company useless (from a customer’s perspective). You have one job: make something that people look forward to using. 70% of Millennials feel that a great product is the most important driver of brand loyalty and 69% of Millennials feel that brand recognition and trust is also an important brand loyalty factor. What they are telling us they need is a great product that knows it and stands by it. Incrementally investing in your product is critical.
Fight the myths: “We must be innovative.”
When you’re evolving your product with customer retention in mind it is not necessarily the time to reinvent the wheel — no matter how tempting it might be. Innovation for innovation’s sake can kill your relationship with your customer – and even worse – your business. True Innovation shouldn’t evolve a product, it should re-invent it. And when it’s time to reinvent, you should be just as cognizant of the user – with a massive objective of growth.