Customer retention should be one of the most important parts of a retailer’s marketing strategy. After all, a customer you keep is a customer that you don’t have to find. In fact, it costs 6 to 7 times more to gain a new customer than keep an existing one. Surprisingly, a large number of retailers are not allocating much of their marketing budget to retention programs.
According to a recent survey of leading online retailers, nearly 30% of respondents reported that less than 10% of their marketing budget is devoted to marketing to existing customers. Additionally, more than 60% of retailers surveyed are spending less than 30% of their budget on retention marketing. As you’re creating your marketing strategy (and budget) for next year, keep in mind that customer retention is a valuable (and profitable) tactic to include.
In addition to being less expensive, retention tends to generate more revenue than acquisition marketing. In fact, retailers see 2.5x higher ROI from marketing to existing customers than trying to reach potential customers. Furthermore, existing customers are responsible for 41% of revenue, but this group is only 8% of a retailer’s customer base. Based on these factors, retention marketing is essential to grow, sustain, and improve your online business.
Existing customers are vital to your success, and you should let them know how valuable they are to you. A great tactic to employ in your retention strategy is to reward your best customers. Creating automated reward and loyalty emails is an easy way to ensure continued loyalty from your best customers segment, which, in turn, will create substantial ROI and higher CLV.
For specific examples of loyalty campaigns, download our Reward How-To Guide. Be sure to check out our other How-To Guides for step-by-step instructions to creating a variety of automated data-driven campaigns.
To learn more about retention marketing in the eCommerce industry, download the 2015 Retention Marketing Survey.