Use Customer Retention Marketing

chezfat | Dec 6, 2009 |

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Customer Retention Marketing

In times of economic difficulties customer retention is a major driver for profitable sustainability in the business world. Current customers are far less expensive to retain than potential customers are to gain thus marketing budgets can be far more effective on a dollars spent basis. Customer retention marketing is very important for business manager's and owner's to implement because losing a customer to a competitor is not a one time loss of potential revenue but a loss of a life-time stream of income. That one customer could purchase your products and services for as long as they are relevant to him if you can simply retain them.

Think of current customers as income streams. If you have a customer that makes a purchase from you every two months then the lifetime value of that customer is based on the size of his purchases and the frequency of his purchases for an indefinite amount of time. It is definitely in your best interest to build more customers to your business base. This will expand your potential income stream at a rate in proportion to the amount of new customers you can acquire. You can't however fail to keep your current customers as viable income streams which perpetually bring in cash flow. If current customers never return then there is no income stream. Each source of income is a case by case basis and business planning becomes dependent on drumming up new business. You have to retain customers to stay solvent and profitable.

Retention Marketing

Customer retention marketing aims to make sure current customers remain customers thereby ensuring current streams of income remain intact. Customer retention marketing is typically cheaper than new customer marketing because your marketing efforts are not wasted on uninterested parties. You know exactly who your current customers are and thus every penny spent marketing to them is a penny spent marketing to an interested party. In tough economic times when budgets get tight this is a very important form of marketing for two reasons.

The first reason is that strong competitors to your business can cheaply take advantage of economic situations to invade your market and attempt to claim market share that once belonged to you. If you have a solid customer retention plan you are more apt to retain your valuable customers. Second, in tough economic times customers typically spend less per visit or visit less often. This results in a slowing of your cash flow and can cause budgets to tighten including marketing budgets. If you cut expenses on marketing customer retention marketing becomes vastly important to make sure your customers do not go elsewhere.

Customer retention marketing also serves a purpose to increase customer lifetime value. Even in cases where the economic times are not challenging marketing to current customers has a way of increasing customer lifetime value. In added investment marketing to them can have the effect of speeding up the frequency of current customer patronage and/or increasing the amount spent per visit per customer. Each of these results extrapolated out over many months and years has a major effect on the bottom line.

An Effective Marketing Plan

Customer retention programs are an absolute must for businesses of all kinds and sizes. The idea of retaining customers is not new to most people but the methods of maintaining them may be. You can begin working out your customer retention program by enabling a simple customer loyalty program or rewards system. You can hire an email marketing agency to manage the email communications and newsletters you send out to your opt-in customer email list for better niche marketing. You can even send out birthday cards with coupons or other marketing materials in them to current customers you may have. All of these options result in bringing past customers back in the doors once again so that they can spend more money on your products and services.

More specific or exotic customer retention marketing projects can even be utilized. Depending on your line of business you might find that games, contests, or give-a-ways may bring customers back in the doors again or more frequently. An effective online business strategy may be required. Sometimes your business may even consider partnering with complimentary businesses to spark interest in new customers while working to retain and increase the return on investment of current customers. In fact partnering with a similar business to yours may even bring better returns than going at it alone.

A Plan To Retain Customers

For instance, if you were to find a business that a customer would likely be interested in because the demographic of your competitor is the same as the demographic of yours then you can essentially split marketing costs and combine customer bases with your competitor/partner. Your business which might cater to stay at home moms might also cater to your partner's business which also caters to the same demographic. Finding natural partnerships to team up with is a way to run an efficient customer retention marketing program which also has the added benefit of reaching out to potential first-time customers and retaining them via permission based marketing.

If your partner in this customer retention program has a demographic of customers which has a high level characteristics which fit the ideal customer of your product or service line you're marketing efforts effectively double. For the same cost of running a solo customer retention marketing program you can also market to a group of potential customers which are targeted customers which have a high likelihood of conversion. It's not like blind marketing when you are investing in a group of people who are more likely to buy your product than the general public.

The whole processes of customer retention marketing is basically an investment in efficiency. Just as a business would invest in upgrading their current equipment to make their fixed costs lower they should also look to their current customer base as a fixed asset. It generates money for them consistently forever so long as it is maintained. Try hiring a customer retention company to help you get started in big customer retention projects if the idea of starting one yourself feels over your head. If not you need to do what you need to do. Invest in your company, retain your customers, and increase customer lifetime value today.