The Long Game: Is retention your new growth strategy?

There’s a feeling of a bit of economic instability at the moment, and what this may be doing is it may be driving your marketing budgets down. So with tighter marketing budgets, how can you still be expected to drive growth for your business or your organisation? The answer could be sitting with your existing customers. So today I want to discuss customer retention.

Hi, my name is Jordan McFadyen, and welcome to the Marketing Mindset podcast. This podcast challenges both you and I to re-look at our marketing strategies with new thoughts and ideas, and move away from random acts of marketing, and start to help you build a long-term marketing strategy.

And today I want to focus on customer retention, because in the face of all this talk of economic instability, brands are starting to focus more and more on retention, because obviously marketing budgets are starting to get a little bit tighter. And so brands are having to think a little bit more clever on how they can retain customers, as opposed to going out and finding new ones.

Now, I base this off a report I’ve just been reading this morning. It was a report ran from an organisation called Braze. Braze is a data marketing software, and what they did is they ran a report interviewing over a thousand VPs in marketing. And this was across many different markets across the world, and these were in probably more large-scale corporate brands. But I still think that the learnings were really interesting about it, because what it showed was that brands are investing more money on retaining customers than acquiring new customers.

There’s one stat that really stood out for me: 45% of brands that were part of the survey said that they’re spending more time and more than half of their budget on retention in 2022. And that was up from spending 33% of their overall budget in 2020. So up to 45% of their overall budget being spent on retaining customers. Some of the other stats that I thought were interesting is 53% of marketing teams saying they’re going to send more messages offering helpful advice. 37% of all those interviewed as well are actually going to pull back on sending more promotional offers, and thinking more about their education and that long-term customer growth, I guess you could say.

So retention has been a big focus, and this got me really thinking. Got me thinking about the value of customer retention in our businesses, and also how customer retention can actually relate back to marketing and back to marketers, and how we can use those existing customers to actually help drive our growth, especially if marketing budgets are getting a little bit tighter.

So first thing that we want to answer is: what is customer retention? Then next I’ll go into what that even has to do with marketing in the first place. So customer retention, obviously, it refers to the process of keeping existing customers, encouraging them to continue doing business with your business and your brand. It involves really building relationships with your customers that provide them with that positive experience that meets their needs and their expectations, essentially. And obviously, we need to make sure that we’re exceeding those expectations, as well as really building those really thorough, in-depth relationships with those customers, so that they don’t know how they did business without you, essentially.

So why should we focus on customer retention? And the big one there is, as marketers, we should really start caring, because even though we’re supposed to be focused on bringing people into the business, that’s not necessarily true all the time. Especially if you do have a bit of a tighter marketing budget this year. There are some reasons why having a focus on customer retention can actually be really good for you in the business and as marketers.

The first one is it can be really cost-effective, because obviously we know that acquiring new customers can be expensive. Cold audiences, cold advertising, we’ve spoken about this a lot on the podcast, can be really expensive, because obviously you’re out looking for more people to essentially pique their interest and their curiosity in your business. While retaining those existing customers, that is obviously more cost-effective, because you’ve already spent that time and that money on acquiring them and getting them involved with your brand.

Also, existing customers are actually more likely to make more repeat purchases, or being on a retainer, depending on your business model, and potentially actually spend more money than new customers that you bring into the business as well. There’s an article I liked in Forbes that even quoted a report saying that returning customers can spend up to 67% more than first-time customers. So it’s really important for us to think about how we can use those existing customers to help with upsells, and keeping them retained for a longer amount of time.

Also, our organisation’s superfans, they’re actually more likely to refer their colleagues, word of mouth, friends, family. They’re more likely to share their experience with your brand with them, which again can help with your acquisition costs. It’s going to help you acquire new customers at that lower cost as well. And over time, those superfans of your business, they’re actually going to show bigger brand loyalty to you as well. And what this does for marketers as well is they turn into your advocates. They’re actually going to help with your brand’s testimonials, your case studies, reviews, to actually help you show trust and authority in your market, as a real way to actually differentiate yourself from your competitors as well.

And these superfans, these customers that you have at the moment, they’re also more likely to provide valuable feedback and insights that can actually really help you to improve your products, improve your services and your full customer experience. So it’s really going to be really beneficial for the entire business to actually focus on the feedback of these existing customers. And this will actually help you identify even some areas for improvement within the business, and actually help you make data-driven decisions to actually better serve your customers, and also better attract your customers as well.

And that leads nicely into my next point, that customer retention really is quite closely related to marketing, and we need to be thinking about it as part of our marketing strategies, because it involves getting a true understanding of all of our customer needs and preferences, and tailoring marketing strategies to meet those needs. And as that report that I spoke about earlier shows us, we need to continue to market and show and build value with our existing customers, as they really are the superfans in our business. They know you, they know your team, they know your product, they know how good you are, and they are a much easier sell at the end of the day as well.

And as marketers, what we can do is we can take the lead in looking at our customer retention, and involve this in a marketing strategy, especially if budgets are looking a little bit tighter. And over time, it’s actually going to help you identify new customer segments. And what this does is this is actually going to help you tailor your marketing messages, and it’s going to help you tailor even your offers to your specific group of customers. It’s going to help you with your overall marketing strategy. It’s going to get you thinking around, what could we have done, or how could we have spoken slightly different to this audience, to have been able to attract them easier? Or how can we find more of these type of people?

And look, I’ve seen this in action as well with an SEO tool that I use, with Semrush. Obviously, I got marketed a lot to when I was researching SEO tools for our business. But what I thought was really interesting is, even once I became a customer, I still got served ads. But the ads switched, and instead of talking around getting me acquired as a new customer, the ads were more focused on education. It was focused on: this is what you can do with the tool. Come here to learn how to do this. Come here, learn how to do that. And so the ads suddenly switched from “come buy this product” to “how can you use this product better?” And so the idea there is that once I’d become a customer, their focus was then on retention.

So the ads and the content that I was seeing switched, and it was more on how I could use the product better, which would mean hopefully that I actually stay with the product for a longer amount of time. And marketing teams, we can actually work with the customer service team to ensure that customers are actually receiving that positive experience. And we can actually send out similar marketing messages to those lists of people who are in your existing database right now, so that you can make sure you’re meeting and exceeding the customer’s expectations. And we also need to be thinking about how we can explore new ways that you can actually help build brand loyalty, and encourage customers to continue doing business with your brand over the long run as well.

And the other big part for marketers and marketing teams is that we can actually gather good feedback to identify those areas of improvement. And this is going to help us craft our marketing messaging, even to a cold audience, or to your warm audience, or to the customers that you already have. So it’s really going to craft that content that you need, and using the feedback as real case studies to actually help drive that business growth. So really using that data to help fuel the creativeness and the content that you have.

So here’s a few ideas as well that I just want to explore. Just three quick ideas on how you can actually approach a retention strategy. And these are ideas that I focus on in my business as well. And it’s just thought starters, to get you thinking about how you can focus on retention, and how we can actually use your customers to help fuel that business growth in the background.

The first one is: make your customers feel really good about even being associated with you and your brand. Because you want to really foster that positive feeling that that customer gets, even just to be associated with your brand or your organisation. If you think about it now, there are brands with which the public right now may really want to be associated with. There’s those brands that are seen as the real cool kids. And then the other brands that would actually bring embarrassment to somebody if you knew that they were associated with that brand, or that they had that product, or they used that service. And essentially what you want to do is you want to think about not being the latter in this particular case. You want customers to feel really good about even having that association, that they work with you and your brand.

And you can do this by providing more value. And that doesn’t necessarily mean going above and beyond and providing more and more and more services, because obviously that’s then going to turn into service scope creep or product scope creep, and it’s not going to work with your budgets and your time. But it’s also meaning, how can you include them more in your community? How can you include them more in things that you do on social media? Do you have Facebook groups or email lists that are specific just for your customers and just for your community?

And you could also do this by sharing your values, for example. Finding connections between your values and your customers’ values, so that they actually feel really proud to be associated with you. Let’s say that you’re eco-conscious, or that you donate to charity often. These are values that can help you connect with your customers that share those same values with you as well. And it really builds that connection, and makes them feel proud to be associated with you in the first place.

The other one is: make your customers actually feel heard. Do not be afraid to actually ask your customers how they’re actually doing, even if the answer is not as pleasant as you’d hope. Positive feedback, obviously it feels really good. But in the cases, it’s usually negative feedback that’s actually more important to us as business owners, as marketers. Because if people aren’t happy, asking them actually, firstly, gives us an opportunity to fix it. Plus, their answers should actually help you improve your service, and it makes it easier to retain those customers in the future.

And again, you can actually use the good feedback in your marketing strategy. It helps you again. It helps you to determine your audience. You craft your messaging. It clones your best customers. And this is something I always think about. Think about those best customers that you have now. How can we clone them? How can we find more people that fit that description? Someone who’s in that particular role in their organisation, or that type of customer. How do we go out and find them? What is it about them that attracts them to your business? And how can we use that in your marketing to clone them, and to keep building on those type of people?

And then the third idea I want to share about retention is becoming too difficult to replace. And this is another thing that we try and focus on as well when building our business: trying to meet customer expectations, focus our marketing on a direct audience, and then deliver such a good service that customers, they sit back and actually wonder how they actually survived without you in the first place. Because remember, it’s so much easier for us to hold on to customers when they actually understand that they cannot easily replicate their positive experience with your brand elsewhere in the industry.

And so I’m going to round back to the stat that I shared at the start of this podcast. 45% of brands say they’re spending more than half of their budget on retention in 2022. So they’re increasing how much they’re spending, on their time and on their marketing budget, on retaining customers. So if your budget’s looking tighter in the next financial year, have a think about it. How can you use your existing customer base to continue to drive growth without draining that marketing budget? Hopefully those ideas have been helpful for you, just to even think about how you can use that existing base you’ve got to continue to use that to build.

And I do hope that you found today’s podcast really useful, and hopefully it helps with setting your marketing budget over the next little while as well. And look, if you need any other ideas, or you want to chat strategy with me or the rest of the team, you can find all of the details of how to contact us at donebynine.com. On that website as well, we have all the resources and links and blogs and articles and education that you can see as well. And you can learn more about how we work with customers and building their marketing strategies, and how we actually help implementing them across the board as well.

So if you do want to reach out to myself, or a member of the team, feel free to go across to our website, donebynine.com. And thank you so much for joining us again for another episode of the Marketing Mindset podcast, and we’ll see you on the next one.