5 Tips To Drive Customer Retention And Increase Lifetime Value
Customer retention does more than giving you repeat customers. It helps build ambassadors out of your customers. This messaging guide shows you how.
Repeat customers have become more important to businesses as markets become more competitive each day. Regardless of the type of company you operate, or role you handle, everyone plays a role in driving customer retention.
In this article, you'll learn clearly about the following:
- Who a repeat customer is.
- Impact of customer retention on customer lifetime value.
- Five ways to drive customer retention.
- How to automate customer retention with message fit.
Who are repeat customers?
First, a customer is someone who has taken a profitable action related to your business, at least once. In essence, 100 people who sign up are not necessarily customers till they exchange money for your services.
When a customer repeats these profitable actions, they become repeat customers. In other words, you have retained them. The topping on this is that retained customers easily convert to ambassadors and refer you to others.
Word of mouth is a key benefit of having repeat customers.
Customer Retention vs. Customer Lifetime Value
As mentioned earlier, customer retention is a measure of how many of your customers that keep doing business with you. It is a metric that requires intentional engagement over time. According to Crazy Egg, an optimisation platform for retention, customer retention is more important than acquisition.
The reason for this assertion isn't far fetched. When a business is being ideated, the lifetime value of a customer is also set. Customer lifetime value (LTV) refers to the expected revenue from a customer over a particular period.
Here's where repeat customers come into play. For example, if your customer LTV is a monthly fee of $100 for 6 months, your customers have to repeat their purchases at least 6 times.
Five Ways to Drive Customer Retention
- Build Experiences like Apple
Over the years, Apple has grown to own a suite of products. At the core of their offering sits the commitment to making things simpler. As little as some experiences seem, they go a long way to driving retention.
For example, the ease of copying text from your iPhone to your Mac without any external app is a good user experience. Apple has hacked the art of continuous experience across all its consumer products. That way, one is nudged to purchase more of its products to get the full experience.
Does this mean everything from Apple is great? No. In fact, the continuity experience can get buggy sometimes. However, the intentionality of the thought plays a key role in its retention strategy.
- Make Personalised Recommendations like SHEIN.
SHEIN is a fast fashion brand that operates from China. Everyday, the brand updates its inventory with thousands of new items. Normally, this will present a customer with choice paralysis.
When a customer is overwhelmed with options, they might find it hard to pick and end up making no decision. You don't want that happening to your business. Leveraging heavily on data, SHEIN makes powerful recommendations that match the specific taste of a customer.
Learn More >> Introduction to Personalised Messaging
- Automate your Messaging like Netflix
Automated messaging doesn't take away personalisation when done rightly. Here's an example of what Netflix does with automated messaging:
- You watch a movie
- They send an email to ask how it was: "Did you enjoy [name of movie]?"
- Sometimes, they even go ahead to suggest similar movies: "Since you loved [name of movie], you should check [suggestions]."
Further, when you start a movie and do not finish it they send a reminder to nudge you about it. Netflix has been able to achieve this through events tracking. That is, they monitor what you do in the app and send messages based on that.
With the Engage personalisation guide, you will also be able to do the same. Check how it works here.
- Ask for Referrals like Cowrywise
Cowrywise is a digital wealth manager in Africa. One of its strongest growth drivers is its referral program. What they understand is this, the more you refer your circle to a platform the harder it is for you to leave.
The reason for this is that those you invite see you as their point of contact with the platform. When they have any issues, you become their de-facto customer support agent. So, this will nudge you to build a better relationship with the brand.
That way, you get to either direct them easily to the support team, or learn more about the product and help them yourself. Remember, before you do this ensure your experience and messaging are great on a personal level.
Learn More >> How Cowrywise asks for referrals
- Reward your Customers like thredUP
Speaking of referrals and rewards, it is important to do them excellently. One company that excels at this, thredUP (an online thrift store). It gamifies its reward experience.
There are multiple ways to earn points, but each way requires you to do something on the platform. Do you see how retention plays into this? Refer a friend, you earn some points. Make specific purchases, you earn some points. And you keep earning till you hit a redemption milestone.
When a milestone is met, points can be redeemed for purchases or discounts. Here's a sample flow of their point system from Growth Tactics:
Now, it doesn't end there, as the redemption items are timed. That is, they get expired. This helps create a sense of urgency and drive continuous use.
Retention starts with building experiences that put the customer first
As we conclude this section, regardless of the type of business you operate or work with it is cheaper to drive growth through retention than chasing after new customers. Retained customers serve as an excellent growth channel for your brand. So, how do you drive retention with messaging? Check the next section.
How to Drive Retention with Messaging
A message isn't delivered when it gets to the customer and they open it. Rather, true delivery happens when they go through it and connect with what you sent. This can be described as building a message-customer fit.
Clearly, such fit can only be built with personalisation. Thankfully, Engage has just the right tools to get you started with that. Kicking things off with Segments, you'll be able to cluster similar customers and message them with exactly what they need to hear.
For example, customers who have spent over $100 can be grouped into a particular segment and sent messages that offer them discounts: "Here's a 10% discount because you just spent $100..."
Don't stop there. Using Automations, we'll work with you to deliver this messages exactly when they qualify. You only need to:
- Define the segment. We'll add customers automatically when they match the criteria.
- Set up your message copy.
- Choose channels for delivery. You have the option or emails, push and in-app notifications, and SMS.
- Go live. 🎉
Here's the interesting part, you don't need to migrate from your current email service provider like Amazon SES or Mailgun. We support integrations and get you started immediately if you don't want to connect your data from the scratch.
Finally, we also support code-free use. With Lists, you will engage your community like never before. They are great for newsletters and also support personalisation.
How to Signup with Engage
- Visit here
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- Go live with your retention campaign in minutes