Digital Marketing

How To Retain Customers: Basic Retention-Marketing Techniques

By Bastien, on October 10, 2022, updated on November 27, 2022 - 5 min read

Effective retention-marketing is particularly relevant today: with its help, businesses can increase conversion rates without the cost of attracting additional traffic and using marketing channels that have left the market. The marketers at shared workable techniques to retain customers and increase repeat sales.

What is retention-marketing?

Retention-marketing is a set of techniques for retention of customers, building their loyalty and, as a result, increasing repeat sales. 

Simply put, when a client leaves his contact, the retention marketer gets involved. It offers the product over and over again, demonstrating its benefits and helping to make a purchase quickly and on favorable terms for both parties. 

Applying retention marketing techniques allows businesses to solve a number of problems, including: 

  1. Creation of brand loyalty and building long-term cooperation.
  2. Continuous generation of repeat business and sales.
  3. Preventing the transformation of the client from “active” to “asleep”.
  4. Strengthening brand awareness (the more loyal the customer, the more often he tells his friends and acquaintances about the product).
  5. Establishing effective communication by addressing the channels that a particular customer prefers. 

A loyal customer is a valuable asset. According to the data, if a user has already had a positive experience, they are 65% likely to buy again. Whereas  a sale to a new customer will take place with a much lower probability of 5-20%. 

Channels for retention marketing

The main channel for retention marketing is email.  Push notifications, chatbots, SMS messaging, and pop-up notifications are also used. 

In recent months the following tasks were relevant for retention marketers: 

  • rapid migration and integration with domestic email services and Customer Data Platform services;
  • optimization of costs for retention-marketing to maintain a stable position in the market.

In the complicated conditions competent segmentation of the target audience is especially important, because it allows to reduce the marketing costs of business and not only to retain, but also to increase the level of profit.

Why segment the target audience?

The magic word for effective email marketing is personalization. 

IMPORTANT: According to the authors of expert articles on Cheappaperwriting, only a personalized newsletter and content will benefit your business and reduce your advertising costs. 

Therefore, before launching an email campaign, always ask yourself the question “Is this offer really necessary for this particular user at this particular moment?”. And only after that choose the segment of users who will benefit most from it. 

You can segment the target audience according to a variety of criteria. Let’s say that segmentation by gender or by purchase history will be relevant for the fashion sphere. But in the field of food, it is important to pay attention to the taste preferences of customers and not send vegetarians offers to buy steaks.

Regular RFM-segmentation, generating as many hypotheses about customer preferences as possible and running continuous A/B-tests will help to personalize your mailings and make them as effective as possible. 

RFM Segmentation

RFM segmentation is a method of target audience analysis that allows you to segment your customers into groups based on how often they have made purchases (Recency), frequency (Frequency) and the amount of checks (Monetary).

The method allows you to clearly segment your audience to clearly understand who among the customers buy often and a lot, who often and little, and who made one purchase and did not manifest itself in any other way. 

After dividing the base into groups it becomes clear which behavioral pattern is typical for its representatives. For example, to encourage active customers with a high check to buy even more, you should send them special offers for VIP-purchasers. And for those customers who haven’t shown themselves in a while, you can send a motivating discount or a selection of popular brand products. 

ML Segmentation

making a budget tracking finances (small)

While RFM segmentation allows you to build a picture of your core target audience, it does not allow you to see the dynamics of user behavior. Can the current cross-section be assessed as positive for the business? How does customer behavior change over time, and why? Which segment of the target audience is most profitable? These questions can be answered by ML-segmentation.

ML-segmentation is a method of audience clustering based on machine learning technologies. It is used to get the most complete idea of the customer base, based on a larger number of attributes than the three ones used in the RFM-analysis. 

IMPORTANT: The ML-segmentation method provides accurate and useful results for the business: it allows you not only to capture user behavior patterns, but also to determine how they affect the profitability of the company as a whole and the specificity of the group in particular. 

How to measure the effectiveness of RT marketing

You should regularly record and evaluate the effectiveness of your mailings. This is the only way to adjust your strategy in time and prevent “draining” your budget on activities that are unprofitable for your business and sometimes even irritating to your customers. 

You can do this in two ways: 

  1. With the help of analytics tools. Google Analytics is the basic tools of the retention-marketer. Always track a user’s last click using UTM tags to understand where he came from – which email, notification, etc. 
  2. Using the control group method. Don’t know how to find out in the most accurate and clear way how effective your mailing, advertising channel and communication in general is? Use the control group method. 

The method is easy to apply: 

  1. Produce a hypothesis. Assume the following hypothesis: Users are more likely to open emails if their subject line contains emoji.
  2. Identify two groups of customers. In our case, the first (test) group receives emails with emoji in the subject line. The second (control) – without. 
  3. Evaluate the result. Next you have to calculate the conversion rate of the emoji opening for each of the groups, compare indices and calculate the additional profit from sending emoji messages (if there are any).

Selecting a large number of control groups makes it possible to not only evaluate the effect of a particular type of communication, but also their combined impact on user behavior.  

How to improve RT-marketing results: 5 useful tips

#1. Build your base

The main ways to add to your base: 

  • a pop-up/some kind of dynamic block with an offer/bonus at the beginning of the session;
  • polling at the beginning of the session to gather more information about the user;
  • an offer at the end of the session (based on the user’s behavior: what products he viewed, what he put in the cart, etc.);
  • situational activities (tied to holidays, weekends, time of year, etc.): contests, special offers.

#2. Clean the base in a timely manner

It is important to constantly monitor the status of your email list and understand in time that your mailing costs have increased significantly. Often the reason for this is the growth in the number of people in the database and, consequently, an increase in expenditures on email marketing. This is when you need to clean up your base. 

#3. Choose effective topics

New, unfamiliar newsletter formats are always a good idea. For example, send emails with personal testimonials from the company’s employees about the products gave a good conversion rate at the initial stage.  

Mailing lists with digests and seasonal offers also showed consistently high conversion rates.

#4. Work on your mistakes

Don’t be lazy to segment your audience in detail to offer the user what they really need. If you notice that customer churn is increasing, more and more people are unsubscribing from your mailing list – immediately begin to revise your strategy.

#5. Be inspired by

Look for and borrow interesting ideas from your colleagues. Pay attention to which newsletters you like and why, and which ones your colleagues, friends and acquaintances like. Use original mechanics in your work, don’t be afraid to be bold, and try to create detailed newsletters that are a product in themselves.