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Customer Retention

Previously we said that the main thrust in growth for most companies revolves around the acquisition of new customers. However, if your existing customers are defecting, the time and expense spent in acquiring new customers can be wasted. You must look after the interests of your existing customers as well as acquire new ones.

The Internet makes customer defection easier

The internet continues to shift the balance of power from sellers to buyers by making it easier for buyers to research, locate and switch to other suppliers. Today’s “dissatisfied” customers will be be gone tomorrow, the merely "satisfied" are already looking for alternatives or substitutes. Unless you can engender commitment and loyalty in your existing customers your competition will easily poach them away.

If you spent just 20% of your marketing budget promoting special offers to existing customers and keeping them informed of product upgrades etc. the response will easily out-perform the demographically targeted group talked about in the Customer Acquisition section of this site. 

This effect has been known and acted upon for many years within marketing circles, it works because actual customer behaviour, which can be determined through mining customer data, is more accurate at defining future customer behaviour than demographic characteristics. 

Latency

Marketing is often described as a conversation. Customer data can help interpret that conversation and uncover what customers are really saying, you need to know how to listen and react. For example, let's say you analyse customers who have made multiple purchases (at least 2), and calculate the average number of days between these purchases.  The resultant number of days is called "latency" i.e. the number of days between two purchases. The data may tell you that there is a latency of 65 days.

Now switch your analysis to look at one-time buyers, customers who have not made a further purchase by the 65th day are not acting in-line with your pre-defined multi-purchase customer.  The results of this analysis is telling you something is wrong, and you should react in some way to encourage the second sale, perhaps some kind of promotion.  This is just one example of data speaking for the customer.

Latency allows you to find a set of customers who are behaving outside of the norm. This saves your advertising buck by letting you promote a specific offer to a specific set of customers rather than every customer.

Latency is just one aspect of retention marketing that Escocian can offer as part of an ongoing marketing campaign, if you value the role the internet can play in promoting your products, services, or brand to a national or international market.

Take the first step towards generating more sales and maximizing profit by requesting a free Internet Marketing quote Today.