Many businesses place the majority of their sales and marketing efforts in acquiring new customers and growing their market share. While this seems like a reasonable plan, there is actually a huge amount of value in shifting focus slightly and putting more effort into retaining customers rather than just constantly seeking new ones.
There are many studies which suggest customer retention is just as, if not more, important than new customer acquisition. Acquiring a new customer can be anywhere from five to 25 times more expensive than retaining an existing one, and increasing customer retention rates by 5% can increase profits by up to 95%.
In order to find loyal customers who return time and again, a business does still need to acquire new customers in the first instance. Then, they can focus on converting those new customers into loyal customers who stay with them for life.
In this blog, we’ll explore strategies for acquiring new customers, the key metrics of customer satisfaction, actionable customer retention strategies, and how a business can improve a customer’s lifetime value.
Strategies for acquiring new customers
All businesses must invest in a customer acquisition strategy in order to find the right audience for the product or service they’re selling. By having an effective strategy, it’s possible to increase your chances of finding a number of customers who you’re likely to retain, making your marketing more cost-effective and cheaper per conversion, setting you up for more success long-term.
Some of the acquisition channels a business can use to find and target new customers include:
- Organic search: Invest in a search engine optimisation (SEO) strategy to rank well on search engine results pages (SERPs).
- Paid search marketing: Pay-per-click (PPC) advertising is when businesses pay to feature highly on search engine results. PPC platform Google Ads also enables you to place display advertisements on partner websites.
- Organic social media: Share content posted on your blog or other channels, develop a company voice, and grow your brand awareness.
- Paid social media: Use sponsored posts on Facebook, Twitter, Instagram, LinkedIn, or TikTok to get your content in front of your target audience more easily.
- Email marketing: Collect email data through strategies such as gated content or webinars, then use those lists to nurture leads through to conversion via their inboxes.
- Referrals: Ask your existing customers to introduce you to their friends in exchange for an incentive with a referrals program.
- Events: Have a presence at conferences if it fits your industry, or hold virtual events like webinars to tell potential customers more about what you do.
- Traditional advertising: Place adverts on TV, radio, and print media, either locally or nationally depending on your business type and budget.
How to create a customer acquisition marketing funnel
Creating a strategy for customer acquisition that aligns with the principles of a funnel ensures that you follow a tried and tested method of acquisition and hone your efforts which makes your strategy much more effective.
The four stages of the customer acquisition funnel are:
- Awareness: You get your message in front of the right customers, growing their awareness of your product or service.
- Consideration: Give customers more information to help them make a decision to purchase from you.
- Conversion: Convert your audience into customers.
- Retention: Retain your newly acquired customers and turn them into loyal, returning customers.
Before creating your funnel strategy, ensure you know who your audience are, their demographics and motivations so you can understand their need and communicate your solution effectively, choose the right channels and know where your customers are, and create a content plan which aligns with the funnel stages. Once your strategy is launched, you must build in time to analyse the results and adjust and optimise your output after a specific period of time.
What is omnichannel marketing?
Omnichannel marketing is when organisations use various channels to interact with their consumers. This usually refers to the combination of physical channels (such as retail stores) combined with their digital channels (such as social media or ecommerce website chatbots which reply to FAQs in real-time).
By having multiple touchpoints for customer engagement with a brand, this kind of strategy offers many opportunities for fulfilment and to delight the customer through seamless customer service and customer experience.
What are the key customer satisfaction metrics?
Customer satisfaction is a key indicator of success for businesses. The more satisfied a customer is, the more likely they are to become loyal customers who return and the more likely they are to recommend a brand to their friends and family.
Customer satisfaction metrics are vital as they provide an insight into how consumers really feel about a business and whether or not you’re meeting customer expectations. By collecting this information, a business is able to see what they’re doing well and where they can improve to inflict meaningful, positive change on their services. It’s possible to automate this work, sending out surveys automatically to customers who have made a purchase.
Essential metrics all companies can use to measure how satisfied customers are include:
- Net Promoter Score (NPS): Asks consumers their willingness to recommend your brand. The more ‘promoters’ you have, the more your brand will spread by word-of-mouth.
- Customer Service Satisfaction (CSS): Measures customer satisfaction with post-purchase service, enabling you to track common queries and concerns, and whether your customer support offering is efficient.
- Customer Effort Score (CES): Determines the ease of using your products or services. The easier a customer finds using your offering, the more likely they are to be retained.
- Customer Satisfaction Score (CSAT): Measures how satisfied a customer is with your product or service.
- Customer Health Score (CHS): Identifies customer loyalty and whether current customers will be retained or if they’ll churn over time.
- Customer Churn Rate (CCR): Indicates the percentage of customers that have been lost rather than retained.
- Customer reviews: Many new buyers turn to reviews to decide whether or not to purchase. Feedback and reviews are collected on a range of portals or social media channels, and businesses must be aware of all of them.
What are some effective customer retention strategies?
A business’s customer retention rate is a metric which can be used to measure overall success. If a customer stays loyal to your brand, they will keep generating a profit for you and increasing your bottom line by making repeat purchases and being a brand advocate to their friends and family.
Some customer retention strategies businesses can employ to keep their customers coming back include:
- Make a memorable first impression with a strong onboarding process
- Personalise your customer experience with tailored solutions
- Build trust by consistently delivering value, fair pricing, and reliability
- Gather customer feedback and address any criticisms or customer complaints quickly
- Keep in touch with customers with valuable content and upselling or cross-selling opportunities to keep them engaged
Effective techniques for improving customer lifetime value
Loyal customers who keep returning to buy from you have a high customer lifetime value (CLV) – this is the amount of money they’ll spend with you over the course of their lifetime. Ideally, a business will make CLV a focus for all customers, and try to grow their customer base into one which is retained.
Ways to improve customer relationships for a high CLV include:
- Utilise cross-selling and upselling as much as possible
- Offer a memorable customer experience
- Create a customer loyalty program and incentivise purchases
- Listen to your customers
- Set up a referral program so your loyal customers are rewarded for recommending you
- Build a community among your consumers
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