Customer retention is one of the most important factors that come into play whenever a new company seeks growth. Organically growing a business requires more customers, which leads to increased revenue which ultimately allows the company to hire more employees. These steps are almost always in order. Getting new customers is not as hard as what it takes to retain those customers. Getting customers to make repeat purchases requires serious work.
The same rules apply to online stores as well. A business starts up, generates traffic, which leads to revenue and then expands. To make sure that they keep the visitors that first came to their site, the store works on retention, finding ways to get recommendations to remain relevant online.
In this webinar, Raul Galera (Partner manager at ReferralCandy) and Rytis Lauris (Founder and CEO of Omnisend), will talk about how to retain customers, increase loyalty and in turn, generate revenue.
Is Customer Retention really Important?
Research conducted over the past few years has proved that existing customers add more to a company’s value than new customers.
According to Gartner Group, the world’s leading research and advisory company, 80% of a company’s future revenue is from existing customers. An article by Forbes goes into more detail about this subject.
“It costs, on average, 5 times more to acquire a new customer than it does to keep an existing one.”—Raul Galera
It is commonly said that customers are the best salespeople for your store. Customers will endorse your store and products if they have had a good experience purchasing from your store, and found that it was worth sharing with others as well. They believe what you are offering is worth the money spent.
This is because there are no customer acquisition costs associated with returning customers, your profit can multiply by 5.
“Probability of selling to existing customer: 60-70% – Probability of selling to new prospect: 5-20%”—Raul Galera
Companies like HubSpot and Karmaloop were on the verge of bankruptcy when they started relying heavily upon their existing customers, offering exclusive services and deals that gave customers considerable bang for their buck.
Jill Avery, a senior lecturer at Harvard Business School, said about HubSpot “they worked to eliminate roadblocks to usage so that customers could unlock the value of the product.”
Keeping your Brand Top-of-Mind
Top-of-mind-awareness (TOMA) is when a brand or product is the first in customer’s mind when talking about a specific industry or category. There are quite a few ways to keep your brand top-of-mind. Forbes has an article about how old-school advertising can help a brand stay top-of-mind. Here is an outline that can help keep your design out of mind:
- Keep it simple
- Make it unexpected
- The message should be concrete
- The message should be credible
- Try to tell emotionally-driven stories
Periodic offers with variable rewards
- For example, Uber referral rewards and discounts.
Useful social media posts
- Mere exposure effect – “The more often your customers encounter your brand, the likelier they are to keep it in mind”—Raul Galera
- Don’t be too promotional
- Be interesting
Customer Retention to Increase Word of Mouth Sales
“You’ve got your customers thinking about your brand, now make them talk about the brand”—Raul Galera
Customer retention and word of mouth may very well be two sides of the same coin. As customers find that your product is a perfect fit for them, they are bound to tell their friends and family and recommend for them to give it a try as well. A New York Times’ article gives more information on how to build customer loyalty through word of mouth.
To increase referral sales, you can:
- Highlight benefits of referrals
- Use referral call-to-actions in pages your customers visit the most
- Add post-purchase popups or send customers reminder emails to reap benefits of referrals
One way to maximize customer retention is via email.
“Email is Immortal”—Rytis Lauris
According to a survey by Exact Target, now known as Salesforce Marketing Cloud, 77% of US citizens and 63% of UK citizens prefer to be contacted by brands via email. And 91% of internet users check their inbox at least once a day.
This data gives emails power over SMS and phone calls for brand-related messages. Email as a marketing channel can derive 15-30% of income for online businesses. The reason why email is such an effective means for brand-related messaging is that users can take their time to read emails while other mediums have a more urgent feel to them.
Subscribers’ list—what difference does it make?
“Subscribers’ list is a huge asset for your business”—Rytis Lauris
A subscribers’ list keeps track of all your returning customers. A subscription to your online store is a second chance for you to convince your customers to buy your product. Stats show that only 2-3% of visitors buy something within one session on an online store. If you can convince the other 97% to subscribe to your website, you can send them promotions, discounts or use other means to make them see why you are the right choice. A Forbes article sheds light on the importance of discounts and coupons for retailers.
“…the numbers won’t be very impressive, but the quality will be really great”—Rytis Lauris
Out of all those who visit and the select few that subscribe, only 0.2% – 0.5% end up purchasing, which might seem like a depressingly low number. A point to remember here is that creating a subscribers’ list will cost you nothing, and yet will give you a quarter percent increase in sales. Plus, the customers you gain from this list are those that will return. They are also very likely to spread the word about your store and the value it provides.
A similar result is seen when using Newsletters.
Omnisend, known at the time as Soundest, is an automation app that can take over to send personalized emails and SMS messages that can help online stores help get more customers.
“Don’t forget to greet (your new subscriber) and send out welcome emails”—Rytis Lauris
A person who doesn’t buy anything from your store but subscribes nonetheless still deserves recognition. You can use automatic welcome emails to greet every new subscriber and perhaps offer a discount code in the mail to show that their subscription is truly appreciated.
“You have 30 days to convert a subscriber into a paying customer, and probability to do it later is very, very, very low…”—Rytis Lauris
“Your incentives can help users decide…”—Rytis Lauris
Your incentives and greetings really help retain customers and get them to make frequent purchases, which is after all the main goal. Automation can make things a lot easier on your end, allowing you to send emails and incentives on subscribing, purchasing, and even reminder emails if they have not bought anything in a while, or have abandoned carts.
Automated emails can be the last Hail Mary—a big discount offer that will finally change your customers’ mind? There are a lot of possibilities.
Role of ReferralCandy in Customer Retention
ReferralCandy is an online store plugin that helps small and medium stores get more word-of-mouth sales.
“We do not put caps or limits on how much you can get from your referral program”—Raul Galera
ReferralCandy looks for potential customers for you and spreads the word about your online store, and the best part of it is that there is no limit on how many advocates it finds for you. You get what you paid for and more. ReferralCandy first helps you acquire a customer, but then it’s your job to retain that customer, maybe through offering great service with value for money.
Raul Galera and Rytis Lauris’ webinar must have clarified the importance of customer retention and why you should improve yours. Services like ReferralCandy and Omnisend can play a vital role in helping you realize the full potential of your customers as you go on with your online ventures. After all, in the end, a business is nothing without satisfied, loyal customers.
View the original webinar here…