Marketing Strategies keep evolving with time. Marketers today are well aware that it’s easier and cheaper to retain existing customers than to acquire new ones, and yet research has found that most companies are still more focused on new Customer Acquisition instead of Customer Retention. However, as concerns about a possibly slowing economy continue to gain steam—with many economists predicting a recession within 12 to 18 months—this emphasis on new customers (and the cost of acquiring them) versus existing ones will be called into question. After all, when the economy contracts, too often marketing budgets do as well.
Brands can make their marketing dollars go further by finding new opportunities within their existing customer base. Research has shown that attracting new customers can cost five times more than retaining existing ones, and an increase in Customer Retention of only 5 percent can increase profits by 25 to 95 percent. Here are three ways that brands can get more value from the customers—and the customer data—that are already at their disposal:
Get Creative with the Cross-Sell Marketing Strategies
By looking at customer purchase data in new ways, brands can often identify cross-selling opportunities that might not be apparent on the surface. Sure, if a customer buys running shoes, it probably makes sense to target them with socks and other running gear. But cross-selling efforts should go deeper than that.
Optimal cross-selling starts by analyzing existing consumer and purchase data over the last year to identify best-selling product categories and determine complementary ones. If brands can discover what product categories are most frequently purchased together, they can start to gain a deeper understanding of customers and their interests. In many cases, these insights can be used to develop nuanced personas that improve cross-selling success.
Take luxury boating and water sports retailer West Marine, for example. The company has an in-depth understanding of its customers and their unique interests, and approaches their communications based on personas (e.g., paddle/surf, power water sports, fishing, sailing, etc.) They use the personas as a guide to serve up personalized content featuring the water activity that most excites them. Through this approach, West Marine has achieved a 22 percent increase in email-driven revenue.
Explore New Customer Dimensions
Getting more information about customers can help brands improve the effectiveness of their campaigns and provide insights about their best (or potentially underappreciated) customers. Additional psychographic and demographic details about audiences can help identify niche markets or unexpected buying personas within a brand’s customer base. Bringing together customer surveys, preference centers or third-party data can help build a more complete picture of customers’ interests and uncover new opportunities to engage them.
Consider See’s Candies. The iconic candy retailer found a new opportunity to engage its audience when the company analyzed its existing customers and discovered it could drive additional revenue by targeting a customer segment it did not previously recognize: male customers. When the brand tested unique Valentine’s Day content for this audience segment, it increased email-driven purchases by 25 percent.
Keep It Clean
Finally, if brands want to make the most of their existing customer bases, they need to be practicing good data hygiene. IBM estimates that bad data costs U.S. companies roughly $3.1 trillion dollars a year. Every bad email, mailing address and duplicate record in a database means wasted marketing budget. Furthermore, these types of errant records hurt email deliverability and a sender’s reputation with internet service providers. By improving data hygiene practices—for example, by removing incomplete, closed and invalid addresses and deduplicating records—brands can cut costs and mitigate the harm caused by dirty data. Furthermore, better data hygiene reduces the risk that customers will receive redundant or poorly targeted communications, which customers can take as a sure sign that the brand doesn’t understand or appreciate them as individuals.
It’s time for marketers to be ready to do more with less. But retention is just the beginning. Brands today have an opportunity to not just keep their customers coming back for repeat purchases, but also deepen and extend their relationships with their audience to drive sales that wouldn’t happen through traditional retention messaging. It all starts with the smart use of customer data.