The why and the how of a customer retention strategy to keep your customers coming back again and again. Anna not only chats about 5 easy to implement plans but the importance of developing a strategy in the first place.
Like this episode? Head to the ratings and reviews section in Apple Podcasts and share the love.
Welcome to episode six of The Elevatory Podcast. I'm your host Anna Jonak, and I'm the founder of The Elevatory. So our topic today is titled what's better than acquiring a new customer. I mean, who doesn't want lots of new customers, right? Everybody, but the answer is retaining an existing customer.
Yep. Today, I really want to talk to you about customer retention because all too often, I see clients scrambling really hard, working really hard on a bit of a hamster wheel. They leave money on the table and all they're doing is focusing on the next new sale. It's always about the new customers coming in, the new clients. Rather than investing energy into what they already have and what's right in front of them.
So I just want to talk to you today about why customer attention is so important. And then on top of that, I'm going to take you through some ideas around how you can keep your clients coming back for more. So, let me give you five reasons why you absolutely should be focusing on customer retention.
WHY CUSTOMER RETENTION IS IMPORTANT
1. Increase Your ROI
The first is that keeping customers coming back will continue to result in a greater return on investment. So for those of you that are spending on ads to get customers and clients in, I know that sometimes when campaigns aren't performing as well as they should, you might just be breaking even on those ads.
Sometimes you can run a loss or maybe your return on investment isn't very high. But if that's all you're currently focused on is getting a better ROI on that one new person coming in, and you're not thinking about them from a long term perspective, then you're really missing out on the opportunity to really leverage and grow that client with you.
Clients can spend thousands. Tens of thousands in their lifetime with you if you nurture them properly. So imagine your cost per acquisition was $50 to get that initial customer to buy. And you made $10 which is your profit. That's it. If you keep doing that every time, and that's your constant focus, you're getting a lot of $10, but what about the client that you get to come back again and again and again? All right. That $10, it's suddenly a hundred dollars, a thousand dollars and so on and so on. So you really have to think about this when you're spending on traffic or paying for ads that, essentially your return on investment can be so much greater, as long as you've got the second part of your marketing strategy. You're looking after and nurturing that client beyond that first initial sale. It's why we work so hard on email marketing, on surveys, and understanding our clients and getting feedback, getting testimonials, having conversations with clients, all of these things so that we can make sure that we're keeping and retaining them.
'...essentially your return on investment can be so much greater, as long as you've got the second part of your marketing strategy... looking after and nurturing that client beyond that first initial sale.'
2. It costs less to keep an existing customer
Something else that you should know. It also costs a lot less to keep an old customer (as it would make sense) between five and 25 times less. All right. Cause again, generally it costs a lot to acquire someone who's cold and doesn't know you, but to have someone come back and spend again cost you a lot less. Now, when it's email marketing, in fact, it probably cost you nothing, which is why email is such a huge part or should be such a huge part of your strategy.
I think stats suggest that you should be making, of your revenue, 20 to 30% of it should be coming through email marketing. Okay. Because guys, people are in your list, leverage them, They're there. Stats also show that most people are more likely to make a purchase from an email than they are from an ad campaign. So really just shows you how much you should be leveraging this platform. And as I said, it's free. So that customer that came in and cost you $50 is now costing you nothing. And that return on investment is going up. Likewise re-targeted ads generally are much cheaper than running cold conversion ads. So again, it's going to cost you a lot to get a lot less to get back in front of that customer and encourage them to buy again.
'So that customer that came in and cost you $50 is now costing you nothing. And that return on investment is going up.'
3. Repeat Customers Spend More
Something else. Number three, repeat customers actually generally spend more. Imagine that someone coming in that doesn't know you, for the first time, they're not going to spend an extraordinary amount unless they've got lots of money. I mean, some people do, but studies show that by the fifth purchase, they're actually spending 40% more than their first purchase. And by the time they hit their 10th purchase. 80% more, which is huge. I guess again, you've got to think about it the first time someone's coming in cold. They don't know you they're experiencing you for the first time. Once they've experienced your products and services and they know, you're legitimate, you're good. They've had a great time. It makes sense that if they've had a good experience, they're going to come back and they're more likely to spend more as a result. But how amazing is the fact that people can be spending 80% more by their 10th purchase, which is why you have to make sure that you're making them get to that 10th purchase.
'...studies show that by the fifth purchase, they're actually spending 40% more than their first purchase. And by the time they hit their 10th purchase. 80% more...'
4. You could be leaving money on the table
Something else to consider, point 4 from my end is that really you could be leaving lots of money on the table by not looking at customer retention outside of what I've already told you. And here I want to kind of note the 80/20 Pareto principle. Look it up. It's a fantastic book. The 80/20 rule in sales and marketing, because it really gets you thinking. It's very statistical, but it really gets you to think about, the fact that there are statistical percentages, which show that 20% of your customers, deliver you 80% of your profits. So if you were to go and have a look at who is spending, who spent over time, 20% of the money that's coming in is going to come from 20% of your customer base. Likewise of these 20%, 20% of customers will actually spend four times more than others.
So there's always people that are willing and able to spend more. So it's about making sure that you do have communication for those top spenders. And this is where, as I'll get onto, when it comes to giving you some ideas about leveraging customer attention, and what you can be doing is, you know, segmenting your list and looking at your audience splits and looking at what people are buying, and those customer journeys can be so very important. What's more, I mean, product development as well. There's probably products or services that you haven't dreamt up yet that your customers will buy, or maybe they've got in their mind, which is why customer surveys are so important.
'There's always people that are willing and able to spend more. So it's about making sure that you do have communication for those top spenders.'
We've got a client at the moment who, we went and looked at her VIPs, we segmented her list and we looked at the top tier spenders and we looked at their customer journey paths, and we asked them what they were after. As a result, she's now got a really exciting program in development, from which is to complement her ecomm store and because her customers are asking for it and we know that her VIPs are likely to buy it, but it opens up a whole other revenue stream.
5. Fulfilling relationships with your client
Okay. Point number five on why customer attention is so important. You're missing out on deeper, more fulfilling relationships with your client if you're constantly focusing on the new person coming in. And I have to say, this was a hard lesson to learn in my early years of business, I've been in business about eight years now, but we were very much focused in the early days on just bringing in new clients and, you know, getting the next program full, and we really missed the ball on looking at what was right in front of us and nurturing those long-term relationships.
And when we changed that focus, our job was so much more fulfilling because you want clients that are going to become brand advocates, are going to talk about you, that are going to go out there and share your product or your service with the world, because they've had a great experience. And just generally having a relationship like that is a really wonderful experience.
So, you know, build those relationships, have those brand advocates, you know, have people that you you're having great chats with. I've got another client at the moment, she has really a really quirky, amazing business. Kara from Mount Vic and Me and she, we were just chatting the other day. She's got such an amazing client base and I was like, why don't you start a Facebook group? And she started a Facebook group a few days later. And can I just say it's just a joy to be part of. Everybody in it, they're all on the same wavelength. They're having a really good laugh. They're all introducing themselves. They're sharing the products that they love the most, what they want to see next. And it's just heart-warming to see from the outside, the joy that it's given Kara as well. Okay. So something to think about to create more, you know, more fulfilling relationships for yourself.
5 IDEAS ON HOW TO KEEP YOUR CLIENTS COMING BACK FOR MORE
Okay. So there are a few reasons I think, I mean, I'm sure I could come up with more, but I think there's quite a lot in there to make you start thinking, hang on a second. I shouldn't just be focusing about that next sale coming in from someone new, I really should be leveraging the audience and looking after the people that are right in front of me already, because, you know, I made a commitment to them. They've made a commitment to me. How can we make this even better?
1. Learn as much as possible about your audience
So now I want to give you five quick tips around how to keep your clients coming back for more. So thinking about how we can keep that customer attention, what we can be doing and how we can live. Um, now first things first, I think it's really important that for you to kind of leverage customer retention, you need to learn as much about your audience as possible. It's not just about having people coming in and making the sale, but who are these people? Okay. Who are they? How do they come to you? How did they find you? What was the journey path? What age bracket are they in? What problem or challenge did they have before they came and found you have? How do they feel about your product and service now? How has your service improved their life? What else might they like to see from you. Really, customer surveys is a huge part of understanding your audience and really should be something that you're doing often. And as I said, if you can, segmenting and breaking down your audience to look at different customer sets even, so that you can really understand motivations and purchase cycles and purchase trends and things like that is really key.
And also sometimes you can find when you ask people questions, the things that you think are important in your business, like Australian made, maybe there's something that you hang your hat on. I remember going through a survey with one client and all the things that she was promoting on her website, were not the things that her customers were that bothered about. And actually there were other things that were more important. So these were the things that we decided we would need to make more prominent when it came to website optimisation and user experience. So definitely seek to learn as much about your audience as possible, build a relationship with them, ask them lots of questions. You can do that through surveys, polls, phone interviews. Even we always encourage people to try and get on the phone and, you know, have 10 phone conversations and see what you can learn from those people. All right.
2. Make sure you stay top of mind
The second is making sure that you stay top of mind. So obviously it's one thing to have someone come in and if the comms go dead, how can they, how are they gonna know that you're still there. You need to really think about, having a really good ongoing communication plan. So a marketing plan. So thinking about what you're doing on your socials, thinking about what you're doing on reels, or any video content, regular emails, check-ins, offers updates, like you need. Okay. You need a plan to make sure that you're staying top of mind, because again, sometimes people might have 10 emails from you and they might just delete them because it's not the right time, but it's that 11th email that they get that they're in the headspace to shop or do the thing. I've had clients who have been in my email system for years and just one day it's the right time. And they opened that email. And as they say, they'd been reading emails on and off for years and it's the right time. Okay. I do it with lots of ecomm businesses, especially like, clothes, fashion, that kind of stuff. I'm on a ton of email lists. I don't always open the emails, but I don't delete the accounts either because I like them. And I'm just not in the mood right now, but one day I'll be on a shopping frenzy and the email will be well-placed at the right time. So really think about making sure that you are staying top of mind. So you have that visibility and people remember you when they're thinking about, oh yeah. I bought that and had a great experience. So I should go back there.
3. Add more value
Another thing to think about is giving more value. Okay. Focus on how you can add value to your consumer. So they never want to leave you. As I said, maybe it is having a Facebook community. Maybe it's writing a note. Maybe it's acknowledging that second or third purchase or sending them something specific to say, thanks. Maybe it's hearing them as a buyer, as an advocate on your social media. Let people know that you see them, how great is it to be seen and appreciated? I think that it's really important that we acknowledge the people that are helping to build our businesses. Okay.
4. Incentives and Rewards
Point number four, offer incentives and rewards. Okay. Loyalty points. Loyalty points do make a difference to your clients. Have a think about what you can offer people as VIPs, what kind of referrals, benefits or rewards can you do? Can you give them more flexibility? Can you give them options for Afterpay payment plans? Can you give people an always on 10% discount? Can you offer free shipping for a top tier. And, and then create an email sequence to encourage people to get into that top tier. So they can always qualify for free shipping. Obviously the more that people see that there is opportunity to gain rewards or to get into the next tier, the more likely they are to come back and spend again.
Okay, something else I've alluded to point number five, which is a personalisation. What you don't want to do is just have mass communication so that people are getting blasted with the same thing. It's really important to segment your list. And as I said to break down those customer segments, do you have VIPs, if you've got a fashion store, are there are people who buy skirts, and the dress buyers, can you send them different comms when all of the skirts and things come in and you can probably send them a few more emails than you might the rest of your list. So just don't think about blanketing, your communication. Think about segmenting out. Think about sending, you know, your frequency of your sending to different segments. Like your highest buyers. You might send more emails to, you might send less to the rest of your list, and then you might send more when certain launches and things like that. Okay. You've got an awful lot of data, um, in your Shopify store or hopefully in whatever website backend, you've got there's information, data, insights into purchase patterns and behaviour, um, VIP clients, your email list, there's data there that you should be using to help you leverage your communication so that you are personalising it as much as possible. So that you're more likely to get someone to open and do the thing you want them to do.
Okay. Something else to think about is reengaging. those that are dormant. So obviously those who have already bought from you, previously, they might just have, you know, disappeared for a while. Maybe you haven't been top of mind, and it's a way of, you know, you want to recontact them and remind them of your existence and find out why they're no longer buying maybe even. We've done that recently we've sent some customer surveys out to kind of get a, to get a gauge on what's happening is the current market and the economy and everything else going on impacting their purchasing behaviour, or is it just, you know, maybe that we're not top of the radar anymore, or maybe people move through different stages of life and therefore your products aren't as relevant. Again, it's more about learning as much as possible. But where you can, obviously you want to kind of get clear on removing objections, getting, you know, demonstrating value, offering them an incentive to buy again. I'm sure most of you will have, or should have some form of re-engagement campaigns so that you're reminding people that you're still there should, you know, should they need you and want you and offering them a little incentive to come back and re-join you in whatever it is that you did. Okay.
There's just a few things to help you think about how you can keep your customers coming back for more. And I trust that there'll be many more as you put your head down and start thinking about this. I think you'll actually find that you really enjoy this side of customer retention, and you start thinking about the relationships and a lot of this stuff you can also automate when it comes to, you know, surveys and polling and value. There's a lot that you can do with your software, email marketing that can make this stuff automated. So it doesn't take up too much of your time, but that it does have the impact that we want it to have.
All right. I could probably talk about this forever. I'm sure I say that in every episode I get so excited about all the things that I could share. I trust I've given you some food for thought, though, when it comes to your current clients and creating a retention plan for them. And I really hope that you do go away and really think about, you know, how you can do this better and equally looking at what this could mean for your business. So go and have a look at your average lifetime value of your client right now, and maybe set yourself a goal to increase the average lifetime value. And the same thing, looking at average order value, increase the average order value on that second, third, fourth purchase, get some benchmarks. You know, I love a spreadsheet. And if you don't know that you will know that as we talk about this, but if you've got benchmarks for all of these things and you're tracking all of these. This is where these minute, little details and setting some goals and things to achieve in place. will really help you move the needle okay of your business.
Alrighty. I look forward to hearing from you. I look forward to your questions and I can't wait to chat with our next session where Jo is going to be coming on and talking with me, Jo being our head of optimisation and talking you through the strategies to improve your conversion rate optimisation. So we're going to be talking websites next week. All right. Have a fantastic rest of the day. Thank you for spending a little bit of time with me.
KNOW SOMEONE WHO CAN BENEFIT FROM THIS PODCAST?
HOW TO CONNECT WITH ANNA
Phone: 1300 634 230
HOW DID WE DO?
We're incredibly excited to be able to share our business insights. If you're enjoying the show, you can help spread the love and pay it forward by leaving a review. It will make it easier for other female entrepreneurs in business like you, to find us and kick their own goals.