Loyalty360 talks to various brands and customer engagement/customer loyalty/customer experience firms on a daily/weekly basis and one of the things that seem to be resonating even more now than ever is customer retention: Focusing on your best and most loyalty customers. For example, see Whole Foods.
Christian Hausammann, vice president of loyalty for Snipp, wrote an article that was published in Loyalty360 titled, “Customer Retention: A Permanent Duty.”
“A significant amount of time and money goes into investing in customer acquisition, while brands often neglect to invest in customer retention,” Hausammann wrote. “All too often there is a distinct lack of importance placed on specifically targeting and rewarding existing consumers when in actual fact, an increase of even five percent in customer retention can show a profit increase as high as ninety-five percent.”
Customer retention is obviously a point of increased significance for brands, which makes the following study findings even more curious.
Nearly 80 percent of companies spend less than 30 percent of their time and budget on customer retention-focused messaging and content, according to Corporate Visions’ State of the Conversation Report, “Customer Retention and Renewal Messaging: Mission Critical, But Missing in Action.”
What’s more, the report revealed that 42 percent of respondents say their companies invest less than 10 percent of their marketing budgets on renewal messaging efforts.
“These are alarming figures, especially given how many B2B companies are relying more on subscription or service models,” said Tim Riesterer, chief strategy and research officer at Corporate Visions. “Companies typically incur so many costs during the acquisition and implementation phase that in the first section of the contract, they might barely break even. So, if you want to capitalize on the long-term value potential of your net new customers, you can’t afford to overlook your renewal messaging.”
Nearly 60 percent of B2B professionals see no difference in the messaging for their renewal conversations and their customer acquisition messaging. This specific statistic is in stark contrast to a recent finding from Corporate Visions academic research that found that the messaging strategies that work best for winning new customers are not effective for securing renewals.
“Research shows the story you need to tell to protect existing customer relationships is actually the antithesis of the disruptive, attention-grabbing story you need to tell to acquire net new customers,” said Riesterer. “Whereas in new customer acquisition messaging you need to disrupt the status quo situation, in renewal conversations you need to do just the opposite, actively reinforcing it to build customer loyalty.”