Retention Marketing: What It Is, Strategies & Examples (2022)Jesse Sumrak
Retention marketing isn’t a new strategy, but it’s definitely one that deserves a bit more love and attention. It’s the spirit behind the notion that it’s more valuable to have 10 brand fanatics rather than 100 loosey-goosey customers. The 100 flaky customers might all make a purchase once in a lifetime, but your brand loyalists will buy for themselves, their kids, their neighbor, their aunt, and maybe (just maybe) their dog.
While acquiring a new customer no longer costs 5–25x more than retaining an old one (like it used to), the lesson behind the rule remains the same—it’s cheaper to keep loyal customers rather than chase down new ones.
Marketing without retention is pushing customers into your funnel, through the checkout line, and out the back door. It’s crazy, but when put in that perspective, that’s the trap many businesses fall into—constantly throwing money at brand-new eyeballs and potential buyers rather than focusing on lifetime customers and repeat purchases.
Ready to approach your marketing differently? You’ve come to the right place. Below, we’ll walk you through everything you need to know about retention marketing: what it is, how it differs from customer acquisition, benefits, strategies, examples, and more.
What is retention marketing?
Retention marketing is the strategies and tactics you use to nurture and maintain your relationships with customers. Ecommerce isn’t the only industry doing it, either—everyone from big-time enterprises to mom-and-pop shops does it to keep customers coming back for more.
For example, when Uber sends you a push notification with a $5 coupon, it’s hitting you with a retention marketing strategy. And when your local pizza joint invites you back with a text message for a buy-one-get-one pie, it’s using retention marketing.
Retention marketing tactics could include other activities, such as:
- Warm welcome emails with additional resources or tips that help your recipients with the onboarding workflow
- Exclusive VIP offers for loyal and consistent users or customers
- Loyalty programs that reward customers for spending more
- Regular newsletters that include a combination of educational content and promotional pieces
- Reengagement emails with links to your preference center to allow recipients to customize their email frequency
But email isn’t the only way to do retention marketing. As we mentioned before, you could use SMS, push notifications, voice, chat, video, social media, and more to engage and retain your customer base—more on that soon.
Get retention marketing right, and your leads and prospects stay interested, engaged, and more likely to stick with your brand (and ultimately become more lucrative customers).
Customer retention marketing vs. customer acquisition
So what’s the difference between customer retention marketing and customer acquisition? We’re glad you asked.
Customer acquisition is the marketing practices you use to find brand-new customers. It includes the strategies you use to keep previous and current customers.
For example, your company might launch a new downloadable guide to collect new leads for the sales team. That’s customer acquisition marketing.
On the other side, you might have a brand-new customer who opts into your email list at checkout. A week later, you send them a follow-up to see how they’re doing with their new product and ask if they have any questions—that’s an example of retention marketing.
Best retention marketing channels
There’s no one-size-fits-all approach to retention marketing that works for everyone. Each business (depending on its voice, industry, and target market) will find better success on specific channels. Here are a few to consider when building your retention marketing strategy:
- Email: Email is one of the few opt-in channels. Your customers give you their email address and check a box (or should) to confirm they want your messages. Then, you can use their email to follow up with 1:1 conversations, upsell opportunities, and more.
- PPC: Pay-per-click ads is one way to retarget your customers. For example, if a customer buys a 30-serving supplement from your business, you might start sending them ads for the same product (or similar products) 30 days after they received their first purchase.
- SMS: SMS is another opt-in-only retentional marketing channel. It has a higher open rate than email, but most consumers guard their phone numbers more than their email addresses. So when a customer gives you their number, treat it with respect—it can do you a lifetime of good if you use it properly.
- Social media: Social media is all about building relationships. Use your social media profiles to transform your existing customers into followers and your followers into brand loyalists.
- Push notifications: Push notifications can be a great way to remind your customers to revisit your app or make a repeat purchase. Use them sparingly to prevent annoying your customers and losing notification privileges.
What’s a good retention rate in marketing?
It depends, but you knew that was coming, didn’t you?
While you shouldn’t necessarily treat these numbers as gospel, here are a few industry benchmarks to give you an idea of a good customer retention rate in marketing:
- Most industries can expect an average of below 20% retention in 8 weeks.
- SaaS and ecommerce industries can see over a 35% retention rate in 8 weeks.
- Media or finance industries can reach over a 25% retention rate in 8 weeks.
Benefits of retention marketing
So is retention marketing worth all the time and effort? Could your money be better spent somewhere else?
Again, it depends.
If you’re a brand-new business with little to no customers, you want to prioritize finding customers. However, once buyers start rolling in the door, you don’t want to take their money and lose their future business—you want to do everything you can to encourage repeat purchases and brand loyalty.
That’s where retention marketing comes in.
Here are a few benefits you can expect to see from retention marketing:
- Cheaper marketing: It’s hard to find new leads. But if your previous customer has already given you their email address or phone number, remarketing and retaining their business is easy—more than half the work has been done.
- Long-term customer relationships: 77% of consumers say they’ve maintained relationships with brands for at least 10 years. Think about it. Do you wear the same brand of shoes you wore in high school?
- Higher returns: 61% of consumers go out of their way to buy from brands they’re loyal to, and 60% admit to making more frequent purchases from them.
- Word-of-mouth marketing: 75% of loyal customers will market your business for you by recommending your products to their friends and family.
3 retention marketing strategies
Retention marketing strategies run the gamut. These could be as complex as advanced retargeting tactics or as simple as in-store punch cards—and neither is necessarily more effective than the other.
That said, you don’t have the bandwidth to run every possible strategy, so you’ll need to review your options and narrow it down to a handful. Don’t worry—we’re here to help. Below, we’ll share a few of our favorite customer retention strategies and what makes them special.
1. Email marketing automation and newsletters
Email marketing lets you learn from your previous marketing campaigns, fine-tune your audience, and hone your messaging. Then, you can use customer data to send the right message to the right customer at the right time. For example, you can learn what kind of emails your customers tend to open (and not open) and send them a discount when they’re most likely to purchase.
Segmentation is key. As you start to send more and more retention email campaigns and your email list starts to grow, keep an eye on your list segments or what new segments you can create. You may even consider creating a segment for your most engaged recipients and sending them other campaigns with additional content or promotions.
Just keep an eye on your engagement rates. When you see a dip, you’re probably going a little too heavy on the messaging—so back off a bit.
Check out Twilio SendGrid’s segmentation strategies best practice guide for more tips on email list segmentation.
2. Loyalty programs
Loyalty programs reward your customers for staying true and buying from you. They might be able to shop at a dozen different coffee shops in town, but they choose to come to yours every day—so it makes sense that you’d give them a free drink for every 10 they buy.
Customer loyalty programs show your buyers that you care. And when they notice that you notice they frequent your shop or ecommerce store, then relationships begin to move past business and buyer to brand and friend—that’s when you’ve struck gold.
You can also consider adding a referral program by rewarding your customers when they send you customers. It’s like a commission for your sales teams, so why not give your customers a little something something when they help you out?
In short, think of ways to offer your customers rewards for being loyal. It doesn’t have to be traditional punch cards or even birthday discounts—it could be surprise swag or exclusive access. Imagine hidden shopping items that only long-time buyers could purchase. Cool, right?
3. Multichannel communication options
Don’t lock your customers into communicating with you on your terms—give them options to chat where they’re most comfortable. For example, you might want to include contact options on:
- Facebook Messenger
These channels allow for back-and-forth conversations. That could be customer support-related messaging or a casual chat about which jeans might go with the floral print your customer is considering—or which solution will work best with their current tech stack.
Need help consolidating, tracking, and managing all these conversations? Check out Twilio Flex, the world’s most flexible contact center platform. It’ll get the job done. We promise.
Retention marketing best practices to keep in mind
Even the best customer retention strategies will fail if you don’t get the basics right. Here are a few best practices to keep in mind before you start shooting off email marketing campaigns and push notifications:
- Honor opt-ins: Messaging any customer who hasn’t given you explicit consent to communicate with them is a big no-no. Just because your buyer entered their email address to complete a purchase doesn’t mean you can start blasting them with emails—they need to opt in first.
- Respect breakups: Breakups happen. It sucks, but it happens. Sometimes, customers will choose another brand over yours despite your best marketing efforts—and that’s OK. That doesn’t mean you’ve done something wrong. It just means they found a better fit elsewhere. Give them their space, remove them from your email lists (if they’ve unengaged), and let time (potentially) do the healing.
- Experiment: Your first idea might not be your best idea, but you won’t know that until you test new things out. Experiment with new retention marketing channels and tactics to see if one resonates better with your audience. Does it engage customers? If so, scale it. If it doesn’t, move on to the next idea.
- Monitor: With the right software, systems, and processes, you can track your retention marketing performance. If customer churn decreases, you want to know what worked to replicate success. Identify the metrics you care most about (customer lifetime value, repeat purchases, referrals, etc.) and monitor them closely.
- Incentivize: Just because you build it does not mean they’ll come. Find incentives that deliver real value to your customers to entice them to remain loyal to your brand. When you focus on customer satisfaction (and not sales), you’ll usually head in the right direction.
Real-world retention marketing examples (non pushy)
Ready to see customer retention marketing in action? Here are a few real-world examples you’ve probably already encountered—and all of them are exceptionally non pushy:
1. Xbox’s achievement points
Xbox does an amazing job of keeping its community coming back for more. Play a game, do something cool, earn points, and redeem your points for discounts on more games. Repeat.
Everything from achievements to friends lists to notifications entices users to log in and rack up hours playing games. It’s a great user experience with a never-ending cycle that keeps the community challenged and a great moneymaker for Microsoft.
That’s retention marketing done right—and it probably doesn’t even feel like “marketing.”
2. Harry’s razors
Harry’s sells razors, but the way it sells them is a retention marketing tactic. The brand uses a subscription-box model to entice customers to sign up for regular blade replacements.
Yes, a good shave is a good shave. But if a customer likes the purchase, they’ll keep the razors coming—possibly forever.
Instead of using email marketing campaigns and retargeting to get every first-time buyer to come back, Harry’s makes them a repeat customer from the get-go. How? With huge discounts on subscription deals. Sure, Harry’s loses a cut from every sale because of the discount, but it’s guaranteed a return buyer by doing so.
3. Old Navy’s Super Cash
Old Navy’s Super Cash is genius. For every $25 you spend, you’ll earn $10 in Super Cash—but you’ll have to wait to use it at a later date. And if you’ve just spent $100 and earned $40 in Super Cash, you don’t want to lose it, right? That’d be wasteful. So you should probably go back in a couple of weeks and spend another $100. And so the cycle continues.
This retention marketing strategy keeps customers coming back for more and more. They don’t want to shop somewhere else because this Super Cash is “use it or lose it”—and nobody wants to lose anything.
Personalize your retention marketing with Segment
Are you jazzed about getting started with retention marketing? Right on! Now, you’re probably wondering what to do next.
Well, once you’ve narrowed down your channels, strategies, and tactics, you’ll need data to back it up. Sure, you won’t need much if you’re just using punch cards. However, if you want a holistic view of your customers across all platforms and channels, you’ll need a customer data platform.
Fortunately, we have just the thing: Segment.
Segment helps collect, clean, and use your customer data with a single application programming interface. With insights like this, you can activate retention marketing with the right customers at the right time with the right message on the right channel.