If you randomly ask people on the street what Marketing is all about and what it’s supposed to do for business, most will say, “to bring in more customers” or “to increase sales”.
They are correct. Businesses hire Marketers to come up with strategies that will generate revenues by creating new market opportunities for their products and services.
However, client acquisition is just one objective of marketing. The other, market or client retention, is likewise important. In fact, there is an argument to be made that client retention is more important than new client acquisition.
There is a popular saying in the sales profession: “The sale begins when the client says, ‘No’”. The implication is that when a client or a prospect rejects your proposal, the sales agent should begin the real work of selling the value of the product or service. Thus, the marketing team will shift gears and take its campaign strategy to another level.
Let’s assume in our example that the agent was in real estate. The client he met just declined his offer to purchase a condominium unit at pre-selling prices. Marketing proceeds to send him invitations for private viewings through email. Virtual assistants frequently reach out to touch base and extend an invitation for a VIP cocktail party to launch the new project.
If the client attends, the sales agent resumes his offers and extends a special discounted price with friendly payment terms on a limited time- only basis. The client sees the value and agrees to purchase the unit. Within a few weeks, payment is exchanged; contracts are signed, title turned over, done deal.
What then? What now? Is the sale really over?
The real estate agency has pocketed its commission. The agent has been given his share. Should the agency forget all about the new client and focus on finding the next one?
The answers are “No” and “Yes”.
No, the agency should not forget all about the client who just acquired the property. And yes, the agency should continue to look for new buyers. If the agency plays its cards right and maintains its relationship with the client, it could have a valuable component of its revenue- generating campaign.
Client retention is a marketing strategy that could potentially open new streams of revenues for businesses: referrals.
What Is The Difference Between Client Retention And Client Acquisition?
In our previous example, when the agency signed up the new client, their marketing efforts resulted in client acquisition. This is the primary objective of companies. The more new clients they acquire, the wider they can extend their reach and control of the market.
The greater focus on market expansion has made marketers shift more resources toward new client acquisition strategies. The competition can be fierce. If you don’t act fast enough, your competitor could sign up the client that you failed to entice with your products and services.
However, doesn’t the same hold true for your existing clients? If you don’t take care of your existing clients, you could lose them to your competitors. Client retention strategies are focused on building loyalty and patronage. You want your clients to remain with you. You want them to make repeat purchases.
What if another real estate agent made a new pitch to your existing client for a new development project? While your agents were busy presenting units to potential clients, your competitor has been sending feelers to your client.
During the launch of the project, you see your client with another realtor. They are smiling. They have just shaken hands. The agent takes him to a private room to sign a new sales contract.
All you can do is watch. In your head you see dollars sprout wings and fly off into the sunset. The client was yours. At least you thought he was until he wasn’t. You could only blame yourself for not focusing on client retention strategies.
The Benefits Of Having Client Retention Marketing Strategies
Focusing on client retention marketing strategies is the smart way of creating revenue for your business:
- The fact that they have already made the purchase already qualifies them as capable buyers. They have the money to pay for your products and services.
- If relationships are based on trust, then you already have one with your existing client. Why? Because he/she already chose you for the initial purchase instead of your competitor. Apparently, there was something about you; your presentation or your company that made him/her choose you over others.
- As a client, the purchase has validated the most important component of a sale: Establishing a need for the product or service.
- If you have excellent client retention strategies, you can open new streams of revenues for your business through client referrals. A client who is satisfied with your products and service will not hesitate to recommend you to his/her network.
The cost of client retention marketing strategies is much lower than new client creation marketing strategies. Why? Because the client already knows about your business; its products and services.
If you want statistical data to support the importance of having client retention marketing strategies for your business, here are some interesting figures from a study conducted by Investp:
- Client acquisition strategies cost five times more than client retention strategies.
- 76% of companies surveyed view client loyalty as important for business success.
- The probability of selling a product or service to an existing client is 60% to 70%.
- The probability of selling a product or service to a new client is 5% to 20%.
- Existing clients are 50% more likely to purchase new products.
- New clients are only 31% more likely to purchase new products.
- Increasing client retention by 5% can increase profits by 25% to 95%.
Now that you have read how important it is to include marketing strategies designed to retain clients, the question is:
How can you retain clients for your business? What strategies can you implement to encourage greater brand or business loyalty from your existing clients?
The Best Marketing Strategies For Client Retention
What do you call a person you just met? The answer is: An acquaintance. Now, what would you the acquaintance after you’ve touched base a few more times after the first meeting? The answer is: A friend.
Friendship is a stronger bond than what you have with an acquaintance. It is a “relationship” in the true sense. The key to a su ccessful client retention marketing campaign is to utilize strategies that foster relationship-building.
These are the processes, techniques, and tactics that allow you to touch base frequently and send more personalized content.
According to the same study by Invesp, based on marketers’ responses, the best marketing strategies for client retention are as follows:
- Email Marketing – 56%
- Social Media Marketing – 37%
- Content Marketing – 32%
- Referral Marketing – 26%
- Search Engine Optimization – 13%
- Display Advertising – 12%
- Mobile Advertising – 8%
- Digital Video Advertising – 7%
- Affiliate Marketing – 6%
- Paid Search – 4%
Another study done by Emarsys showed similar results. Email marketing was preferred by 80% of the marketers while social media marketing was in second place at 44%.
The results are not surprising. With email marketing, you already have one foot inside the door. The client has subscribed to your content. It could be that the client likes your business and/or your type of content. In fact, email marketing has a higher open rate and click-through-rate compared to social media marketing.
Social media marketing is an ideal channel to encourage client retention. It is a good idea to ask your new client to follow your business on social media. This way, he/she will receive your content on a regular basis. You just need to make sure you can consistently create great and compelling content.
Which types of content should you send to your clients?
It will be easier for you to create content for existing clients than prospects. They have already purchased from your company. You should have a clear idea of what they want and need.
If you noticed, in the Invesp survey, content marketing is not far-off from social media marketing. You should integrate these strategies by creating great content and use email and social media as distribution channels.
The keyword as we’ve stated throughout is to “personalize” or customize content. Make sure it is useful, informative, and relevant to their wants and needs.
The life-cycle of the sales transaction does not end once money is exchanged for a product or service. If you want to sustain long-term growth, you should work to maintain the client relationship after the sales transaction.
You may also wish to employ high-touch marketing tactics such as phone surveys. Companies hire virtual assistants to frequently contact existing clients and discuss new promotions or projects.
This is an effective way of adding premium value to the client-business relationship. The feedback mechanism is more effective when it uses human interaction instead of digital channels.
Regardless of the approach, do not overlook the value of incorporating client retention strategies in your marketing campaign. After all, existing clients are valuable assets. Instead of taking them for granted, you should take good care of them.