The Magic Sauce: Building a Long-Term Customer Retention Strategy With Advertising
In marketing, sometimes paid media can get lost in the shuffle of a customer retention strategy, and is only thought of as an effective tool for new customer acquisition. While customer acquisition is a key piece of any business, businesses create a foundation for sustainable growth by retaining their loyal customers. When we think of customer retention as a part of an advertising strategy, some marketers think of only retargeting past purchasers with the same messaging they’re using for their top-of-funnel targeting and calling it a day. How can we go beyond that, and what’s the magic sauce to doing it?
Customer Retention: Why Does It Matter?
There are a lot of marketing factors that go into a repeat purchase. Long-term success in brand building doesn’t just hinge on new customer acquisition, it’s also largely dependent on building and prioritizing relationships with existing customers. Here’s why it matters for your paid media strategy:
Cost-effectiveness: Acquiring new customers is typically more expensive than retaining existing ones. By keeping your current customers satisfied and engaged, you can save on marketing and sales costs.
Stability and Predictability: A strong base of loyal customers provides a steady stream of revenue, which can help stabilize your business and make it more predictable. This is especially important during economic downturns or when facing unforeseen challenges.
Word-of-mouth Marketing: Satisfied customers are more likely to recommend your products or services to others. Positive word-of-mouth can be incredibly powerful and cost-effective in attracting new customers.
Higher Lifetime Value: Loyal customers tend to spend more over their lifetime with your business. By nurturing these relationships, you can increase the average lifetime value of each customer, boosting your overall revenue.
Feedback and Improvement: Loyal customers are often more willing to provide feedback and suggestions for improvement. This feedback can be invaluable in refining your products or services to better meet the needs and preferences of your target audience.
Competitive Advantage: In competitive markets, superior customer service and retention efforts can differentiate your business. This can help you maintain a stronger market position and even command premium prices for your offerings.
Brand Loyalty: Building a base of loyal customers fosters brand loyalty, which can act as a barrier to entry for competitors. When customers are emotionally connected to your brand, they are less likely to switch to competitors offering similar products or services.
So, What’s The Magic Sauce?
While some marketers think of retention marketing as best addressed through only email and SMS, it is a multi-channel effort that requires a long-term strategy. Learn how to build a long-term retention strategy in your advertising, overcome challenges to retaining customers through data, and connect to existing customers through your messaging.
Build A Picture of the Customer Journey
You can’t retain your customers if you don’t have a view of the customer lifecycle. You’ll need to work cross-functionally to address customer needs and concerns in your advertising to ensure retention.
Utilize Customer Data to Understand Their Experience
Working with social media managers and customer support teams to look at supporting data can greatly inform advertising messaging to existing customers. Don’t let customer concerns go unaddressed. When advertising to existing customers, utilizing this data to inform your messaging can ensure that the customer feels valued. One example is incorporating customer feedback on your subscription model into your advertising. Along with looking at feedback from customers who canceled their subscriptions, identifying purchase motivations from your existing customers on why they signed up for the subscription in the first place informs paid media strategy to advertise to lapsed subscribers. This customer feedback can answer questions such as:
Why are we having subscriber churn?
Are issues customers are having with their subscriptions being addressed?
Are we advertising one kind of experience with a product or subscription that wildly differs from what the customer expected and what their experience turned out to be?
Does our messaging and creative reflect the data we are seeing?
Examine The Customer Lifecycle Across Multiple Paid Channels
Different advertising channels drive different revenue and purchase results, so why should your approach across all channels be the same for customer retention? Your advertising messaging on for SEM may look different than paid social for existing customers. Some channels may not be the best at driving revenue by targeting existing customers and may serve better as a top of funnel branding tactic.
Addressing Customer Feedback Through Advertising
Dropping a new collection that is directly relevant to customer feedback data is a great way to connect with customers, as seen here with Kendra Scott and Teva.
2. Know Who Your Customers Are
Some brands aiming to drive online purchases sometimes start out with retargeting past purchasers, which can be very broad. While this is a great starting point, there is a missed opportunity to go deeper with customer data segmentation. I sometimes see brands sitting on a treasure trove of data and they have no idea what to do with it, or worse, don’t have a designated role to look at potential segments. Once we’ve built a picture of the customer experience, we need to look at who our customers are, and understand what makes them tick.
Buyer Personas: The Importance of Customer Segmentation
Go beyond basic retargeting by creating buyer personas. Creating buyer personas by categorizing your customers by their purchases can have endless possibilities. For example, if a beauty brand sells eyeshadows, skincare, and blush, the customers who purchase those respective products may have different attributes and purchase motivations. Using a CRM list of specific eyeshadow purchasers with my next eyeshadow release, and aligning this testing to an email deployment announcing this eyeshadow to the same category of purchasers, is a great example of microtargeting to strategically increase Customer LTV among an existing customer base.
Analyzing customer data to create categorical segments of purchases is a must in retention efforts. If I sell outdoor products, but a customer is always purchasing patio furniture, but not gardening tools, then those are two completely different customer segments with different messaging and purchase motivations. Bottom line: create and strategize around your different buyer personas. Figure out what their motivations are, and what they care about when they purchase their products.
Use Your Data to Inform the Experience Across the Customer Journey
Once you’ve created buyer personas, that doesn’t mean you’re shackled to just retargeting them with the same product categories over and over again. Utilize your data from each persona to create a cross-selling strategy. Are your patio furniture buyers from the last 30 days? Remarketing them with patio accessories to go along with their new patio furniture might be a great test. Testing different categories for cross-selling should be a part of your long-term customer retention strategy.
Cross-Selling Ad Examples
These Sephora ads are great examples of retargeting with a specific intention of cross-selling different products to existing customers. The “What You Need Next” messaging in the second ad on the right, with the headline “File Under NEED” creates urgency for users.
3. Personalize Your Messaging
Personalized messaging helps customers feel appreciated and valued, and is more likely to lead to long-term brand loyalty. With tailored messaging and offers, a customer can feel like their purchase experience was made for them. Now that you’ve mapped out your buyer personas, and gotten a clear view of the customer journey across different paid channels, there are several ways you can create personalized experiences through advertising to your existing customers.
Create and Test Incentivized Offers
Incentivized offers are an effective tool in your advertising strategy for customer retention, and testing different types of incentivized offers is ideal. For example, giving loyal customers early access to sales can create momentum around a new product launch or release. Another effective tool is utilizing loyalty points or rewards, offering 2x the loyalty points or rewards for customers that purchase with your ad, giving them a unique discount code in the advertising messaging.
Creating a sense of urgency by making these deal and promotions limited-time that expire soon can be effective. These are just a few examples, and the specific offer you create will depend on your target audience, industry, and marketing objectives.
Don’t Forget the Importance of Timing
How often are you retargeting your customers who just made a purchase? Utilizing your data from your buyer personas, think about how often your customers are actually making a purchase when you’re crafting your advertising messaging.
Incentivized Offer Examples
This Crate and Barrel ad is a great example of creating urgency around a limited time reward that the customer already has. The “You’ve earned this” copy makes the customer feel deserving of their discount.
Similarly, this Ulta ad gives rewards members 3x rewards points on select hair products.
Looking to Craft Your Customer Retention Advertising Strategy?
Customer retention lies at the heart of successful advertising strategies. By prioritizing the retention of existing customers, businesses can unlock cost savings, increase brand loyalty, and drive higher customer LTV. Crafting a robust retention strategy involves understanding your audience, delivering exceptional customer experiences, and leveraging the right channels and incentives to keep customers engaged.
As you embark on your journey to enhance customer retention, make sure every effort is geared towards delighting and retaining your most valuable asset – your customers. Contact us today to learn more about how Lyra Digital can help you craft a robust long-term customer retention strategy.
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