Customer Retention and Acquisition

• Customer retention retains repeat customers and increases the lifetime profitability of each customer.
• Customer churn affects customer retention when customers stop using a business.
• A strong customer retention strategy maintains relationships and creates value for customers, helping them achieve their goals when purchasing a product or service.
• A customer loyalty program exemplifies a customer retention strategy.
• Acquisition involves the steps taken to gain new customers, which should be measurable and repeatable.
• Facebook ads, SEO, and affiliate marketing are acquisition strategy examples.
• Acquisition strategies create a customer base, while retention strategies build ongoing relationships.

The Importance of Customer Retention

• Customer retention leads to affordability, return on investment, loyalty, and referrals.
• It costs ~10 for a repeat purchase, versus ~50 to acquire a new customer.
• Acquiring a new customer can cost 5 to 25 times more than retaining an existing one.
• Loyal customers spend more money because they understand the value of products.
• Customer retention encourages customer acquisition through referrals from satisfied customers.

Customer Retention Focus

• Businesses with high ticket items that need to be bought frequently benefit the most from customer retention.
• Virtually every business can profit from more loyal customers and repeat sales.
• When starting out, focus solely on acquiring new customers, then shift focus to retention once you gain traction.
• Reward early customers.
• As you get consistent sales, split time 70/30 between nurturing existing customers and finding new ones.
• Strive for a 50/50 split between acquisition and retention once well-established.

Strategies to Boost Customer Retention

• Improving customer support pre-, mid-, and post-sale will boost customer retention.
• Resolving a customer complaint effectively can lead to a loyal repeat customer.
• Customer satisfaction shoots up if a mistake is made and corrected effectively.
• Live chat availability can turn a customer question into a sale or a complaint into a resolution.

Customer Appreciation

• Sending a small gift to top customers is a great way to surprise.
• Giving an unexpected gift aligns with the law of reciprocity: responding to a positive action with another.
• Handwritten thank you notes give a personalized touch and can create loyal customers for life.

Email Marketing

• Emails can continue a relationship with customers, making them one of the highest converting tools.
• Ensuring each email adds value will help avoid annoying customers.
• Follow-up and personalized emails ask about customers' satisfaction.
• Asking customers to leave a formal product review can help boost sales.
• Sending well-timed emails based on a product's lifespan will re-engage customers.
• Offering a discount or credit will re-engage customers who haven't purchased in a while.

Loyalty Programs

• Loyalty programs motivate customers to earn rewards, increasing purchase frequency.
• Loyalty programs create two-way value: customers get more value, and stores get repeat business.
• Loyalty programs fall into four categories: points, tiers, social media, and paid programs.
• Giving customers an instant reward will encourage them to sign up for loyalty programs.

Measuring Customer Retention

• Returning customer rate and average order value can measure customer retention.

Calculating Key Metrics

• Repeat customer rate measures how well a retention strategy is working.
• To calculate repeat customer rate: (Number of customers with >1 purchase) / (Number of unique customers) only within the last year.
• Average order value is the average amount a customer spends per transaction.
• To calculate average order value: (Yearly revenue) / (Number of orders processed).
• Customer value is the ultimate goal of retention marketing, in order to understand how much each customer is worth.
• To calculate customer value: Purchase frequency x Average order value.