Retention Marketing – what is it, and why is it important right now?

Retention marketing isn’t new, it’s been around for a really long time. As a business owner, you probably have been practicing it for a while without really knowing it.

Time to read: 4 mins


In recent times it has become a bit trendy in e-commerce businesses strategies, but in saying that it is something all businesses should give some attention to.

We all know the old adage that 80% of your business comes from 20% of your customers. Retention marketing is basically about giving some applied attention to that important 20%.

It’s all about maintaining and enhancing customer relationships so that engaged and loyal customers continue to return to do business with you. Retention marketing requires a conscious shift from acquisition marketing to focusing on the profitability of those you already have.

By giving this some focus, your CLV (customer lifetime value) can increase  - leading to long term profitability, rather than short term gains.


Retention marketing vs. Acquisition marketing what’s the difference?


These two marketing methodologies can be used together. Acquisition does as it says, and helps you acquire new customers, and retention helps you hold on to the ones you already have.

Deciding on what you do, and how, relies on a number of factors:

  • your industry/sector
  • what you do/sell and how (e-commerce, bricks and mortar, services etc.)
  • the margins you have
  • marketing budget
  • and most importantly, the life stage of your business (e.g. start-up, growth phase, established, well established).

Life stage is the first determining factor, as if you are new to business, you will need to focus more on acquisition, however if you’ve been around a while and you have an established customer base, and you have qualified data to support your understanding of your customers, you can work out what percentage of your marketing budget to split out to focus on retention.

As a point of reference, global inbound marketing giant Hubspot offers the following percentages to their client base as a guideline, showing what the marketing budget split could be, based on business life stage and sales volume.

Source: Hubspot


These figures are of course sourced from their client data. You would need to look into your measurement metrics and supporting data to determine what percentage would work best for you based on the aforementioned factors.


So why start retention marketing now?


With everything that’s happening here and globally we’ve seen New Zealanders respond quite passionately to the messaging of shop local, buy NZ made etc. Intentional spending practices are very clear to see; as a nation we’re being more considered and we’re thinking about our purchases and who we spend with.  Chambers of Commerce and Regional Development Agencies around NZ are driving the ‘shop local’ messaging and passionate individuals are setting up websites like SOS and Facebook Groups like ‘Chooice’ to encourage us all to be more considered with our spending and investments.

As a business owner, whether B2B or B2C, you want to ensure that your customers have you ‘top of mind’ in the market in which you operate. Brand strength and consistency of service has never been more important. You want your existing client base to feel like they know you, you care about having their business and that it’s not taken for granted. You need your entire team to be working towards your overarching business mission and vision, and understand how you expect your customers to be treated/interacted with.

Global publications Forbes and the Harvard Business Review studies show that it’s a lot less expensive to keep a current customer than it is to acquire a new one. The cost of acquiring a new customer can range from 5-25x more expensive than holding on to an existing one.

So what can you do to retain customers?


One of the main reasons clients and customers do not come back is simply a lack of follow up from the providing business and often a ‘feeling’ that they aren't considered important.

Maintaining some form of communication with them post-purchase/service provision is one of the easiest forms of retention marketing and often low-cost/nil cost except time.

In practice, this could look like: 

  • email / e-newsletter
  • text message
  • automated booking form
  • phone call
  • letter
  • Facebook Messenger check-in
  • Feedback form / survey
  • Customer loyalty program
  • Industry app/digital tool communication
  • Discount offer
  • Invitation to an event (webinar, seminar, function, exclusive customer activity)
  • Linked In connection (B2B)
  • Targeted digital adverting (custom audience)
  • Improving customer support (e.g. helplines, web bots)

Or something else unique to your business or industry. Knowing what will work best for your business, and your customers will be unique to you and your customer base. You should know them best.

Your current client/customer base is the backbone of your business. Clients and customers already know you, your brand, your products, people or services. Improving their experiences and interpersonal communications with you can maximise lifetime customer/client profitability.

While there are many variables within this marketing practice, at this point in NZ’s business environment, ensuring you are holding on to your existing clients is worth due consideration.  

DISCLAIMER: No liability is assumed by Baker Tilly Staples Rodway for any losses suffered by any person relying directly or indirectly upon any article within this website. It is recommended that you consult your advisor before acting on this information.

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