Are you leaving money on the table?
Many organizations are obsessed with getting new purchases and new business. They push marketing to generate leads, they push sales to close leads, and they justify any success with how many new sales and new customers they have coming in.
Once they close a sale, they immediately look for the next sale they can close and they forget about their customer until – perhaps – it is time for that customer to renew a membership, for example.
Doing this ignores the potential revenue generated by loyal, life-long customers. It also leaves the money on the table for your competition to gobble up – assuming they have any customer nurturing in place.
It Costs Less to Retain Customers – and It’s More Profitable
The stats are pretty revealing:
- According to Bain & Company, it costs six to seven times MORE to acquire a new customer than to retain an existing one.
- In addition to current customers being far cheaper to retain, they are also more likely to buy again – the
- The probability of selling to a brand new prospect is a 10% to 30% conversion rate.
- The probability of converting an existing customer is staggering 60-70% according to Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance
- Gartner states that 80% of your future profits will come from just 20% of your existing customers.
- Bain & Company also highlights that increasing customer retention rates by 5% will increase profits between 25% and 95%.
In spite of the significantly better payoff of customer retention efforts, 55% of marketing dollars are spent focusing solely on acquiring new customers (McKinsey & Company).
4 Types of Customer Nurturing
On-boarding campaigns essentially introduce the customer to your products, services, or company after they make their first purchase.
You may want to do this, for example, with someone who purchased a new software package.
A simple on-boarding campaign might consist of five emails, first welcoming, then moving into an overview of the software, more advanced features, and finally inviting the customer to join the online support community.
Your goal with an on-boarding campaign is to make the customer feel like they’re a part of your company, product, and community. This engages, retains, and can make them happy.
2. Renewal Campaign
Renewal campaigns are perfect for reducing costs and increasing revenue.
This type of campaign suits companies that sell products that last through a particular amount of time and must be renewed. This could include:
- Cloud software, for example, which can be purchased on a month-to-month, six-months, one year, and five years basis.
- Insurance companies with contracts that need yearly renewals.
- A car maintenance contract that expires after three years or a warranty on an appliance.
The list goes on – if your company sells anything that requires renewal, this type of nurturing campaign fits in with your goals.
The thing about effective renewal campaigns is that they should begin three to six months before the actual renewal date. Encourage early renewals with reduced prices or other incentives.
You don’t want to wait until the last minute to communicate with the customer. Then it seems that instead of being helpful – and ensuring your customers are getting enough out of the product/service in order to renew – you are only interested in talking to them when it’s time for them to pay.
3. Product Education & Engagement
This type of campaign is similar to on-boarding. However, whereas on-boarding is geared toward familiarizing customers with the company and product/service, an education and engagement campaign is much more targeted.
This is a series of emails that specifically educate on a certain subject. For example, a five-email series on the proper steps to maintain your new hot tub or get the most out of your Microsoft Surface or how to ensure your new deck has a longer life through proper maintenance.
Customers always like to know tips and tricks, as well as what’s new.
4. Customer Survey
With this type of campaign, you are essentially taking the time to survey your customers and find out if they’re happy or not.
The rule of thumb is that any survey is better than no survey. Even if the bulk of your list simply deletes the survey email, they will usually enjoy the thought that your company cares enough to send them a survey and that you value their opinion and state of mind regarding your products and services. It’s a kind of “thought that counts” situation.
A Net Promoter Score survey can measure customer loyalty and identify potential areas of improvement for your business.
The numbers speak for themselves: customer retention and nurturing not only costs less, it’s more profitable. Always turning your attention to new leads and new sales costs more money and doesn’t have as high of a return rate.
By carefully nurturing your customers and keeping your brand integrated with their lives, they can become loyal, life-long purchasers. After all, if they bought from you once, they’re more likely to buy from you again than someone who has just heard about you.
If you aren’t yet using nurture campaigns, now is a good time to start them. If you already use them as part of your marketing strategy, remember that they need to evolve with your market and now is probably a great time for a message and content review.