THE RETENTION PLAYBOOK
The New Rules Of Retaining Users In The Pandemic
5 points that explain why user retention should play the central role in your marketing strategy
We are living in one of the crucial times in history, which has brought a major impact on consumer shopping behavior.
I know there are tons of marketers like me out there who are juxtaposed between engaging and retaining the customers in the middle of a global pandemic. This article is an honest attempt at the importance of customer retention and why is it more important than ever, now.
Frankly, no fancy offers will entice the consumers right now.
Countries around the world are in lockdown or heading towards it. Millions of people are quarantined in their homes since the Coronavirus first broke out in China.
For Marketers like us who were on track with their year-long plan at the beginning of 2020, things really went haywire overnight.
The entire marketing team's budgets have been slashed by 90%. COVID19 has been especially unkind to a few industry verticals, especially those in the Travel & OTA space.
The overall demand for goods dipped by 30% in China with the ongoing COVID-19 crisis
Still, there are businesses in the Ed-tech and OTT space that have to cater to huge demand with the immediate turn of events. Schools are shut, which has led to widespread adoption of ed-tech implements in India and abroad. The same goes for the OTT space, which is having a winning streak, as millions of new users are flocking online to consume more content.
Our marketing strategy had to be modified quickly, keeping the reduced budgets and consumer relevance in mind.
As a result of the ongoing pandemic, the economy is down by several points.
It is not business as usual for most of the direct-to-consumer services. The overall demand for goods dipped by 30% in China with the ongoing COVID-19 crisis, which means that new user acquisition will purely be a cash consuming game.
Another important factor to consider here is, it is going to be difficult to keep businesses afloat pertaining to the revenue dips. Hence it’s crucial to keep the user base intact and ensure that they don’t move to the competition.
HubSpot says “The best companies build mutually-beneficial relationships with customers that equate to a higher customer lifetime value — meaning, these customers are going to stick around for a while”. In the coming times, marketing strategies for most of the consumer businesses will focus mostly on retaining the existing consumers.
Hence brands like Cure.fit (Indian health & fitness startup) whose business is real-estate heavy, is conducting free live classes for everyone who is interested to take part.
Whatever marketers do right now is going to have a long-term impact on consumer perception which will, in turn, affect brand loyalty & user retention.
Every consumer brand’s marketing strategy right now will determine the fate of its perceived value in customer's eyes in the time to come. The following are the reasons why every marketing hustle boils down to retaining a customer on the platform.
#1 → A 5% increase in customer retention is capable to trigger a 25% increase in profits, says Bain & Company.
Retention marketing ensures that the user is engaged and completely vested in the brand. It’s important to make it work in tandem with your acquisition and engagement strategy. Once a user registers on your platform, it becomes your responsibility to make them stick and carry repeat purchases.
Do not assume that they already know all the features of your product, you need to handhold them at first.
By having a smooth onboarding process you are valuing the customer’s time, and in return, they would certainly like to spend the extra time by jumping right on to the product browsing page. Do not assume that they already know all the features of your product, you need to handhold them at first. Equipping them with information will help them to use your product effectively.
Brand in focus: Zoom
Here’s an example of Zoom, the world’s most favorite video-conferencing tool right now. Zoom is making it simple for people to use it easily by giving them the call-to-action on the landing page itself, the sign-in information comes later.
Key Takeaway: Try to keep your value offering on the first page. It will help reduce the overall complexity of skimming through web-pages and save a user’s time.
#2 → Highly engaged users are more likely to return to the brand and help you with word of mouth marketing.
According to this report, there is a high chance of losing 90% of DAU (Daily Active Users) by the time we cross the day 7 mark. But do we really need to measure the daily traffic metrics more than the actual ‘purchase’ or ‘subscribe’ metrics? Is it not important to try and engage the 90% of users who are churning and bring them to the revenue side?
You have acquired a significant understanding of the customer since they last visited you, and now is the time to put that data into action.
A significant part of the customer experience consists of customer engagement. Hubspot says, “Customer engagement comes from ongoing interactions between company and customer”. Timely communication with the customer will boost the relationship between you and them without overdoing it. You have acquired a significant understanding of the customer since they last visited you, and now is the time to put that data into action.
Brand in focus: Flipkart
Here is an example of Flipkart, an Indian e-commerce company whose deliveries have been halted due to the national lockdown. They are sending out a daily-activity list to their users who have been quarantined in their homes.
Key Takeaway: Communicating with the users in these gloomy times surely is a way to cheer them up and stay in touch which signifies that you are there for them.
#3 → Businesses that personalize customer experiences receive 19% more sales compared to those who don’t.
In this age of information abundance and ease of access, consumers don’t like to be generalized. They need to know that they as an individual matter to you. Personalized messaging helps you do just that. Brands have enough user data which can be used collectively to create ‘Hyper-Personalized’ experiences.
80% of consumers are more likely to make a purchase when brands offer personalized experiences
An example of this is retargeting messages of the products which the user was browsing during their visit. Similarly, you can leverage notifications and email personalization based on their interests. Amazon is doing it right by sending me recommendations based on my browsing history.
Brand in focus: Amazon
Amazon sends recommendations to the customers based on their product browsing history and past purchases.
Key takeaway: From this example, we can certainly judge that “Personalized Marketing” is not just limited to advertising, if done right it can create great opportunities for upsells.
Another good reason to pursue personalization is that it saves time in helping the customer navigate through multiple journeys and land at the bottom of the funnel, don’t believe me yet? A fresh study by Epsilon Group revealed that 80% of consumers are more likely to make a purchase when brands offer personalized experiences. Findings from the transactional analysis indicate that consumers who believe personalized experiences are very appealing are ten times more likely to be a brand’s most valuable customer — those that are expected to make more than 15 transactions in one year.
#4 → A loyal customer spends 30x more than a normal customer
Customer Lifetime Value (CLV) is defined in terms of monetary value spent on a particular brand in the user’s entire lifetime. CLV helps a brand identify the cost of their acquisition efforts, and how much an average customer is going to spend in their lifetime. This metric is a critical aspect of long-term growth and profitability, as your most valuable customers are going to be the one cohort that you want to identify early on.
Here is a graph of consumer spends by RJ Metrics Study which shows that a loyal customer spends 30x more than the normal ones. Isn’t that great? Another study by LoyaltyOne found that customer loyalty and relationship management together accounts for $126 billion out of $323 billion of the overall customer ecosystem.
#5 → Creating an army of evangelists
Another significant benefit of building a loyal customer ecosystem is the free brand advocacy that they are going to do for you. They are not only helpful in establishing a connection with the users but they are 20 percent more influential than advertising.
On average, a one-star increase on Yelp leads to a 5 to 9% increase in a business’s revenue. At the same time, a single negative review can cost a business about 30 customers.
One of the most straightforward examples of brand advocacy is online reviews. The ideal way to establish brand advocacy is by gaining a rapport with your potential brand advocates, finding out what motivates them, and making it easy for them to share their opinion with other customers. Reviews also help in analyzing the data points which consumers used to reach a buying decision. The financial strain on creating brand advocates is pretty low compared to what you are gaining in return.
Who knows the importance of brand advocacy than Yelp, whose core value proposition is user-generated reviews. On average, a one-star increase on Yelp leads to a 5 to 9% increase in a business’s revenue. At the same time, a single negative review can cost a business about 30 customers.
Brand in focus: Wakefit
Wakefit is an Indian mattress company that sells mattresses on all the major e-commerce sites. Now when a customer is searching for a product on e-commerce platforms, after their preferable brand, they consider the user ratings of the product. This factor has been used effectively by the brand on its homepage itself.
Key Takeaway: If you are selling a product, don’t forget to promote user reviews. This will help you to build trust and it also helps the user to navigate to the other features of the product.
In a nutshell, retention should be the end goal of any marketing campaign,right now, here’s why:
Retention leads to:
- Higher revenue
- Lower cost of acquisition
- More virality
- Good returns on the cost of acquisition
- Increased customer lifetime value
The key to user retention is tending to the needs of the customers and not disappointing them. This does not mean that you should create false expectations among them.
“Marketing’s job is never done. It’s about perpetual motion. We must continue to innovate every day.”
— Beth Comstock, Former CMO & Vice Chair, GE
- Make sure you communicate with them in a timely manner and let them know that they are being taken seriously.
- Feedbacks are a great way to make your consumer’s opinion heard.
- Include them in your developments since they are your target market and who could know what they would spend their money on than the customers themselves.