Retention marketing strategies that boost revenue

Customer relationships are like a flywheel—they require effort
to get them started, but once they’re spinning, it’s easier to
maintain. Acquiring a new customer takes hard work. After all,
people aren’t likely to buy from you the first time they see your
company.�

Once you do win them over, though, you can reap the rewards of
that relationship through retention marketing. 

Marketing retention strategies are focused on keeping customers
happy to prevent churn, and increase account expansion and
advocacy. To do this, you begin each customer relationship with a
long-term view and focus on helping users achieve their goals. 

The benefits of retention marketing include:

Increased revenue 

  • Nearly 40% of
    consumers
    will spend more on a product with a company they’re
    loyal to, even if there are cheaper options elsewhere.
  • The average value of a lost customer
    is $243.
  • Increasing retention rates by 5% can
    increase profits
    by 25% to 95%.

Better customer insights


  • 63% of consumers
    would share more data with a company that
    offers a great experience.
  • Customer advisory boards with engaged users can provide
    actionable feedback.
  • Tracking retained customers over time gives you more insight
    into the user journey

Easier expansion

Sound intriguing? Let’s get started. 

Exploring the new marketing funnel

The best retention marketing strategies begin before a customer
ever converts. Rather than basing your strategy on a marketing
funnel that focuses on the buyer’s journey, from awareness to
purchase, you have to expand your horizons. 

The new marketing funnel actually looks more like a bow tie. How
it works is the “buyer journey†funnels downward from awareness
to purchase, and the “customer journey†expands from adoption
to advocacy.

retention marketing funnel

By planning all marketing with the end goals of retention,
expansion, and advocacy, you can make decisions that have long-term
customer benefits, not just cheap acquisition wins. Acknowledging
what needs to happen after the sale also helps you plan how
to keep users engaged. 

We have a starter’s guide to customer
experience management here
, which teaches you how to audit and
improve touch points to exceed customer expectations. In today’s
post, though, we’re going to explore the tactics and tools you
can use to increase retention.

Customer retention marketing best practices +
inspiration

Above all, retention marketing is a mindset. Your best chance at
retention success is getting everyone—from teammates in the weeds
to the C-suite—excited about helping customer success in the long
run. 

Here are seven tactics you can use across your marketing
channels to keep customers happy and engaged. 

Onboarding program

The customer journey begins with adoption, which is rooted in
onboarding.

Customer onboarding is so critical because it lays the
foundation for your customer relationship and success. Without a
process to get new users started on the right foot, you risk losing
the momentum that led them to sign up in the first place, which can
lead to
churn


Duolingo
actually begins their onboarding process during
signup, with a focus on identifying a user’s “why.â€

Duolingo retention marketing example

Users sign up for your product because they want to accomplish
something, and the earlier you can identify that, the sooner you
can begin genuinely getting them to their “aha
moment
.†

During sign up, Duolingo asks you what your usage goals are, as
well as why you want to learn a language. By understanding a
person’s motivations, as well as how serious they are about
achieving their goals, the company can tailor their engagement
approach. 

Duolingo retention marketing example

To apply this, identify touchpoints where you can ask or infer a
user’s goals. Then use this information to position important
features or send relevant content. 

Read More: Customer
Onboarding: A Data-Driven Approach

Customer loyalty program

Customer loyalty programs are useful for keeping users engaged
and increasing customer base, especially for eCommerce brands.
Bracelet company Pura
Vida
uses multiple customer loyalty and rewards touchpoints to
boost retention. 

Their monthly subscription program,
Pura Vida Bracelet Club
, offers three exclusive bracelets each
month. The catch? You have to act fast to get in on this month’s
offer. Creating urgency to join a recurring subscription works to
provide Pura Vida with a more reliable income stream. 

PuraVida retention marketing example

How exactly does this monthly club build loyalty, though? Well,
two of the top eight factors that influence
brand loyalty
have to do with sharing gifts and the most
up-to-date offerings. While an average loyalty program focuses
mostly on gifts and offers, brands can gain even more loyalty by
building community. 

Going above and beyond  to create a program with a sense of
belonging through helpful support, informative content, and
collaborative engagement will get you far. The more you invest in
building a community that’s “bigger than your brand†(one
that isn’t solely focused on money), the more brand affinity
you’ll build.

Loyalty is a two-way street, and the more you put into the
relationship, the more you’ll get out of it.

Newsletter

Not ready to add entirely new initiatives like customer loyalty
programs? How about an upgrade to your email newsletters? These
recurring emails keep subscribers up to date, but they can also
keep users engaged. 


GitHub
uses its newsletter to educate readers on a variety of
topics. While they do use emails to promote new content with links,
there’s also an “Ask Hubot†that offers advice with no
strings attached. By providing so much value and information in the
email, GitHub positions itself as a knowledgeable resource and not
just a tool.

GitHub retention marketing example


Asana
uses the newsletter below to highlight their community.
Presenting new use cases can re-energize users by educating them on
new ways to use the same tool. As the email highlights how the
company itself uses its product, it also gives readers a
behind-the-scenes look into the people running the show. 

Asana retention marketing example

Read More: Email
Newsletters: Why they’re effective and how to create your
own

Customer education

If you liked the education aspect of the Github newsletter, then
you’re going to love these examples from Shopify. Customer education
resources ranging from free courses to live workshops and templates
can help users be more resilient. In Shopify’s case, they offer
free courses and guides across all of the skills their users may
need. 

Shopify retention marketing example

Are you facing an issue using a product? Head to a community
forum to talk to people who can relate. Need to level up your
skills? Try consulting a company’s knowledge base or free
courses. As we mentioned previously, investing in educating your
community positions you as a partner in their success.

Plus, providing resources to help customers overcome hurdles and
increases the chance that they’ll stick around and see their
problem through.

Referral programs

While formal customer loyalty programs are sometimes better
suited for eCommerce brands than software companies, everyone can
benefit from referral programs. For example,
Dropbox
rewards its users with free space when they invite
friends to join. 

Dropbox retention marketing example

The company’s “double-sided†referral, where both the
existing and new customers receive free space, was very successful.
Before the program, they were spending SEM and affiliate marketing
to gain new users at a CPA of $288-$388 on a $99 a year
product.

After the program, their signups permanently increased by 60%
and 35% of daily signups are from referrals.

Read More:  How to
create great referral emails

Upsell emails

Another way to retain customers and boost revenue is to send
upsell emails wisely. This means that your upsell offers need to be
timely and personalized.

For example,
Asana
gives users a heads up when they’re approaching an
account limit. Instead of just springing an upsell email on them
once the limit has been reached, possibly sending the user into a
panic, Asana gives them time to consider. 

You should also personalize your upsell emails. In the example
from Freelancer
below, the company is recommending an upsell based on customer
actions. Since the user had set up a project but not hired anyone
to complete it, Freelancer took the opportunity to help a person
along with a paid “recruiter†service.

By pairing the upsell with customer actions and goals, it feels
less like a pitch and more like a helping hand.

Freelancer retention marketing example

Read More: Triggered
Retention Emails That Keep Customers Engaged

Collect feedback

It’s nearly impossible to make improvements if you don’t
know where you’re falling short of customer expectations.
Therefore, collecting user feedback is a vital component of your
retention marketing plans. The email from Scoot
below is a bit of a feedback and winback combo. 

The company noticed a drop in activity, so they sent an email to
ask if there’s anything they could do to improve. This email can
help retain the customer it was sent to, as well as provide insight
into user sentiment as a whole. If you find recurring themes in
feedback surveys, you may have a detail worth investigating.

Another way to collect feedback to boost retention is through
customer
advisory boards
. These are groups of customers who are willing
to provide feedback on an ongoing basis. Regularly meeting with
your most engaged users helps you check company strategy against
customer goals, as well as make sure users feel their voices are
heard. 

Read More: How to
Collect Customer Feedback with Email

How to track retention rate marketing efforts

Ready to talk numbers? All of your hard work could go unnoticed
if you don’t track results, so we’re going to break down the
retention marketing metrics to pay attention to. These calculations
will help you get a more granular view of what’s affecting your
retention rate. 

Want a refresher on calculating your overall retention rate?
Check out our guide
here

Retention metrics for software companies

If you want to boost retention in your software company, your
focus is on helping users build and maintain good habits.
Therefore, retention marketing metrics for this business model are
based on the frequency and consistency of actions. Here’s what
you should pay attention to:

Login frequency

It’s natural for accounts to have some fluctuations in

login frequency
, but you should investigate spikes or crashes.
A sudden drop in login frequency may benefit from a customer
success check-in, while a steady decrease over time could use a
re-engagement campaign. 

login frequency retention marketing

A sudden spike in logins should also raise your eyebrows. What
caused the change? Are they logging in more because they’re using
more features, or are they becoming frustrated and logging off
again and again? You could send a survey to find out.

New team members added

Your accounts are growing—hooray! Users adding more team
members to their accounts means they’re sharing the tool within
their organization and having more widespread adoption. They may
also now be candidates for an upsell, and you may need to send
resources to new team members to help them learn. 

Support tickets raised

Analyzing support ticket frequency can be tricky. On the one
hand, you don’t want customers to be having such a tough time
that they submit requests over and over.

On the other hand, silence doesn’t guarantee that a user
isn’t having issues either.

Instead of looking at just the volume of support tickets raised,
segment your analysis to add context.

For example, you can sort support tickets by type or topic.
Preferably, you’d see more users asking for help on positive
aspects of your business, such as a new integration or feature
request. Support tickets about bugs and outages are signs of
frustration, and increased volume of this type could correlate with
churn. You can also review support ticket volume by customer
segment or account type. 

You should also analyze NPS ratings from users after they’ve
submitted support tickets. Gauging sentiment after these
interactions can let you know whether the issue was truly resolved
and the customer is happy. To gather NPS scores, send a simple
email like the Insurify
example below. 

Volume of key
metrics

Every app has core actions that healthy customers should be
taking regularly. For example, here at Vero, we expect to see users
sending emails each week. If you have a project planning app, your
key metrics may be tasks completed or projects updated. 

Whatever your key metric is, track it for changes. If an account
hasn’t taken action in a few weeks, a triggered email to get them
back into the app can help. 

Retention metrics for eCommerce companies

Healthy eCommerce retention and expansion is reflected in order
frequency and volume. To tie retention to your marketing efforts,
consider using cohort analysis to segment users based on the
campaigns they’ve received, or their acquisition channel. 

Repeat customer rate

Repeat customers generate sales without having to pay
acquisition costs again. To calculate your repeat
customer rate
, determine what percentages of orders came from
someone who has bought from you two or more times. 

Instead of calculating this rate once and calling it a day,
compare the numbers over time, such as in the graphic
from Shopify
below. How is your month-over-month and
year-over-year performance? Does your repeat customer rate vary
between product lines or customer segments?

All of these calculations can help you pinpoint profitable
segments and campaigns to double down on.

Shopify retention marketing example

Purchase frequency

Purchase
frequency
explores repeat customers a little further, and lets
you know, on average, how many orders a single customer makes in a
given timeframe. To calculate it, simply divide the number of
orders by the number of unique customers. Remember to use the same
time period, such as a month or a year, for each number. 

Repeat customer rate formula

Similar to your repeat customer rate, you can use purchase
frequency to analyze customer retention across segments. If you
have a loyalty program with automated emails, like
Chipotle
does, you can also monitor how often those triggered
emails send. 

chipotle retention marketing example

Customer lifetime value

In addition to order frequency, you can use customer lifetime
value to understand long-term engagement. Not only does this help
you identify your most loyal customers, it also builds your case
for retention. 

If you know what your company stands to gain from keeping a
customer around, then your retention efforts look even more
enticing. Understanding customer lifetime value also helps you set
limits for how much you’re willing to spend on acquisition and
retention.  

To calculate customer lifetime value, you’ll first need to
uncover your average purchase value, purchase frequency, average
customer value, and average customer lifespan.

Average purchase value formula

For example, imagine your revenue last year was $1,000,000 and
you had 10,000 unique customers. That means your average purchase
value is $100. 

Purchase frequency formula

While you had 10,000 unique customers last year, you processed
16,000 orders. That means your average purchase frequency is
1.6.

Customer value = Average purchase value / Purchase
Frequency

Using the two numbers you’ve just calculated, you can find
your customer value. An average purchase value of $100 over a
purchase frequency of 1.6 gives you a customer value of $62.50.

If you meet the average e-commerce
retention rate
of 28%, that means you have an annual churn rate
of 72%. Using the equation above, your average customer lifespan
would be 1.38 years.

Customer lifetime value formula

Finally, the number you’ve been working towards. In our
example, you would multiply the average customer value of $62.50 by
the average lifespan of 1.38 years. In the end, you’d have a
customer lifetime value of $86.25.

Once again, remember to make your time frames align in your
calculations. If you use your total revenue from May, then you need
to divide it by the number of orders for the same month. 

Retention metrics for marketplaces

If you run a marketplace, tracking retention comes with a few
more angles. Rather than simply looking at metrics such as order
volume or site visits, you’ll use separate equations for demand
and supply.

Marketplace demand metrics

Your marketplace demand metrics are all about buyers on your
platform, and they’re very similar to what’d you use as an
e-commerce company. 

Repeat purchase ratio

A customer’s repeat purchase ratio is similar to purchase
frequency in that it measures how often buyers come back for more.
To calculate this ratio, you’ll need to know how many customers
purchased from you more than once. 

Average number of bids per buyer

If your marketplace works with bids, you should analyze the
average number of bids per buyer. When a bidder is new to a
marketplace, they’ll likely start with a lower number of bids.
However, as trust increases and each buyer places more bids,
you’ll need less buyers per seller to complete a
transaction. 

This evolution is displayed in the chart
below
. In the early stages, buyers bid infrequently, and you
may need 100 buyers to every..

Source: FS – Email Marketing Blogs!
Retention marketing strategies that boost revenue