2009 Retention Marketing Checklist

As Barack Obama’s arrival to the White House brings hope of change, many Americans feel the ground beneath them has shifted. Similarly, economic challenges have accelerated the interactive market’s maturation, requiring online marketers to change their approach. To compete in the slower growing 2009 e-commerce market, marketers must focus on retention plans to maximize results from existing customers.

When budgets are tight, retention marketing is attractive because you’re talking to your existing customers. This means that you have either an e-mail or postal address to communicate with customers, reducing advertising costs. You also have insights based on past history to better target marketing to each customer’s needs.

Three Categories of Customers

Just as Americans of diverse backgrounds and political views have united behind Obama, your house file contains consumers with different past behaviors and attachments to your company. There are three distinct categories of potential customers in your house file:

  1. Prospects who’ve expressed interest in your offering by registering for e-mails, catalogs or other actions. Because they haven’t purchased from you, they still need to be persuaded. (Note: Some companies consider this segment part of their acquisition activities.)

  2. Customers who’ve purchased from your company recently. You can assume these customers like your products and are positively disposed to your firm. (Note: Gifts are the exception where your target is the recipient.) You can communicate directly with these customers directly via e-mail, snail mail, and possibly phone.
  3. Past customers who’ve bought from your firm, but not recently. Depending on the reason they stopped buying, you may be able to reactivate them. (Note: Some firms handle reactivation separately from retention.) Because these customers have stopped buying from you, they may also have stopped receiving e-mail communications or not opened them recently. You may only be able to communicate with them using postal mail.

Your 2009 Retention Checklist: Seven Factors to Consider

Retention marketing involves relationship building over time and both parties must participate for it to endure. As online marketing continues to evolve, ensure that your retention activities cover the full array of tactics and are integrated with your other marketing plans. Here’s my 2009 checklist. (Note: For additional retention marketing information, check out my three-part retention marketing primer, here, here, and here.

  • Communication. Just as relationships require involved direct, engaged communications rather than repetitious nagging messages that get tuned out, your customer exchanges must be relevant. Use your database to send targeted e-mailings based on past behavior and purchases (check here and here for more information) and create related landing pages. Also, consider consumer-controlled communication channels, such as widgets and RSS feeds.

  • Web site. As your central online destination, your Web site must provide a wide range of information to satisfy all three types of customers who may be at different points in their purchase process. Be sure your Web site includes the following information: detailed product descriptions, suggested related products, best seller lists, customer comments and ratings, product support, 800 numbers, retail locations, company information, and returns information.
  • Search. Don’t assume that because a customer found you once, they’ll find you again. Therefore, your content must be search optimized. From a retention perspective, think about how customers will look for product data in terms of names, brands, and product numbers.
  • Customer service (including returns). How you treat customers can have a big impact on whether they keep the items purchased and buy from you again. A pleasant return experience that aids the post-sales process can turn someone into an advocate. Therefore, make it easy to get information about returns and related policies. Provide information regarding product usage that can be used to sell related products and services.
  • Social media. Give customers the means to interact with each other, either on your Web site or on a third-party site. Consider how your firm should participate in these forums. Among the options for these interactions include blogs, Twitter, podcasts, videos, photos, bulletin boards, forums, wikis and Webinars.
  • Offline communications. This includes catalogs, postcards, and information contained in the product package.
  • Advocacy and referrals. Provide customers with multiple means to communicate with you if they have any problems or comments. Help customers extend your reach to their contacts through forward-to-a-friend and/or social bookmarking functionality. Think about giving them special refer-a-friend offers.

Six Key Retention Marketing Metrics

To ensure that your retention marketing program works efficiently, track the following six indicators to determine the strength of your customer relationships.

  • House file. Measure the size of the file, response rates, and churn rate. In this economic environment, customers may take longer to purchase additional items. Track different segments separately where possible.

  • Expenses. Assess the total costs of retaining customers, as well as the cost of extended communications during this difficult economic period. Look at cost per customer contacted.
  • Revenues. Monitor total repeat sales and sales per customer contacted. Analyze what is selling and to whom. Monitor the ratio of sales to new versus existing customers.
  • Lifetime value. Calculate the profitability of customers over time taking into consideration the full acquisition and retention cost.
  • Customer feedback/buzz. Monitor what customers say about your firm both on your site and in other forums. Quick, effective communications when issues arise can retain customers.
  • Referral rates. Track the percentage of customers who refer you to others, the conversion rate, and quality of the referrals.

Retention should be a core part of your online marketing strategy. Your house file is one of your company’s biggest assets. Don’t fall into the trap of putting all of your marketing efforts into romancing new customers while taking your many loyal customers for granted.

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