Why retention marketers are focusing on offline customer engagement

Customer retention is always an important part of business, and it’s become incredibly integral to revenues during the COVID-19 crisis as brands spend far less on acquisition-minded advertising.

The best place to reach your existing customers for the last six months has been at home, and it will likely continue to be that way: According to McKinsey’s global research in countries affected by the pandemic, more than 70% of consumers don’t yet feel comfortable resuming their “normal” out-of-home activities.

Considered-purchase brands—sectors like finance, insurance and healthcare where consumers make complex buying decisions—are aggressively developing new approaches to increase retention rates. And it’s easy to understand why.

Acquiring a new customer can cost as much as 25 times more than retaining one. Financial and insurance brands spend around $300 to gain a new customer. Customer retention has been a top goal among healthcare marketers for decades, and their need for a strong strategy has been ratcheted up by scrappy direct-to-consumer competitors.

A Google or Facebook ads strategy isn’t enough in this omnichannel era that’s now being redefined by a pandemic. You need the right pieces in your martech stack. 

The novel coronavirus will likely be a public health crisis in the many months ahead. That means people will continue staying at home in order to remain safe and healthy. They will not typically be going to see their insurance agents in person.

They won’t likely be visiting their financial management advisors, and they will probably avoid spending time in banks. And healthcare brands are going to be dealing with customers who are managing their health from home much more often than usual. 

Stand out or miss out

The current reality means brands should create a customer journey that meets people where they are at—most often, at home and/or online. To do this, brands should consider combining targeted messaging online and offline.

Normally, that also means a considerable spend on out-of-home ads. But with everyone staying at home, not at this moment. Brands right now should give a look to offline channels like direct mail and delivery packaging, which are great ways to drive customers to websites and mobile apps.

If you are an ecommerce company, every package you send out could be a strong marketing opportunity during this pandemic. Consider that 72% of consumers say packaging can influence their future purchases. And for all brands, direct mail can be incredibly effective when it’s targeted, personalized and fast.

The Direct Marketing Association reports that direct mail can lift response rates for other channels by as much as 450%. 

Take SmileDirectClub, a direct-to-consumer (D2C) healthcare company that’s well-suited to navigate the tough terrain of this pandemic because it combines direct mail with digital. The brand, which offers at-home dental and orthodontics services, has an in-house marketing agency with more than 100 data-driven staffers.

Before a customer purchases from SmileDirectClub, the marketers are able to identify friction points and develop messaging to increase conversions. For example, if a consumer abandons their online order, discounts and other motivational tactics will be sent via direct mail, email or text to reanimate the potential transaction.

Not every D2C player “gets” retention like SmileDirectClub—too many in this space give retention a backseat to acquisition. Even though a little more than 50% of Americans have purchased from a D2C brand, only half become repeat customers.

They could learn from not only SmileClubDirect but also companies that lean into online and offline innovation for retention, such as coffee giant Starbucks (best-in-class mobile app), small business Santa Cruz Bicycles (centralized customer messaging software) and D2C pets supplier Chewy (hand-written mail to customers based on their data). 

Go beyond email for customer engagement

More than anything, what the above brands prove is that engagement is an omnichannel game, and it’s foolhardy to over-index on any one channel.

A lot of marketers have made that mistake with email, as some brands see more than 40% of their customers unsubscribe from their lists. That unsubscribe rate is not just because customers are dissatisfied or no longer interested in the brand—today’s reality is that many people are just getting overloaded with email. 

The growing problems with successfully reaching customers through electronic channels has made offline communication highly attractive to retention marketers. Offline channels like direct mail are increasingly programmatic marketing systems for holistic, omnichannel campaigns.

Plus, the marketing copy, photos and discounts can be personalized. According to a recent Harris Poll, 42% of purchasers repeat buying a certain brand because they received a timely, relevant offer. 

Right now more than ever, customer retention is crucial. Given the unique nature of retention campaigns, the first step for brands is to determine what tools they already have and where they are lacking. With an omnichannel stack, any brand can start conquering retention marketing to capture lifetime customer value.

Tatiana Afanasyeva is the VP of Marketing at Lob.