What is Retention Marketing & How Can You Do It Better

Loyalty…what a loaded word. It’s one I’ve explored a lot on a personal level over the years, but not one that rings as true in my marketing experience or professional portfolio. For almost a decade now I have been focused on “acquisition” marketing, which itself has changed a great deal over the years.

Only recently, as in the past 6 months, have I turned my attention to retention marketing. For those unfamiliar with the term it refers to “marketing programs that are aimed at increasing engagement, brand support, and loyalty to one company or product.”

You may have heard it surface in conversations as lifecycle marketing, loyalty marketing, customer success marketing, customer happiness marketing, etc. There are a lot of ways to say it but it all boils down to – programs that help keep customers happy.

customer loyalty image

While I may be new to it, my inner curious cat has really enjoyed jumping in head first. I’ve read a few great books, watched some excellent webinars, and set up coffee or calls with pretty much anyone I know that has done this in any capacity.

Guess what I learned? It’s fracking hard. Most brands don’t do it well (or at all), and many brands are using outdated tools and resources to manage such programs. While over the past five years, companies like Zappos have brought customers to the forefront, we are still somewhat confused on how best to talk to them. We aren’t quite sure how to isolate out our different customer types as it relates to loyalty, and because of that we simply fail to reach them effectively.

The Four Types of Loyalty

Did you know there are four types of loyalty? Me either but it’s true. Understanding these groups and thinking about your customers as they relate to each is super helpful when approaching your retention marketing efforts. Each and every customer must sit in one of these buckets:

1. No Loyalty – there s a subset of your current user base that is incapable of being loyal. This is just the cold hard truth. Did you know that? I sure as heck didn’t. Wouldn’t it be nice if you could grasp a sense of how many of your users consistently “shop around” so you can better measure your success?

2. Inertia Loyalty – this is when a customer has a low level of attachment but usually has a high repeat level of repeat purchase.  Basically, this type of customer sticks with you out of habit or price indifference, they tend to sit in the middle – not dissatisfied, but not wowed either. Interesting right? Wouldn’t it be cool if you knew how big this group was? They respond to a totally different message than the other three groups.

3. Latent Loyalty – this is when a customer has a great sentiment for you as a brand, but low repeat purchase. This means they are highly influenced by situational effects like promos from competitors. Isn’t that crazy? Think about how many untapped evangelists are in this group? If you seek out evangelists by number of purchases, you are doing your loyalty marketing an injustice.

4. Premium Loyalty – is just what you think it is. Its when a customer is both highly attached and has a high likelihood to purchase consistently. These are your golden customers. What are you doing to proactively seek this group out? How are you messaging them differently? Are you rewarding them differently?

Your current readers, visitors, customers, etc. fall into one of these buckets right now. Do you know where? Do you know the distribution of those groups by % of your customer base? At SEOmoz, we sure as hell didn’t. In fact we have made some huge gains toward it, but we are still on our own journey toward understanding how our customers feel about us.

So What Did We Do?

About a dozen things actually, but here are the biggies:

We made it a company-wide cause. After letting retention and loyalty marketing be the hot potato for far too long, we simply decided to let someone own it. I am super fortunate to lead the initiative, but I quickly realized I was going to need a whole lot of help if I was going to make a dent in our churn. That help came in the form of a cross-function team. I reached out to a representative from each team that has showed a real interest in reducing our churn and keeping our customers engaged. This team meets every two weeks and covers a variety of topics covering everything from new help documents, to customer surveys, to new success metrics.

I got serious about data collection. When I say I got serious about data collection I mean “I drove people nuts until we had a plan for data.” Honestly, I’m surprised I didn’t get fired while pushing for a new data house, new KPIs, and new business rules around measurement (I plan to do a post just on those metrics soon enough!). I set so many meetings I thought I would break Google Calendar. I wanted everyone on board with what we wanted to measure, and more importantly – what we were okay NOT measuring. This is crucial.

I hired a retention marketer. You might think I jumped the gun but honestly…I wanted someone full-time. When I looked at the role I was easily able to put together more than 40 hours worth of work for them to focus on. They handled weekly reporting, data investigations, churn analysis, regression analysis, source tracking, loyalty program brainstorming, building, and implementation, not to mention – involuntary churn analysis and optimization, credit card processing, etc. Then there is customer landscape research, and email marketing. I mean wowwzzz—how did we not have this yet?

Lastly, I was honest about our limitations – both the companies and my own. I sent an email to the executive team pitching this new program and I made it super clear that there would be a learning curve. I’m not trained in loyalty marketing, and my background doesn’t carry much direct experience either. You could say it was quite a Hail Mary.  Luckily for me, the E-team at SEOmoz supports this sort of risk. They were more than willing to let us run with it.

Where Did This All Get Us?

To a much more successful place IMO. The company now has a place for retention to call home. When questions pop up there are people that are informed and ready to jump in a meeting. We have pushed out over a half dozen loyalty and engagement-focused programs, reworked customer personas, revamped customer metrics, and build a data house that the entire company benefits from.

Do we have a long way to go? Hell yes. We are currently exploring improving our measurement around customer engagement, customer groups, and upsell programs. This is just in the next few months. We have surveys running to help us understand where we can do better, and I couldn’t be more excited to see the results.

I think all of this has taught me something pretty fantastic though – loyalty marketing is more than delivering a good product. It’s so much more…if your company is only exploring the acquisition side and not spending as much time on the customer once they convert – its time to get moving.  To keep a customer loyal is not only cheaper than acquiring a new one, but it makes for more organic growth. The power of customer marketing (word of mouth marketing) is stronger than ever.

Help your customers succeed and then give them ways to share those successes with others. I think its’ time to consider “increasing loyalty” a marketer’s job…because it is. For me, it’s been a fun part too. If you have resources you love on loyalty marketing, share them below!

 

6 Comments
  • http://www.shamelessmarketingstrategies.com Robert Watson

    Long before people, entities or brands begin addressing anything “loyalty”, whichever buzz term is chosen, I think you gotta address the often unfortunate absence of fundamentally caring about those you serve.

    Too often “customers” are seen simply as part of an equation, stripped of their emotions only to be treated as a component necessary before getting the money.

    This is not rocket science. Old school manners are being replaced with entitlement.

    It’s like solving obesity in America, the solutions are not difficult, but the mindset of those who are knowingly too fat is so lazily skewed that getting people to take the action that matters, is seen as impossible and unworthy.

    The challenge is getting the herd mentality to change how they think, walk around in the shoes of those they serve and just plain give a damn.

  • http://joannalord.com joanna

    I think you are spot on Robert! The challenge really is one of “company wide awareness and perspective” around why you (as a company) are doing what you do– to solve a problem, to help others, to improve something.

    I do think where things might get mucky is when there are competing goals for the company (some customer facing, and maybe others aren’t) and when there is limited resources.

    With that said you are right when you say “just plain give a damn” as they key piece. I think that might have been a great alternative for the post title ;)

  • http://www.tidydesign.com/blog Michael Jon Ward

    Came across this post via twitter and a RT from Mr Rand… Interesting article, a great read to start the day! I believe like the word “loyalty” and feel benefits all aspects of life and business… Every action has a reaction :D

  • http://mollermarketing.com Nate

    So what kind of data did you collect and how did you collect it? The first thing that comes to my mind is to create a series of email campaigns that link to surveys people can fill out. I would imagine “calling” clients could be an option (but a costly one and really time consuming).

    What kind of information were you looking for to determine loyalty?

    How did you measure the loyalty and classify the current client list into the four sections you mentioned?

    Interesting topic – one I’m ready to learn more about for sure.

    Thanks Joanna!

  • http://www.brewseo.com Bryant Jaquez

    This is so cool. I don’t know how what i’m going to do with this information, but you definitely inspired me to start looking into retention marketing. Hopefully, I’ll be able to write a blog post one day called “what I’ve learned about retention marketing”… and I’ll link back to this article as my starting point.

  • Avner Pinchover

    Hi,

    Great post, I really found exactly what I Googled for.

    Two points:
    1. I think resources are allways limited. What is your way of demonstrating ROI for this activity? Is RM ROI measurable?
    2. What tools do you use? Is it CRM software or MA (Marketing Automation) software? If it’s not confident, I’d be happy to hear which services you use at SEOmoz. I checkes out Marketo and Hubspot a couple of days ago, and wierdly enough no RM module was mentioned, and for lead generation, nurturing and conversion they absolutely have it all.

    Thanks so much for sharing!

    Avner Pinchover