3 Ways to Use Marketing Automation to Increase Customer Retention

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A 2019 Forbes article asked, “Does it still cost 5x more to create a new customer than retain an old one?” The author’s take was that, with advanced targeting and personalization, acquisition costs should decrease relative to retention costs, and that the time-tested adage should be rendered obsolete. 

Needless to say, things have changed in 2020.

While the current COVID-19 crisis has transformed almost every facet of our professional lives, it has especially laid bare the importance of customer loyalty and retention. In the face of tremendous economic risk and real human tragedy, consumers and businesses are reducing or eliminating expenditures, which makes new customer acquisition even more difficult than it was pre-crisis.

Today, marketers charged with driving growth have a new primary mandate: to find scalable, low-cost ways to build and maintain strong relationships with existing customers.

Marketing Automation and Customer Lifetime Value

While customer experience optimization requires a holistic approach, one way to achieve engagement with customers at scale is with automation

Marketing automation software helps marketers deliver the right messages to the right people through the right channels at the right time - something that would be challenging to achieve at scale without the ability to automate delivery based on customer information and behavior. 

While marketing automation can be deployed to generate and nurture leads, it is also a powerful tool that helps organizations increase their customers’ lifetime value, or the total profit a company generates from a given customer over time. 

The more timely and relevant you can make your touchpoints with your customers, the more likely you are to retain those customers. 

The longer you can retain a customer, the higher their lifetime value will be.

By increasing the lifetime value of each of your customers, you increase your overall profitability substantially. 

How Marketing Automation can Improve Retention

There are countless ways to automate your marketing program for existing clients, but here are three that really stand out: 

1. Welcome and Onboarding

While it might seem obvious that onboarding a new customer is important, as many as 41% of companies don’t utilize the inbox to welcome new customers in real time. 

Even when the sales process is high-touch (this is especially common in B2B transactions), a welcome email series can reduce any perception of risk in your process and keeps you top of mind in the period before actual project work might begin. 

In the world of automated marketing, “welcome” series are about as close to a “guaranteed win” as you can get. Various studies show that welcome emails have average open rates between 50-65% - that’s more than 85% higher than the average open rate for email newsletters. 

Furthermore, a national communications firm found that nearly half of all customers who switched service providers left because they felt underappreciated. Whether they’ve signed on for a multi-million dollar engagement or purchased a $10 product, acknowledging their business and showing your appreciation matters.

It’s important to note that automated onboarding messages are a lot more than just one welcome email. Other elements of onboarding campaigns can include:

  • Thanking the recipient for being a customer
  • Setting expectations for the next phases of the customer experience
  • Providing recipients with relevant and valuable customer success resources
  • Collecting more information about the recipient to further personalize their experience
  • Connecting recipients to members of your customer community
  • Sharing your organization’s purpose in a simple and authentic way
  • Providing your customer with a point of contact (and humanizing that person in the process!)

While you may already have a manual “welcome” process in place, automation can allow for segmentation and personalization at scale, allowing you to tailor their onboarding experience to what’s most relevant for their particular use case. 

Plus, “triggered” emails (ones that are delivered in real time) have average open rates that are four times higher than email newsletters, making automation that much more important.  

2. Customer Reactivation

As your customer base grows, it’s inevitable that some will grow inactive over time. One study found that 20-25% of clients are “lapsed existing customers,” which presents both a challenge and an opportunity for businesses.

Use the data you have already collected on your existing customers to define what an “inactive” customer looks like. Depending on the nature of your business, this could be the date of their last purchase, the date of their last login to your tool, or the date of their last touchpoint with your company (digitally or in person). 

Then, segment your inactive audience. Your active audience has different preferences, needs, purchase histories, and pain points, so it would follow that your inactive customers do, as well.

Finally, create relevant, persuasive content for each inactive segment and automate the delivery of this content at the point of “inactivity.” 

For example, if a software customer suddenly stops using a particular tool after years of being a power user, a special offer for an “upgrade” to a premium version may be exactly what they need to dive back in.

If a new customer signs up and only uses the system sparingly before becoming “inactive,” however, self-service resources or a link to schedule a free training may be more effective. 

While it might be tempting to configure a one-time message to reactivate old clients, consider delivering messaging across multiple channels (display remarketing, direct mail, social ads, etc.) or queuing up subsequent messages after the initial communication. Research from Adobe found that 25% of disengaged customers will open an initial “win-back” email, but up to 50% will engage with subsequent ones.

3. Feedback and Reviews

Collecting customer feedback is an important part of any long-term growth strategy, and automating your feedback program can mean the difference between keeping and losing a loyal customer. 

Consider this: In PwC’s Future of CX report, ⅓ of customers reported that they would leave a brand they love after just one bad experience. That percentage skyrockets to a whopping 92% after two or three negative interactions.

That means if you’re not picking up on points of friction in your customer experience before they happen again, you’re at risk of losing a customer forever.

To automate your customer feedback loop, consider which points in the experience warrant a check-in, and schedule requests for feedback after those periods of time after purchase has passed.

Remember, automation should make your touchpoints more relevant, not less relevant, so be sure to add context to your request based on the timing of the communication. 

For instance, your customers could receive a message after 30-90 days “...checking in on how things are going so far...” whereas messaging positioned towards your long-time clients could include something like, “You know how important your happiness is to us, so we want to know what we’re getting right and how we can serve you better.”

Make sure you’re demonstrating responsiveness to this feedback by using automation technology to the fullest. 

Neutral or negative responses should trigger a notification for a customer success representative to intervene and right the ship; effusively positive responses can trigger a request to leave a review or submit a testimonial.

In conclusion

These are just a few of the ways that marketing automation can help brands have more personalized, relevant touchpoints with their customers. That being said, as we continue to navigate through these unprecedented times, everyone is experiencing this crisis differently. 

Tailoring your approach based on what you know about your customers can help you connect with them not just on a professional level, but on a human level, as well.

Ready to invest in a marketing automation program? Need some messaging support or tech stack recommendations? Connect with our team today.