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Retention Marketing from the Inbox to the Mailbox
Direct Mail
March 4, 2021

Retention Marketing from the Inbox to the Mailbox

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Mark Pinard

Who are your most important customers? Unless your business is just getting started, the answer is the ones you already have. While building your customer base is an important part of marketing, all that hard work (and investment!) isn’t worth anything if your customers don’t stick around.

To help you nurture those customer relationships, we brought together leaders from some of the top companies in marketing tech to share tips and strategies for customer retention marketing. Here are some of the key takeaways from our four-part customer retention seminar, The Retention Marketer’s Playbook.

Table of contents

  • Why Should I Focus on Retention Marketing?
  • How Does Retention Marketing Work?
  • What Are the Challenges of Retention Campaigns?
  • Understanding the Customer Lifecycle
  • Customer Retention Strategy Marketing Strategies
  • Retention Marketing Tools

Why Should I Focus on Retention Marketing?

The biggest reason is ROI. Acquiring a new customer costs 25x more than retaining a current one. Keeping existing customers is crucial to your bottom line, providing 65% of all business. But it’s not just about maintaining a loyal customer base — keeping your existing customers is also one of the best ways to earn new customers.

The better your business is at nurturing your existing customers, the more enthusiastic they’re going to be about your brand. The more you show them they’re valued, the more likely they are to recommend you to their friends and family. By nurturing your relationship throughout the customer lifecycle, you can increase existing customers’ net promoter score, providing a strong driver of new customers in the process.

Retention marketing campaigns can also help you to better understand your customer base — and that can help you make smarter decisions to address customer demand. When your marketing team tracks what factors make existing customers stick around, they’re not just gathering marketing data — they’re collecting information that can apply to product strategy and governance as well. And of course, many of the insights that apply to customer retention are likely to help with new customer acquisition as well.

Finally, focusing on retention enables you to develop a more balanced approach to marketing. It’s exciting to get new customers, and it’s a relatively easy way of seeing your marketing efforts are being effective, so marketers tend to focus on it. Marketers are generally less experienced with customer retention campaigns, and may not have a reliable means of tracking their effectiveness. Learning retention strategies can help you better prioritize marketing resources, and develop a more effective approach towards tracking success rates.

How Does Retention Marketing Work?

Like all marketing, effective retention marketing is about delivering the right message, through the right channel, at the right time. However, with existing customers, you have a lot more data to shape that message, and create a personalized experience.

That personalization is key to customer retention campaigns. An effective retention campaign needs to gather data on customer preferences and behavior as it runs, and incorporate that data into customized offers, images and applications that both provide value to the customer, and show them they’re valued.

Retention marketing will be most effective in an omnichannel campaign. Being able to address customer needs across email, social media and other digital channels, as well as through direct mail gives you more touch points, enabling you to deliver a consistent message your customers will remember. Customers can be hard to reach on digital channels, because they’re exposed to so many emails, ads and offers, they tend to tune out. Customers are much more likely to be receptive at the mailbox than at the inbox. In fact, direct mail has a response rate 13 times higher than email.

What Are the Challenges of Retention Campaigns?

Customer retention marketing strategies rely on collecting and analyzing data from a number of different sources, which can be quite difficult without the right tools and workflow. Many marketers are already overwhelmed with data, as well as the sheer number and range of tools their job uses.

Marketers also struggle with coordinating an omnichannel campaign — particularly with direct mail. Though many companies have invested in a marketing platform such as Salesforce or Salesforce Cloud, direct marketing is rarely integrated with it. This is because companies tend to use outdated direct mail workflows which are siloed off from the rest of marketing. These workflows are all different, but they often involve traits like:

  • Paper-based approval
  • Manual address copying and pasting
  • Lack of address verification and tracking capabilities
  • Lack of automation
  • Complex and difficult vendor management
  • Inefficient in-house printing or inflexible third-party printing

As a result, their direct mail workflows tend to be slow and inflexible. They can’t trigger events based on customer actions, such as automatically sending customized thank you postcards or to upselling customers based on past purchases. As a result, they have a limited ability to use direct mail as part of a customer retention marketing strategy.

Marketers also can struggle with lack of data analysis tools or training. Without effective tools to segment customers, it becomes much more difficult to draw actionable insights about customer preferences.

Unfortunately, these aren’t challenges marketers can overcome on their own. Most companies need to invest in bringing their direct mail marketing program up to date, integrating different data sources, and bringing the tools together to enable an omnichannel marketing approach. We’ll discuss this more in our section on retention marketing tools.

Understanding the Customer Lifecycle

According to Suyong Deshpande, Head of Product Marketing at Amplitude, there are four types of customers or users: New, Current, Churned and Resurrected. New users or customers are those who are brand new to your product. This would include customers who just placed their first order, or recently downloaded your app and used it for the first time.

Current users differ from new users in that they’ve been consistently using the product for some time. They may have placed a second order at an e-commerce site, or used your app every day since they downloaded it, for example.

Churned users are a concept we all understand, unfortunately. They’ve found your product useful in the past, but have either lapsed into inactivity or gone over to a competitor.

If you manage to bring these users back, they become resurrected users. Deshpande points out that it’s easier to bring back churned users than recruit new ones, so it’s important not to write customers off as soon as they abandon your product or service.

To divide users up into these groups, you need a way to measure retention, against a well defined action called a “critical event.” Critical events are the tasks you want customers to complete, such as placing an order, downloading an app, placing a reservation, or signing up for a membership. You measure that critical event against a time interval representing how soon you expect the customers to engage with your product or service again. For example, if you’re a takeout delivery company, the critical event would be placing an order, and your interval might be somewhere around once a week.

There are three basic ways of structuring your interval to measure retention:

  • N-Day Retention: The proportion of customers or users who come back exactly a certain number of days after they first use your product
  • Unbounded Retention: The inverse of churn. You measure customers who come back on a particular day or any time after that. For e-commerce or on-demand services that don’t expect a regular cadence, this is the way to go.
  • Bracket Retention: This measures customer retention within a certain defined period, with a start and end date. For example, if a user downloads a travel app, the company might expect them to come back to book a flight some time in the first week.

Once you have a framework to measure retention, you can start gaining insights from groups of customers. By gathering data on which customers stay and which go, you can look for factors linked to retention and churn. Are customers more likely to come back if they visit particular pages on your site, or use a certain function on your app? Are certain products more likely to bring in long-term customers than others? And what strategies are most likely to resurrect churned customers? The opportunities this analysis can bring are almost endless — if you know how to harness them.

Customer Retention Strategy Marketing Strategies

The data you gather is only as good as what you do with it. Lily Harder, Senior Director of Marketing Strategy with Comperemedia, a product-level data and insight company under global marketing research firm, Mintel, shared three key rules to retaining the modern consumer in her retention marketing presentation: Interactions over transactions, Personalization is Paramount, and Technology over Time-lags.

Interactions over Transactions

As Harder points out, the role of retention marketing is to build lasting relationships. If you can interact with customers in a positive and valuable way, that customer will feel a connection to your organization, making them more likely to stick around.

Companies like TD Bank have done an excellent job of doing this during the COVID pandemic. TD Bank engaged with customers across multiple channels to prepare them for safe banking at branch locations. This included an email explaining the new rules, a QR code to check-in, and friendly physical signs at the location telling customers where to stand (“We saved you a spot.”) and reminding customers to social distance (“Stand together by standing apart.”)

However, there’s plenty of room for more lighthearted content, like tips and tricks to get the most out of a new product. Anything that builds interactions with existing customers is a potential retention tool.

Personalization is Paramount

You can’t have authentic interactions with a cardboard cutout of a customer. To truly build rapport, you need to to personalize your interactions based on what you know about a customer. If you run an e-commerce site, for example, you might send previous customers personalized offers, featuring products that are similar to the ones they bought before. This strategy could also be used to convert a churned user, e.g. by offering them a discount or information that might encourage them to take the next step.

But sometimes, you don’t even need to have conversion in mind. For example, some consumer financial services companies will send trigger-based emails to congratulate customers when their credit scores go up. This technique could be easily adapted to health and wellness apps, lifestyle brands and other companies. By offering the customer congratulations or helpful advice, you can build loyalty even without making a pitch!

Technology over Time-Lags

Maintaining consistent interaction with customers requires an omnichannel approach that can bridge the gap between the online and offline world. Your marketing team needs to be able to trigger complex customization automatically, with as little time lag as possible. Ideally, you should be able to get a customized offer, reminder, thank you note or other direct mailing to your customer’s mailbox in just a few days. If you’re using a legacy direct mail system where everything takes a week or two to process, that’s not possible.

Similarly, you need tools to collect and analyze your data. You should be able to track deliveries, conversions and ROI across all marketing channels. Additionally, you should have the analytical tools to sift through all those customer actions and make deductions about their needs.

The principles of retention marketing are quite simple, but getting it to work across dozens of touch points for thousands of customers and former customers is all but impossible without the right tech.

Retention Marketing Tools

If you have a marketing platform, you’re halfway there. You can automate your digital campaigns, A/B test emails and landing pages, and track whatever customer actions are relevant in the digital world. The biggest thing you’re probably missing is the ability to bridge online and digital campaigns.

Lob can get you there. We offer a complete direct mail system which integrates with your marketing platform. Lob automates direct mail, providing address verification and delivery confirmation, along with the means to track customer actions — for example, measuring which customers use a mailed coupon or offer. We’ve partnered with a network of printers across America to make the process effortless for our clients. We’ll automatically print, quality check, and send your mail at bulk prices, no matter how few (or how many!) mailings you send. Our system even helps with the design process, with a system of intuitive templates that makes mailings a breeze

Once you have the system setup, direct mail becomes as powerful and flexible as email. You can create triggers to send customized mailing based on customer actions or other data. For example, you can have the system automatically post a thank you note when a customer places their first order, send an offer when a former customer hasn’t placed an order in a certain length of time, or even send birthday cards to let your audience know how much they mean to you.

If you want to get deeper into the analytical side of retention marketing, Amplitude is a fantastic tool. Using the retention lifecycle framework we discussed earlier, it enables you to divide users into cohorts and analyze how customers are interacting with your product. A variety of out-of-the-box charts enable you to look at what critical events shape user retention, and derive insights into how you can reshape your retention marketing strategy (or even your product) to retain users.

To learn more, check out our retention marketing seminar, featuring in-depth demos of both Lob and Amplitude.

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