Achieving a return on investment (ROI) that keeps your marketing and finance teams happy isn’t just about pushing loads of new customers through your sales pipeline. It’s about creating strong relationships that reward and retain the ones you already have.
This isn’t revolutionary stuff, but many businesses forget – so we’re laying it bare. Here’s why you need to focus on customer engagement and retention for a rock-solid ROI (and how you can go about doing so).
With real customer engagement comes real results
Before we dive in, let’s clarify the differences between customer engagement and retention.
What’s customer engagement?
Customer engagement looks at how you engage with your customers, how often you engage, and how your engagements benefit you both. There are loads of ways to measure customer engagement, with long-term benchmarks like net promoter scores (NPS) and more granular metrics like email opening rates.
These are important, but try not to get hung up on vanity metrics. Link clicks don’t necessarily translate into loyalty. Thousands of retweets don’t equal thousands of repeat customers. You get the idea.
What’s customer retention?
Customer retention looks at how many customers you’re able to keep. Metrics make a little more sense here, with churn rates and lifetime values (LTV) giving you a good insight into your returning customers.
Again, make sure you’re recording the right metrics for your business. For instance, if you sell web development services, you might consider how many clients have hired you repeatedly or recommended you to their network.
Customer retention – the key to your brand’s survival
Although customer retention and engagement aren’t quite two peas in a pod, they don’t exist separately. They’re both indicators of your customer experience (CX), and as such your ROI.
Why? Let’s get into it.
Retention > acquisition
We’ve all heard that overused point about acquiring customers and how it costs more than retaining them, but there’s a reason for that. Plus, the payoffs of retaining customers stretch far beyond saving on acquisition costs.
In fact, an increase in customer retention rates of just 5% could increase profits by up to 95%. So just to say it louder for the people at the back: retaining customers is key to your brand’s longevity.
Engaging customers = upselling & cross-selling opportunities
Here’s another stat for you. According to McKinsey, cross-selling could increase sales and profits by up to 20% and 30% respectively. When you convince your customers to stick around for longer, you’re in a stronger position to sell them another product or service of yours.
Engaged customers lead to more endorsements
Happy customers are the ideal advocates for your brand. They’re unpaid marketers, and they offer an authentic viewpoint that the rest of us trust. By engaging with your community to offer value, you’re increasing the chances of them introducing you to your next customer.
A happy community, a healthy ROI
Now we’ve touched on the why, let’s consider the how. How do you create an experience that keeps your customer relationships happy, healthy, and profitable in the long run?
Offer a consistently fantastic experience
You can’t get complacent after one or two positive experiences. Are you following up with post-onboarding support? Are you keeping your prices competitive? Your customers’ loyalty isn’t guaranteed, so make sure every interaction is top-notch.
Build a customer-centric community strategy
With a customer-centric community strategy, you can put the wheels in motion to strengthen your connections. Start by getting a firm grip on your customers’ current and future needs, and make sure every engagement or offer is packed full of value that aligns with them. Think less about short-term sales wins, and more about building a community that continuously gives back.
Build a community by giving, not selling (yet)
‘Value’ has become a bit of a buzzword, but it just means that you’re giving to your community, perhaps by:
- Answering customer questions via social media
- Hosting in-person or virtual events, such as educational webinars
- Sharing ungated content, like whitepapers
This can get your customers thinking of you as their thought leader for a product or service while keeping them engaged until their next purchase.
Personalise your CX
Personalisation is much more than ecommerce brands sending “Dave, you forgot these!” emails after a shopper abandons their cart. It’s about using data to get to know your customers and meet their needs at every stage, hopefully turning them into long-term advocates.
Incentivise your customers to advocate for you
Building a community of advocates organically is the dream, but there’s no harm in asking for a little help. Ask your customers to review or refer you and consider offering an incentive for doing so. It could be a low-value incentive from your point of view, but the ROI could be huge.
Leverage your data
To understand your customers and keep them hooked in the long run, you need data – from social media engagements to purchasing behaviour metrics.
How you use data will depend on your industry, goals, and budget, but you might:
- Predict when customers are at risk of dropping off and recapture their attention
- Spot cross-selling opportunities
- Reward the customers who keep coming back
You’re probably sitting on a mountain of insights right now, so invest in using them wisely.
Invest in a chief growth officer (CGO)
When it comes to driving a community strategy forward, you need someone to take the wheel – like a CGO who understands analytics and marketing. With a CGO at the helm, you’ll be in a stronger position to use the right engagement and retention metrics to improve your CX, while making sure everything you do delivers the best ROI.
(Not sure what a CGO does? Give our blog a read for an introduction to this emerging role, ‘The rise of the chief growth officer’.)
If you’re ready to optimise your community strategy and CX for a better ROI, you know where to find us. Drop us a line or browse our full range of business growth solutions here.