There is a long-standing notion that it costs five times more to get a new customer than to keep one. This, however, is a little misleading.
While the cost of gaining a new customer is more expensive than retaining an existing one, companies focused on the 5X benchmark risk missing what matters most – how to engage with customers in a way that consistently delivers value.
Instead, deciding how much to spend on acquisition and retention is better judged by overall customer lifetime value (CLV), the total revenue expected from a single customer, calculated by multiplying average purchase value, frequency and customer lifespan.
CLVs will be different for each customer and company so, as opposed to a blanket “spend 5 times more”, companies that consider the full potential of their customer will be much better able to allocate resources and prove ROIs, ultimately driving growth by increasing the value of their existing customers.
Improving CLV starts, naturally, with an excellent customer experience that engages customers before, during, and after the buying process and keeps your company top of mind.
In particular, post-purchase CX strategies are critical to find a balance between the cost of new business and the cost of retention. And what we see is that current strategies and tools like personalization and business text messaging can be easily deployed after purchase to create an exceptional customer experience that boosts lifetime value. To start, let’s look at some common, field-tested customer retention strategies.
Customer retention strategies
There are a wide variety of strategies that brands use to enhance the post-purchase customer experience and retain customers, including:
- Customer surveys: Surveys give customers a voice in how to improve your company
- Loyalty program: Customer accumulates points and rewards based on specific interactions with your brand.
- Emails: Engaging emails build an ongoing relationship with existing customers before and after purchase.
- Discounts and rewards: Surprise rewards or discounts to existing customers build goodwill and encourage re-purchase.
One other powerful strategy, however, stands out from this crowd: personalization.
How personalization solves this problem and better reaches customers
Regardless of channel or company, message or product, today’s customers expect and demand personalization. In fact, 72% of consumers say they only engage with personalized messaging and 42% are annoyed when messaging isn’t personalized.
When 80% of frequent shoppers only shop with brands that personalize the experience and 63% will stop buying from brands that deploy poor personalization, the numbers bear out that personalization is better at creating a customer experience ripe for retention.
Customers emotionally connect to your company when interactions are personalized, motivating them to continue doing business with you. But perhaps most telling is that 36% of consumers believe companies need to do more to offer personalized experiences, begging the question – how do you do more?
Personalization + business texting = retention
Emerging from the middling pack, business texting is a supercharged customer retention strategy that combines the power of personalized messaging with a customer’s preferred communication channel.
Given the ubiquity of smartphones, it’s unsurprising that 58% of consumers say texting is the best way for businesses to reach them quickly. And with open and response rates as high as 98% and 45%, respectively, no other medium comes close to texting in its reach.
That makes post-purchase texts a very powerful tool to show your appreciation in an engaging, personalized way, creating a memorable customer experience worth coming back to. Some areas where personalized post-purchase texts can be most effective include:
- Purchase confirmations – Texts confirming and thanking customers for their purchase make them feel valued and reassure them their order has been received.
- Shipping notifications – Personalized shipping and delivery texts keep customers updated on their order and reduce unnecessary service calls.
- Upselling – Inform customers of new and upgraded products and services, personalized according to previous purchasing habits.
- Cross-selling - Based on their personal data, texts can recommend items related to their interests and purchasing habits.
- Feedback - Text messages can ask customers for feedback on their purchases, letting them feel cared for and that their opinion is important.
- Loyalty programs – Keep customers in the loop on loyalty programs by informing them of benefits, point accumulation, flash sales, discounts and rewards.
Post-purchase texts, post profits
Sending a post-purchase text is just one of many occasions where you can leverage the combined power of personalization and texting.
Personalized texts can be strategically deployed along any number of critical points across the customer journey to create a better experience and drive your marketing strategy to better business outcomes by improving both customer retention and lifetime value.
In a marketing world characterized by increasing competition and tools, post-purchase texts are the solid, proven foundation upon which your business can build a better customer experience – for life!
To learn more about how Statflo can help your company get the most out of business text messaging, request a demo now.