Whether you’re a startup or a renowned enterprise, you’re always striving to acquire new customers to grow your business. But before that, you also need to ensure that you’re focusing on retaining your existing customer base.
This is essential as customer acquisition costs five times more than retaining your current customers according to Forbes. After all, there’s no point paying to attain new customers when you can’t retain them in the first place. Let’s delve deeper into how growth hacking can help you retain your clients.
What is growth hacking?
Coined by Sean Ellis in 2010, growth hacking is the process of rapidly experimenting with different combinations of strategies to help a business grow in a short period of time. Despite being a newer technique in the marketing field, growth hacking has shot up in success and has helped countless businesses accelerate their processes leading to profitability.
First implemented by companies in Silicon Valley, growth hacking has now evolved into a stream of work that helps brands cut through tight competition to come out on top.
Being a famous marketing practice in startups, this approach allows them to achieve high impact results with low cost solutions. It is apt for companies that have limited budgets and resources, and for small and large corporations alike that wish to spike their brand growth.
So, what do growth hackers do?
- Run various experiments at once
- Use the entire marketing funnel to find opportunities for growth
- Play an important role in product development as they have to concentrate on customer retention in addition to customer acquisition and more
All these reasons make growth hacking one of the most sought after methods among companies of all sizes.
What is customer retention and why do you need it?
While customer acquisition is finding new clients for your business, retention is the process of keeping customers that you already have. This process is important for growth marketing for B2B businesses. After all, getting new customers without catering to your existing ones won’t make your business grow. A mere 5 percent increase in customer retention boosts your business’ profitability from 25 percent to 95 percent, according to Review42.
More than 65 percent of an organization’s business stems from their existing customers, which shows you why you need to pay attention to them. An additional 86 percent of customers are most likely to purchase from the same brand if they have an overall great customer experience. This helps us understand that customer retention is one of the best ways brands worldwide become successful.
Customer retention helps you build a loyal customer base which doubles down to repeat purchases, more profitability, and increase in customer lifetime value (CLTV). Recurring customers are more likely to give positive feedback about your products and services, helping you get free promotions to their family and friends. This also means that the existing customers are more likely to pay for premium services.
You can calculate your retention by using the following formula:
Customer retention rate (x) = [(Customers at the end of a period – Customers at the beginning of a period)/Customers at the start of the period] * 100
Customer retention can be calculated for any given time period [monthly/quarterly/yearly].
But what happens when brands ignore working on retention? Businesses drop over $1.6 trillion by losing customers to their competition every year. Around 82 percent of customers in The United States of America alone stop interacting with brands when they are dissatisfied with their customer service. Losing customers is something that you cannot afford as a brand when you are focused on growing your business. Let’s take a look at the underlying growth hacking strategies that will help you retain your customers.
Six growth hacking strategies you need for retention
1. Email drip campaign
Email drip campaigns are pre-written automated email campaigns. These emails are focused on converting disengaged users into customers. They are set on autopilot based on the customer journey stage that a potential lead is on. Email drip campaigns educate users by sharing information that is relevant to each buyer’s journey stage to help coax the customer to convert. From sales, reminders, and deals, these campaigns are adept at capturing your audience’s attention and converting them into active customers. Drip campaigns aimed at customer retention help businesses reduce churn rate, increase customer engagement, and facilitate customers to understand the value of the brand’s products better.
Chatbots are an indispensable part of any modern business. They are incorporated into your website to help customers with answers to common questions. Built around the concept of customer-centric approach, chatbots are just one of the tactics used to increase customer retention.
After all, Business New Box states that more than 82 percent of customers look for immediate responses from businesses and won’t hesitate to drop them if they don’t respond in an adequate amount of time. Chatbots are instrumental in cases when you don’t have any customer service agents available or when your team is faced with overwhelming traffic. You can also use chatbots to collect customer data and gain insights into behavioral patterns that can help you design better customer retention strategies.
3. Reviews, testimonials and feedback
A report by Vendasta shows that 92 percent of individuals check for reviews before they make any purchase decision. Testimonials and reviews are first hand information sources for your target customers. It helps them learn if your products or services will resolve certain issues, and boosts your customers’ trust in your brand’s ability to provide what they need.
Additionally, 40 percent of consumers make a decision after on reading at least three reviews. So, when you get a chance, see what your target customers think works and doesn’t work for them and use this information to make what you provide better.
Businesses only find customers leaving their brand when they’re dissatisfied, so you need to ask them why they’ve left your service or help them with their issues before this happens.
The number one growth strategy that you should use is referrals. When customers are satisfied with your services, they can become your promoters, encouraging their family and friends to use your product or service. After all, 84 percent of consumers claimed that they trust product or service recommendations from their family or friends over other sources, according to Nielsen.
Referral marketing has also been instrumental in creating demand for products and services. Try using referrals by giving influencers promotional codes that give them a percentage of the sales made when their audience purchases with it.
5. Constant re-evaluation
Marketing strategies that you’ve used in the past may no longer be adding any value. This is why you need to be constantly re-evaluating your strategies as your audience’s needs change. Doing this will keep your business up-to-date with what is and isn’t working, and help you optimize when appropriate. Being on the constant hunt for opportunities that will add value to your existing customer base will help you sustain your business and improve your retention rate too.
6. AI and machine learning
Multi-armed bandit testing:
Let’s suppose that Netflix has to choose a thumbnail for a series from over 30 creative options. They can’t afford to opt for A/B testing with so many options as this will cost them time and viewership.
Here steps in multi-armed bandit testing, a technique that uses machine learning algorithms to prioritize assets that perform well, and gives less traffic to those that underperform.
Using this, Netflix allocates artworks to different customer segments and analyzes their responses to those thumbnails in real-time. When faced with decisions that have strict time constraints, this approach helps find the right options that appeal to minimize losses and retain customers.
Predictive analytics is a branch of advanced analytics that uses different techniques including machine learning, statistics, data mining, and artificial intelligence to predict future actions that customers will take.
Organizations can use predictive analytics to study their historical data to learn and project what customers may like and what they will avoid. Since machine learning algorithms are iterative, they constantly learn by using statistics, math, and probability to understand the underlying reasons for churn rate in your business. Though data analytics may seem tedious, unlike humans, machine learning gets better by accumulating more data. You can rely on the results from this approach and work on perfected growth marketing strategies to retain your customers.
Good growth marketing takes skill
Creating an excellent growth marketing strategy doesn’t come easy. Fortunately, with the right tips and tricks, you can get exponential growth for your business from end-to-end. Our guide, What is Growth Marketing? Your Complete Guide to Business Growth, will help you take your marketing to the next level.
Now that you understand how growth hacking and customer retention work together to propel your business to sustainable growth; you can start building your own strategies to make your way to success. However, we understand that growth hacking is not an easy task to start or manage.
That’s why you need a growth marketing agency that can help you achieve your goals. Growth Marketing Genie has a team of seasoned growth hackers who can help you design and execute winning growth marketing strategies that can take your business to the next level.
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