Having this number, Starbucks is easily able to calculate how much they would be able to invest in their customer acquisition and customer retention strategies.
While speculative, a huge part of the reason why the LTV of a customer of Starbucks is so high, despite their relatively low-profit margins per product is the customer satisfaction rates they have. (62% Very Satisfied, 27% Satisfied and 11% Not Satisfied)
Despite the shaky economy in the first part of the 2010s, Starbucks continued to successfully open new stores. The reason for their confidence?
Knowing their KPIs and making sound business decisions, despite overall market conditions.
How do you decide how much to invest in customer retention?
Go back to your KPIs and add these numbers. Start building your business analysis and profitability analysis based on your LTV to CAC ratio value instead of simple profit margins.
Average Customer Lifetime - The average time a customer spends with your brand
Average Customer Value - The average value a customer brings to your business for a period of time
Lifetime Value - The average value a customer brings to your business for their lifetime with your brand
Customer Acquisition Cost - The average spend your business makes to acquire a new customer
Lifetime Value to Customer Acquisition Cost ratio - The LTV to CAC value
Analyze Where to Spend More
Step #1: Analyze your CAC based on Industry Averages ✔
According to research from Deloitte, 44% of customers are more likely to purchase from a brand again, if their experience is personalized.
Trust in the brand is what builds customer loyalty and in turn, the key factor to increasing your customer retention.
How to achieve it?
Regardless of whether your marketing strategy is inbound or outbound, make sure to employ all best practices to make the experience of your customers more personal.
Include the Customer’s Name (and Face) Where it matters - Sending emails? Address the customer by name. Sending postcards? Why not include a photo of them, if you have one.
Separate your Buyer’s Persona into a few actionable groups - You should already be addressing the issues of your customers that your product/service solves. To go more personal, separate your buyer’s persona into a few actionable groups.
Want to Have a Personalized Email Marketing Strategy?
Including the “Name” tag in a subject line isn’t the best, but it’s a good way to start.
Gamification is a great way to increase customer retention while improving the customer engagement with various other aspects of your business.
It’s widely used to empower both customers and employees. And in fact, according to ProgressiveGrocer, 87% of retailers will use gamification strategies in their operations in the next five years.
Make sure you are ahead of the trend.
How to achieve it?
A gamification system can be tricky to implement and may require the hiring of a firm, experts or developers to properly implement in your business.
However, here’s how to start building a gamification system.
Identify Key Points of Your Customer Retention Journey - Map out your customer retention journey. What does it look like? What are the key points of that journey? The customer retention journey should include the journey of your customer after a purchase and the journey of a returning customer.
Brainstorm ways to track and showcase “progress” to users for each of those points - These can be rewards, badges or anything that would provide value to your customer, educate them on your branding and keep them coming back.
USE LOYALTY PROGRAM TO REWARD YOUR MOST ACTIVE CUSTOMERS
Starting out as a gamification tactic, loyalty programs have transformed into a beast of their own.
26% of customers find brand loyalty programs and rewards to be a primary factor in their decision to continue their service with a company.
Sufficit to say, having and actively promoting your company mission is not only a must, but can increase your customer retention and net promoter score at the same time.
How to you achieve it?
Do an Active Survey of Employees, People Close to the Business and Outside Thought Leaders - Interview people on what they think about the business values. Check their perception on the business and ask how the business fits the broader industry.
Do Research on your Buyer’s Persona - What values do they promote? Which ones are they against?
Create a Draft and Run it with a Customer Focus Group - Employ a focus group of active customers, returning customers, potential customers, people who are interested in the business and people who won’t have an interest in the business.
Improve the Draft Based on Feedback, Publish and Promote - Promote your company mission on a smaller scale first. Receive feedback, improve and promote again.
Implement your Company Mission Throughout the Buyer’s Journey - Make sure to use it in ads, in follow-up campaigns and wherever else you think possible.
To ensure proper response on social media inquiries from customers
Determine the tone and voice of your replies - Make sure to build out your DM voice based on your buyer’s persona.
Create your Company DM Workflow - If you outsource your CRM, contact your firm for DM replies. Both Social Media (SM) and CRM firms are starting to offer SM replies as a service. If you don’t make sure to give the task of SM replies to active team members and make sure to cover the active hours of your business both during the week, but also during the weekend.
Set a Time Limit for your Replies - Make sure to respond in the span of 6-10 hours after an inquiry. The sooner, the better.
Curate ready-to-go messages - Common brand statements, lines and responses should be available to improve your reply times. However, make sure to keep the resulting message personal.
Use Common SM Reply Tactics to Increase Intimacy - People are used to sending and receiving GIFs, Stickers and Emojis on SM. Based on your brand voice and determined tone, make sure to also include the proper engagement drivers in your replies.
According to research from Gallup, customers are far more emotionally engaged with a brand depending on the quality of customer engagement.
Speed is also a factor, but it’s far less important than the quality of the response.
Your brand or a business doesn’t need to have all tactics set in place, but the ones you have implemented, should be focused on driving a quality-first experience.
How to achieve it?
Inspect all aspects of your CRM, both external and internal - The best way to do so is to test your CRM process. I've explained how to do so a few paragraphs above.
Identify Points of Fault/Points of Improvement - Which aspects of your CRM process can you improve?
Ask your customers for direct feedback - Actively engage with a portion of your customers that went through your CRM experience, interview them and provide value back to ensure higher number of responses.
Tailor your quiz around the interests of your buyer’s persona
Make sure to make the customer feel valued, while continuously educating them on all aspects of your brand
Make sure to tailor your questions in a manner to improve the relationship with your customer
POSITION YOURSELF AS THE “CUSTOMER WHISPERER” IN YOUR INDUSTRY
People love supporting the David in a David vs. Goliath battle. Positioning your brand as “the one that is aware” and “the one that understands the struggle” can have a positive impact on your business.
AMD is a great example of this in the technology sector.
Having lower performance processors than their main competitor Intel, they’ve launched their “Ryzen” brand addressing the main issues customers had with their competitor (primarily price, care and awareness).
This lead to AMD growing their computing and graphics side of the business with as much as 69% on the year.
Remember the Mac vs. PC ad campaign. Same thing!
How to achieve it?
Have an active list of your main competitors that have the same customer base
Inspect the marketing campaigns and public customer response of your competitor
Find the main issues customers have with your competitors
Inspect your business to improve on those issues
Build a marketing message and a brand strategy to position yourself as the brand who understands, deals with and has an active and aware approach towards those pains
Position the campaign as “your business” vs. “your direct competitors” but make sure to follow all advertising and marketing practices when you do
BUILD OUT EXPERIENCES TO ENGAGE CUSTOMERS WITH YOUR BRAND VALUES
Your customer experience should extend way beyond the normal customer journey.
Engaging your customer by actively building out experiences with the sole purpose of customer advocacy is a great way to improve your customer retention scores.
A great example of this is ADOBE and their highly interactive experience event, the Adobe Summit. In 2018, the brand engaged popular celebrities to talk alongside their CEOs about the company’s future products,
The result: 800,000 live viewers. 💥
How to achieve it?
Consider Your Resource Base - Which portions of your team have the most free time? Developers? Marketers?
Brainstorm with your Team - Pitch these experiences as passion projects related to your main business activity
Work with your Project Manager to Build a Timeline - Even though a passion project, these experiences should still follow a proper timeline.
Implement Tactics for Customer Interaction - Track the customer experience and communicate with them to review and analyze the value of this experience to your overall business.
LEVERAGE SOCIAL, AUTHORITY AND SCIENTIFIC PROOF
There’s a great blog by Photoslurp explaining how Fashion brands are using social proof to improve their customer retention.
The best part? ✨
These tactics can work for ANY type of business. ❗❗❗
How to achieve it?
Use the power of User generated content for Social Proof.
Build out a User Generated Content campaign to entice your existing customers
Use the User Generated Content to improve your existing social proof campaign
Educate your customers to build advocacy
Contact industry insiders, specialists, influencers or related scientists and build a campaign around authority and scientific proof
Educate existing customers with a campaign on why the product is good/how to best use the product
Spread the love Everyone and their dog are looking into SEO Backlinks, but you don’t know where to start? The most comprehensive backlinks guide for 2020 is here! Whether running a small startup or a Fortune 500 company, you’re probably familiar with the benefits of Search Engine Optimization. Having your website appear on top of […]