Strategies for Retaining New Customers — Designing Lifecycle Campaigns
What is Customer Retention?
Customer retention is described as the process of encouraging existing customers to buy more of your company’s products or services. The consumer has already been converted at least once, as opposed to customer acquisition or lead generation. The best customer retention methods allow you to cultivate long-term relationships with customers who will become loyal to your business. They may even become brand ambassadors by spreading the news to their own circles of influence.
According to studies, selling a product to existing consumers has a 50–60% likelihood of success, but new acquisitions have a 5–20% chance of success. As a result, keeping an existing customer is crucial. Lifecycle campaigns are one of the most effective ways to retain a new customer.
What is Lifecycle Campaign?
Customer lifecycle marketing is a well-coordinated marketing activity that reaches out to customers at every stage of their journey. The goal of this strategy is to assist you to retain your current customers.
How to Study the Journey of a Customer?
There are numerous techniques for creating a Lifecycle campaign; however, I will attempt to explain one method in which the customer’s journey is examined from the perspective of product and purchase behavior patterns. We can better understand how a customer transitions from his first visit to his second visit if we can detect it in the past for customers who got converted.
To understand this transition one needs to study what a customer is buying in his first visit and similarly what a customer is buying in his second visit, how many days an average customer is taking to come back if he is buying a certain product x in his first visit.
Similarly, we have to find the results for other main products in the inventory.
After that, we need to figure out how long it takes Customers to return for their second visit on average (Gap between first and second visit)
On the x-axis, we have cumulative customer percentages, and on the y-axis, we have the number of days it took the customer to return. We can observe that 45 percent of customers are converted in the first 45 days, and 75 percent of customers are converted in the first 240 days after their initial visit.
These conversion milestones combined with our product preference derived earlier can be used to create a stage-based lifecycle campaign like below.
Ideology — We can tell from our data that most customers who bought a ‘AAA’ on their first visit chose ‘BBB’, ‘AAA’, ‘CCC’, and ‘DDD’ in that order for their second buy. So now we can target consumers in the same categories to keep them, and if they don’t convert, we can discount them later in the lifecycle by increasing the intensity of the offers for each stage.
Now Customers that purchase different products during their initial visit can create their own lifecycles. Please remember that a lifecycle can be formed in a variety of ways; for example, you can combine numerous tactics to boost hit rates, substantially discount, conduct a latency study for each product, and the results will vary based on the industry and brand. The more variables we add, the more personalized it becomes and the better the results become.
Outcome: We can improve the conversion of new consumers to repeat customers, reduce the organic latency of new customer transactions, and keep our customers engaged indefinitely.
