Does customer retention really matter? The simple answer is absolutely! Customer retention is a great way to increase revenue, decrease expenses, and ultimately grow your bottom line. Ready to dive in? We’ve explained it all, and then some, in this LM Creative Article.

TABLE OF CONTENTS

Key Takeaways

  • Customer retention is vital for sustained business growth and profitability, as it’s cheaper to keep existing customers than to find new ones.
  • Calculating Customer Retention Rate (CRR) helps businesses understand how well they’re maintaining customer relationships compared to industry benchmarks.
  • Implementing strategies like personalized communication, loyalty programs, and targeted re-engagement tactics can significantly increase the likelihood of customers making repeat purchases.

Are You Leaving Revenue on the Table?

There is a common misconception that once a customer makes a purchase, the transactional journey concludes. However, savvy entrepreneurs understand that the true success of their business lies in nurturing ongoing relationships with their customers.

Customer retention is a pillar of sustained growth and profitability for every business. If you’re not actively working to engage with your customers after they have made a purchase, you are leaving money on the table.

In this article, we will explore effective customer retention strategies and tactics any business owner can use, whether you’re just starting out or have been in business for years.

From establishing personalized communication channels to leveraging customer feedback, each tactic plays a role in fostering loyalty and customer engagement that keeps your customers coming back for more.

What is the Sales Funnel?

An Introduction of Where it All Began and What it is.

Since its inception in 1898 by businessman and advertising advocate Elias St. Elmo Lewis, the sales funnel has been a cornerstone of marketing strategy. Despite the evolving landscape of marketing, advertising, and sales, this conceptual framework remains a reliable guide for businesses seeking to understand and navigate the customer journey.

At its essence, the sales funnel illustrates the progression of a potential customer from initial awareness to eventual purchase.

Think of it like a roadmap, outlining the stages individuals take as they transition from being unaware of a product or service to becoming customers. The metaphorical ‘funnel’ shape represents the gradual narrowing of focus as leads progress through each stage, with a select few emerging as customers at the bottom.

For any business owner, the primary objective is clear—continually replenish the top of the funnel with qualified leads while maximizing the conversions at the bottom. The more people who are aware of your business, the more you can convert into customers. This process is simple enough on paper and entails attracting attention, creating interest, nurturing desire, and ultimately promoting an action otherwise known as making the sale.

While the specific stages of the sales funnel vary based on your industry and your business model, the fundamental stages of the funnel endure:

The Fundamental Stages of the Sales Funnel

While the specific stages of the sales funnel vary based on your industry and your business model, the fundamental stages of the funnel endure:

  • AWARENESS

    This initial stage involves capturing the attention of potential customers and making them aware of your products and services. Awareness is all about standing out in a crowded marketplace and piquing curiosity.

  • INTEREST

    Once awareness has been established, the goal shifts towards cultivating genuine interest in your products and services. This stage is all about providing valuable information, addressing pain points, and highlighting the unique benefits you offer. It’s about engaging potential customers and compelling them to learn more.

  • DESIRE

    With the interest piqued, the focus now shifts to nurturing a sense of desire, want, and need for your products and services. This involves showcasing the value of your products and services, demonstrating how your products and services fill a specific desire, need, or want, and how your product or service enhances the life of the customer better than anything offered by your competitors. The goal of the Desire Stage is to create a strong emotional connection between your product and service and your customer. You need to drive their desire to purchase.

  • ACTION

    The combination of the above stages leads qualified leads through the funnel and transitions them into customers. The Action Stage involves facilitating the purchasing process, overcoming any remaining objections or barriers, and providing clear calls to action. Until the lead takes the desired action, whether it’s making a purchase, signing up for a service, or taking another desired action, they are not a customer yet. The goal here is to guide the lead toward conversion and ultimately acquire a customer.

In a nutshell, the sales funnel serves as a foundation framework for understanding the customer journey, from initial awareness to eventual conversion. However, customer acquisition is just the beginning. Far too often, business owners get stuck in a perpetual loop, always chasing after new customers while neglecting the crucial step that comes after acquisition—customer retention.

Instead of pouring all your efforts and marketing dollars into customer acquisition, imagine the possibilities if you took a portion of those resources to develop and maximize the lifetime value of your existing customers.

After all, just because someone purchases from you once doesn’t guarantee they’ll keep coming back. A one-time purchaser does not make a loyal customer. Loyalty has to be earned by building trust and nurturing relationships. If you’re not doing that, then you’re leaving money on the table.

Before we dive into the subject matter at hand, let’s pause to ponder some tough questions:

  • What happens after you make the sale?
  • What steps are you taking to nurture relationships and build trust with your customers?
  • How much potential revenue are you losing out on by focusing solely on new leads and customer acquisition? And most importantly,
  • How can you keep your customers coming back for more?

These questions will guide our exploration as we challenge the misconception that the cycle ends with a sale and reimagine the strategies you use for building a thriving business.

Customer Retention Rate

A look at what it is, how to calculate it, and using Industry Benchmarks.

Let’s take a look at how to determine your Customer Retention Rate (CRR) and the benchmarks you can use to gauge your success. Understanding these metrics is important for making informed decisions that will help your business grow and become sustainable.

CRR is a metric that measures the percentage of customers a business retains over a specific period of time. Calculating CRR provides valuable insights into the effectiveness of your customer retention efforts and helps you identify areas for improvement. Your CRR can be used as a Key Performance Indicator (KPI) to help you measure success and achieve goals.

Calculating Your CRR

Calculating your CRR is straightforward. Here is the formula:

CRR = ((E – N) / S) x 100

E = the number of customers at the END of the period
N = the number of NEW customers acquired during the period
S = the number of customers at the START of the period

Let’s do an example:

Let’s say your business had 500 customers at the start of the year (S = 500), acquired 100 new customers during the year (N = 100), and ended the year with 425 customers (E = 425).

CRR = ((425 – 100) / 500) x 100
CRR = (325 / 500) x 100
CRR = 0.65 x 100
CRR = 65%

This means you have a customer retention rate of 65%—but is that good? Can it be better? It’s all a matter of perspective. I know that wasn’t the answer you were expecting, but it’s the truth. Calculating your CRR isn’t a math exam, so 65% isn’t necessarily a C grade; in fact, you may be exceeding industry norms.

Industry Benchmarks

Industry benchmarks provide you with the best reference point for evaluating the performance of your customer retention efforts.

These benchmarks will vary significantly across different industries due to a variety of factors. The very product or service being offered is one difference. Consumer behaviour changes from one industry to the next, the buyer’s journey changes, the competition level varies, and on and on.

For example, in industries with high competition and frequent purchases, such as retail, a CRR of 63% is considered excellent. In contrast, in industries with longer purchasing cycles or niche markets, such as luxury goods, a CRR of 80% may be the norm.

When making the comparison, you need to compare apples to apples, so find the industry benchmarks for your industry and don’t worry about what is happening in others. Understanding the context of your industry is crucial for setting realistic retention goals for your business.

Let’s go back to our example of the 65% CRR. Let’s assume you are in the Hospitality, Travel, and Restaurant Industry, where the Industry Average CRR is 55%—you’re crushing it. If you are in the Retail Industry, with an average CRR of 63%, you’re slightly above normal. If you are in the Professional Services Industry, with an average CRR of 84%, you have room to make some improvements.

Moreover, using your own historical data allows you to compare and contrast your CRR to make even better assessments and achievable goals.

Moving Beyond the Funnel

Exploring what’s happening in the post-purchase phase

Alright, so let’s take a look at what’s happening in the post-purchase phase, also known as the Retention Phase. You acquired that fantastic new customer – now, instead of forgetting about them, let’s keep them coming back for more!

The Retention Phase marks the next chapter in the buyer’s journey and emphasizes the importance of nurturing and maintaining long-term relationships with customers. Unlike the early stages of the sales funnel, which focus on acquisition, the Retention Phase centers on fostering loyalty, maximizing customer lifetime value, and driving repeat business.

While the top of the funnel is somewhat linear, what happens after a customer makes an initial purchase is more cyclical in nature.

Picture it like this: if the metaphorical ‘funnel’ represents the gradual narrowing of focus as leads progress, with a select few emerging as customers at the bottom, think of the post-purchase phase more like a feeder lane leading to a roundabout, where the roundabout symbolizes the Retention Phase.

At its core, the Retention Phase illustrates the progression of a customer from adoption to brand advocacy.

For any business owner, the primary objective is to keep customers on the roundabout for as long as possible. The more customers you retain here, the higher your customer retention rate climbs, and the more customers you can try to develop into repeat, loyal customers. On paper, the process is relatively simple, involving facilitating adoption, encouraging retention, stimulating expansion, and generating advocacy.

While the specific stages of the Retention Phase vary based on your industry and business model, the fundamental stages of the roundabout are:

The Stages of the Retention Phase

While the specific stages of the Retention Phase vary based on your industry and business model, the fundamental stages of the roundabout are:

  • ADOPTION

    In the Adoption Stage, customers transform from first-time buyers to fully embracing and utilizing the products or services they’ve purchased. Here, the goal is to ensure your new customers realize the value of their purchase and become satisfied with their experience.

  • RETENTION

    Once you’ve successfully onboarded your clients and they are satisfied with the experience, it is time to maintain ongoing engagement with customers to cultivate loyalty and keep them coming back for more. In the Retention Stage, the goal is to deliver consistent value and address customer needs and concerns proactively to build and strengthen the relationship.

  • EXPANSION

    As your satisfied customers continue to loop the roundabout, it’s time to seek out opportunities to resell, upsell, or cross-sell additional products or services to your existing customers. Here, the goal is to increase your customer’s lifetime value by stimulating additional purchases while maintaining customer satisfaction and positive user experiences.

  • ADVOCACY

    This is the pinnacle stage every business strives for. If you’ve completed all the other steps successfully, you’ve built customer loyalty and generated brand ambassadors, where your most loyal customers actively promote your business to others. During this stage, the goal is to keep delivering excellent customer service and engagement, solicit feedback and testimonials, and reward loyal customers for their support.

In a nutshell, what happens after a sale is made is retention. It is during this stage that the real magic of business happens. Yet, it is often overlooked, taken for granted or assumed. Whether due to a lack of awareness, resources, or sometimes, a misconception that once a customer is converted, they’ll naturally keep coming back for more. However, the reality is far from that.

I can’t help but think about a local business in my hometown that shuttered its doors back in 2019 after being open for 20+ years.

From time to time, I found myself wandering the aisles of what was a pretty amazing rural ‘department’ store that carried a variety of high-end products, from outdoor gear to clothing. Notice how I said, from time to time?

The owner had this assumption that because their store was the only one like its kind until you hit the next urban centre, they didn’t need to promote themselves to gain new customers, nor did they need to communicate to keep existing ones.

I, like everyone else who shopped there, rarely walked out empty-handed. The problem with the lack of communication is that after a while, I’d forget, as did many, about the products and services and would find myself at Cabela’s or Canadian Tire to make my purchases.

Repeat customers and customer loyalty are not guaranteed.

You have to make an effort to stay top-of-mind, facilitate adoption, encourage retention, stimulate expansion, and generate advocacy. Retention is where the true art of business lies. Nurturing long-term relationships that fuel sustainable growth and success. Allocating resources to customer retention will ultimately keep your customers coming back for more.

Growing the Value of Existing Customers

How Customer Retention Increases Your Bottom Line

Customer retention is not just about keeping customers; it’s about maximizing their value to your business over the long term. There are many, many benefits to introducing customer retention tactics or increasing the ways you work to retain your customers. Here are just a few benefits of prioritizing customer retention:

  • INCREASED PROFITABILITY

    Retained customers are more likely to make repeat purchases, resulting in higher revenue and profitability for your business. According to research conducted by Bain & Company, increasing customer retention rates by as little as 5% can lead to profit increases of 25% to 95%, depending on your industry. Of course, you can also do that by acquiring new customers; however, acquiring new customers comes with a higher price tag and the need for more resources, which leads us to the second benefit.

  • REDUCED MARKETING COSTS

    Depending on your industry, it can cost 5 to 25 times more to acquire a new customer than to retain an existing one.

Let’s say, for example, your Customer Acquisition Cost (the amount of money you need to spend to take a prospect from awareness to purchase) is $220, which is an industry average for Hotels and Resorts.

In this industry, customer acquisition is five to eight times more than retention, which means the cost to retain a customer is between $27.50 and $44.

In this example, the difference is one new guest booking a stay versus 5 to 8 returning customers booking a stay.

Having worked with several resorts, the difference is significant, with an average booking of a three-night stay for $750.

1 New customer with a $750 purchase minus $220 in marketing equals a profit of $530
5 Repeat customers with a $3,750 purchase minus $220 ($44 per customer) in marketing equals a profit of $3,530
  • HIGHER CUSTOMER LIFETIME VALUE

    Naturally, this leads to the fact that retained customers have a higher lifetime value (CLV) compared to one-time purchasers. Customer Lifetime Value represents the total revenue a customer generates for your business throughout their relationship with you.

    By nurturing long-term relationships, you can increase your CLV and even reduce your retention expenses, further enhancing your profit margin.

    Sticking with the resort example, customer retention resources can be as simple as booking your customer’s next yearly stay during check-out. No marketing dollars are needed; simply 10 minutes of your time invested in securing the date.

  • CLOSE MORE SALES

    Another amazing benefit of retaining customers is that you have a 60 to 70% chance of selling to an existing customer compared to a 5 to 20% chance of closing the sale with a new customer.

    In the world of marketing, those odds are spectacular.

    Moving beyond the reselling of the same product (i.e. the three-night yearly retreat at the resort), what can you cross-promote or upsell to your existing clients to close more sales with these better odds? Are you an artisan who specializes in organic soap – do you have a fabulous new scent just in time for the upcoming holiday? Instead of just putting that out into the world, let your current customers know about it and watch your soap fly off the shelf.

  • BUILD A LOYAL FOLLOWING

    Loyal customers are 57% more likely to purchase from you than the competition.

    Having a customer retention plan in place and using it to build long-term relationships with your customers will help you build a loyal following. With this comes a sea of marketing opportunities that won’t cost you a penny, like referrals, feedback, testimonials, and a competitive edge that marketing just can’t buy.

There are many more benefits to creating a customer retention strategy, such as improved brand recognition and reputation, enhanced competitive advantages, and even better quality customer data and insights that will help your business grow even more. The ones discussed in this article are the most noteable.

By prioritizing these aspects, not only will you enhance your business’s financial health, but you will also build a stronger, more resilient brand. As you move forward, consider how you can implement tactics that will help you achieve these benefits to maximize the value of your existing customers and drive sustainable growth for your business.

6 Strategies for Retaining Customers

Let’s Move Beyond the Initial Purchase.

Regular Engagement Through Newsletters

A common theme throughout this article has been building long-term relationships with your customers. Newsletters provide a direct and effective way to stay connected with your customers. They allow you to share valuable content, promotions, and updates, keeping your brand top-of-mind and adding value to your customers’ lives.

Implementing a newsletter as part of your customer retention strategy is a really good starting point that is relatively simple to implement, especially once you get the hang of things. Newsletters are also very cost-efficient. With the plethora of email marketing tools available today, such as MailChimp, Aweber, Constant Contact, and Zoho (just to name a few), you can create and send professional newsletters without breaking the bank.

Email marketing also boasts an impressive return on investment (ROI). Of course, this isn’t an automatic guarantee, but when you get your newsletter working for you, you can expect an average return of $36 to $40 for every dollar spent.

Surprise and Delight Your Customers

Surprise and delight tactics are so simple to implement and involve going above and beyond to exceed customer expectations to create memorable experiences.

This is one of my favourite tactics to implement, and it’s also my favourite to be on the receiving end of. The specific tactics can be as simple as personalized thank you notes (bonus points for handwriting the note), unexpected discounts or gifts, exclusive access to special events or promotions, upgrades or enhancements to the product or service they’ve purchased, and so on.

By surprising your customers with unexpected gestures of appreciation, you create a sense of loyalty and goodwill. You make your customers feel important to you, and that encourages them to continue supporting your business.

Implementing surprise and delight tactics as part of your customer retention strategy can go a long way toward building customer loyalty quickly. This comes with a plethora of benefits that marketing cannot buy.

Loyalty or Rewards Programs

Loyalty or rewards programs are a powerful tactic to incorporate into your customer retention strategy. These programs incentivize customers to make repeat purchases by offering rewards or benefits for their continued patronage.

Loyalty and rewards programs can take various forms, such as points-based systems (like Air Miles), tiered memberships (like Sephora’s Beauty Insider program), or exclusive perks for loyal customers (like Amazon Prime).

There are many types of loyalty programs and models you can incorporate into your business. Whether you allow customers to rack up points, reward them for spending more with you, or even charge them a fee to receive perks, loyalty programs all have one thing in common—they keep your customers coming back for more.

Rewarding customers for their loyalty can encourage repeat business and strengthen brand loyalty over time. Implementing a loyalty or rewards program involves designing a program structure that aligns with your business goals, promoting the program to your customers, and tracking and measuring its effectiveness to make adjustments as needed.

Upselling

This is a strategy that most of us are familiar with (“Would you like to supersize that for $0.99?”) in which you encourage your customers to purchase a higher-end or larger product or service than the one they originally intended to buy.

Upselling not only increases the average order amount but also enhances the value the customer receives. This technique can be implemented in various ways by any business.

For instance, a resort could upsell by suggesting an additional night’s stay or an upgrade to a luxury cabin. A café might upsell by recommending a larger size drink or a premium blend over a regular cup of coffee. The key to successful upselling is to ensure that the offered upgrade is genuinely valuable to the customer, making their purchase decision and experience with the product or service more satisfying.

Cross-selling

Cross-selling is a similar strategy to upselling, except this time, you are presenting your customers with an additional product or service that complements or enhances something they are purchasing from you.

This strategy can help business owners increase the number of products or services in the cart and generally provide a more comprehensive deliverable for their customers.

For example, recommending batteries when a customer buys a gadget or toy that needs them or suggesting specialty shampoo that helps maintain freshly dyed hair at a salon. Cross-selling works best when the suggested products are relevant and add real value to the customer’s purchase, making them feel understood and well-served.

By effectively using one or both of these tactics, businesses can significantly boost their revenue while enhancing customer satisfaction. These strategies help deepen customer relationships by providing more tailored solutions and demonstrating a genuine understanding of their needs. It’s a great way to build loyalty and ensure customers keep coming back

Community Building:

Community Building involves creating a sense of community around your brand. It provides opportunities for customers to connect with each other and with your business on a deeper level. There are many ways to build a community, including hosting events, creating online forums and social media groups, encouraging customers to contribute content related to your brand, using specific hashtags, and more.

Building communities around your brand can be fun and rewarding! It gives you more direct access to your customers, lets you get to know them better, and shows you how they use your products or services.

For example, the organizers of a yearly music festival in my hometown host regular concerts and open mic nights to keep festival-goers and musicians entertained all year long, not just during the festival weekend. Similarly, a life coach friend of mine creates closed Facebook groups for each group session she leads, allowing participants to connect over a single topic.

This strategy has many benefits, including increased customer loyalty, as customers feel more connected and committed to your brand. A strong community can also become a powerful marketing tool. Satisfied and engaged customers are more likely to become brand advocates, provide feedback, and contribute to your word-of-mouth marketing.

By investing in community-building efforts, businesses can create a loyal customer base that not only supports them through purchases but also contributes to the brand’s growth and success through active engagement and advocacy.

The Key Takeaway About Retaining Customers

Customer retention is a crucial aspect of any successful business strategy. By focusing on retaining existing customers, businesses will increase profitability, strengthen brand loyalty, and create long-term relationships with their customer base.

We’ve explored several key tactics businesses can implement to kickstart or enhance a customer retention strategy, but so many more can be explored. From personalized customer experiences to providing exceptional customer service and everything in between, the possibilities are endless.

No matter what you choose to do, remember that the key is to prioritize building meaningful relationships with your customers. Continuously find ways to connect with them and add value to their experience with you, your business, and the products or services they are purchasing from you.

All is Not Lost: The Art of Re-engagement

It’s never too late to engage with your customers.

When we work with clients on implementing customer retention strategies, it is usually at this point in the conversation that they get a disheartened look on their faces as they realize the, sometimes decades-old, customers they haven’t engaged with because they didn’t have a plan in place. Yeah, it can be a blow, but it’s nothing you can’t overcome.

First things first—get your plan in place and start retaining all the new clients entering your wheelhouse. Then you can switch gears and focus your attention on winning back inactive customers. It’s never too late to begin prioritizing customer engagement and implementing strategies to win back inactive customers. Having a solid retention plan in place moving forward can prevent similar situations in the future and ensure that you’re consistently nurturing and strengthening customer relationships.

Assessing the Situation

Engaging with customers whom you haven’t engaged with before or with those who have become inactive may seem like a daunting task, especially if the entire process is new to you or if it hasn’t been a priority before. However, it’s never too late to start, and you don’t have to do it all at once. Even reaching out to a few inactive customers a day can be a game-changer.

Moving forward, the key is to approach re-engagement with a strategic mindset, a willingness to listen and adapt, an understanding that you won’t win every customer back, and a preparedness that the feedback you receive may not always be positive. Use those conversations to learn about where you may have failed and how you can turn those failures into successes for all your other customers.

To assess the situation, start with your customer base and identify inactive customers. This can be done by analyzing purchase history, website activity, email engagements, and other data you have collected over the years. When you analyze this data, you want to look for both active and inactive patterns and trends. You will gather a significant amount of information that will let you segment your clients based on various criteria.

You will also be able to identify some quick categories, like:

  • ACTIVE CUSTOMERS

    These are customers who consistently purchase from you, showing a regular pattern of engagement and loyalty. If you’re just developing a customer retention plan, this segment is going to love it because they already love your business. If you already have a customer retention strategy in place, perhaps this segment receives an extra perk for being such great customers.

  • SPORADIC CUSTOMERS

    These are customers who purchase from you on a seemingly random basis. Whether you’re kickstarting your retention plan or tweaking the one you have in place, this segment of your customer base is going to need further analysis. Those random buying patterns are probably not as random as you think; you just need to dig deeper to find out what triggers their purchase decisions. (More on this in a little bit.)

  • INACTIVE CUSTOMERS

    These are customers who haven’t made a purchase with you in quite some time. They may have previously been active but have since disengaged from your brand. This segment of your customer base is going to need more work, specifically in obtaining feedback to understand why they became inactive. Perhaps there was a customer service failure, maybe another company’s communication strategies filled a void and swooped them away, or perhaps the way they make their purchasing decisions changed. Regardless of the reason, knowing why customers leave allows you to identify areas for improvement and create strategies to mitigate future customer inactivity or win inactive customers back.

Identifying the Patterns and Trends of Sporadic Customers

Understanding why customers buy sporadically will help you develop more effective engagement strategies. Unlike inactive customers, who have disengaged entirely, sporadic customers still interact with your brand.

These customers may purchase at irregular intervals, driven by various factors that influence their buying habits. By identifying the patterns and trends, businesses can alter their customer retention efforts to better engage with customers at appropriate times. When you are analyzing your customer base data, see if you can identify any of these patterns or trends and then segment your customer list based on those trends and patterns.

  • SEASONALITY CONSUMERS

    Seasonality Consumers are those whose purchasing behaviour is influenced by specific seasons or times of the year. Plan seasonal marketing campaigns and product launches around peak times to engage these customers. These campaigns can include special promotions, but the key here is to be top-of-mind during the peak seasonal buying times identified by your customer data. For example, send out targeted email campaigns for winter clothing in the fall.

  • BUDGET-CONSCIOUS SHOPPERS

    Budget-conscious Shoppers are customers who primarily shop during sales or discount periods to get the best deals. Engaging these customers will involve making sure they are aware of relevant deals and promotions you are running or by creating deals just for them. Loyalty programs that offer regular discounts work well for budget-conscious shoppers, and including a way to highlight value and savings in your communications will appeal to these cost-sensitive shoppers.

  • NEEDS-BASED SHOPPERS

    Needs-based Shoppers are customers who only make purchases when they have a specific need or when their current product wears out or is used up. These customers need to be engaged before their product is gone. Sending reminders for replenishable products through email, phone calls, or app notifications when it’s time to reorder is a great tactic.

  • OCCASIONAL GIFT SHOPPERS

    Occasional Gift Shoppers primarily shop for gifts on special occasions such as birthdays, anniversaries, graduations, or holidays. These customers will benefit from things like gift guides and special promotions tied to common gift-giving occasions. Sending reminders ahead of key dates and providing perks like free gift wrapping, timely delivery, or surprise and delight gifts are fabulous ways to engage occasional gift shoppers.

  • EVENT-DRIVEN SHOPPERS

    Event-driven Shoppers are customers who make purchases in connection with specific events or milestones in their lives. These shoppers may make purchases around life events or milestones, like weddings, graduations, or holidays, but they may also be holding out for sales events like Black Friday, Cyber Monday, and Red Tag Days, just to name a few. You can engage event-driven shoppers with targeted promotions, communications, and events that celebrate milestones or are of your own design.

  • EXPLORATORY SHOPPERS

    Exploratory Shoppers make purchases sporadically as they explore different brands, products, services, or experiences. These shoppers are intrigued by trying new things, so if you have the operational capacity, you can engage these shoppers by regularly introducing new products, limited editions, or exclusive experiences. Trials, sample packs, and introductory offers are also great ways to intrigue exploratory shoppers.

  • IMPULSE BUYERS

    Impulse Buyers make spontaneous purchases based on a sudden desire or attractive deal simply because they saw it on sale or found it appealing at the moment. Attracting impulse buyers means you have to communicate regularly with the right product, at the right time, at the right price. Things like flash sales, limited-time deals, and eye-catching product shots and videos are great ways to connect with impulse buyers. To simplify the process, focus on highlighting your best sellers and trending items to spark continuous purchases.

These are just a few primary categories of sporadic customer patterns and trends. By understanding what motivates customers to buy, businesses can tailor their marketing strategies to better engage these customers and encourage more consistent purchasing behaviour.

Some trends may be easier to identify than others, and you don’t have to figure out every trend before implementing strategies to capitalize on the ones you have identified. At the end of the day, it’s best to implement one strategy at a time, especially if you are a solopreneur or have a small team working with you.

Understanding Inactive Customers: Why did they disengage?

The last core group of customers is inactive customers. Identifying inactive customers is just the first step because, just like with sporadic customers, there are a number of reasons customers become inactive. Sometimes, you will be able to re-engage them, and other times, you won’t. Knowing why your customers have become inactive is the key to segmenting this customer base and working to re-engage them.

  • BAD EXPERIENCES

    Bad experiences or dissatisfaction, such as poor customer service, product issues, or unmet expectations, can lead to customer disengagement. When you identify this as a reason for customer inactivity, it’s important to listen and determine if there are areas for improvement. Not every bad experience or dissatisfaction will be actionable for correction – perhaps the expectations are more than you can or are willing to deliver. Other times, the complaint is disingenuous (yeah, the customer isn’t always right), but there will be genuine issues that you can and should address. Sometimes, you’ll get a customer back by owning up to your mistakes and making corrections, and at the very least, you’ll learn from the mistake and take steps not to make it with new customers.

  • BETTER OFFERS

    More competitive offerings presented by your competitors may have lured away your customers. Monitor your competitors’ activities and offerings to understand how they may be influencing customer behaviour. In terms of customer retention, you want to take note of deals, product differences, service levels, and customer experiences (through reviews) to see if you are missing out on opportunities to retain your customers.

  • COMPATIBILITY ISSUES

    Incompatible relevance is generally caused when your products and services no longer align with the needs of the customer and is often caused by changes in preference, lifestyle, or circumstance. Customer feedback can help you determine if this challenge can be overcome. If you specialize in baby clothes, and your customer no longer has a baby to purchase for, then you are no longer compatible with their needs.

  • LIFE CHANGES

    Life changes or circumstances, such as job changes, relocations, or financial constraints, can impact customer purchasing behaviour. Understanding these life events can help tailor your re-engagement efforts to better meet their needs and circumstances. Jumping back to our baby clothing example, if you carry a line of toddler clothing that this customer is unaware of, you can reengage this inactive customer by sharing information with them about your toddler clothing line.

  • MARKETING OVERLOAD

    Communication overload is another prime reason customers disengage. Overwhelming customers with too many marketing messages or irrelevant communications leads to fatigue and disengagement, especially when using email marketing. Maybe your customers don’t need a daily email reminder about the sale you are currently running. One email, combined with other methods of engaging your customers, should suffice. Review your communication strategies to ensure they are targeted, personalized, and respectful of customer’s preferences.

Regardless of where you are in the process of building a customer retention strategy – these are just some of the key considerations and segments of your customer base that you can consider. By digging deeper into the reasons behind customer disengagement, you can gain valuable insights that will help inform your re-engagement strategies and increase their effectiveness.

Keep in mind that you will not win back all of the disengaged customers on your list, and that’s okay. Take the time to listen to what your customers (engaged or not) are saying about your business, products, and services and adapt your approach to address the relevant needs and concerns so that you can grow as a business owner, learn from your mistakes, and implement new strategies and tactics for future customers.

8 Techniques for Re-engaging

Let’s change those inactive customers into loyal customers!

Various tactics can be strategically used to effectively reconnect with your customers, whether they are sporadic or inactive. Each tactic offers unique benefits and can be tailored to address specific customer behaviours and motivations. In this section, we’ll explore a range of engagement tactics you can use to re-engage your customers.

Re-Engagement Emails

Re-engagement emails are personalized emails aimed at inactive customers to invite them back by highlighting new products, specials, promotions, or exclusive offers tailored to their interests. These emails are particularly useful for winning back inactive customers.

Special Offers

Special offers are unique deals or discounts provided exclusively to inactive or sporadic customers to entice them to revisit your website or make a purchase. Special offers are suitable for both sporadic and inactive customers and can be very useful in generating sales from budget-conscious shoppers, occasional gift shoppers, and impulse buyers.

Reactivation Campaigns

Reactivation campaigns are targeted marketing campaigns designed to re-engage specific segments of inactive customers by addressing concerns or offering incentives to encourage them to return. Reactivation campaigns are suitable for inactive customers.

Personalized Offers

Personalized offers are custom offers based on past purchase history, preferences, or demographics. They make the offer more appealing and relevant to both inactive and sporadic customers. Personalized offers will increase sales from needs-based shoppers, occasional gift shoppers, event-driven shoppers, and exploratory shoppers.

Targeted Advertising

Targeted advertising uses retargeting ads on various platforms to remind inactive or sporadic customers about your products and services. It aims to bring them back to your brand or complete an order they may have abandoned in their online shopping cart. Targeted advertising is useful in reaching seasonal consumers and event-driven shoppers.

Limited-time Promotions

Limited-time promotions create urgency by offering time-sensitive promotions to encourage immediate action from both inactive and sporadic customers. Limited-time promotions work exceedingly well with seasonal consumers, budget-conscious shoppers, impulse buyers, and exploratory shoppers.

Product Recommendations

Product recommendations are a tactic where you make recommendations on relevant products or services based on past purchases or browsing history to engage sporadic customers and encourage additional purchases. This tactic works well with needs-based shoppers and exploratory shoppers.

Feedback Requests

Feedback requests can be used with active, sporadic, and inactive customers. Asking for feedback helps you understand their purchasing habits, identify reasons for disengagement, and address any concerns. Feedback requests are only half of the equation; first, you must ask for it, then you need to act on it. Addressing genuine concerns shows your customers that their opinions matter and that you genuinely appreciate their business.

Engaging sporadic, inactive, and even active customers requires a thoughtful approach that addresses the diverse reasons behind your customers’ purchasing behaviours. By understanding the unique needs of different customer segments—whether they are driven by seasonality, budget-consciousness, needs, gift-giving, or events—you can implement targeted tactics to engage them effectively.

The tactics outlined above are just a small sample of those you can use to re-engage your sporadic and inactive customers.

By personalizing your tactics to meet the needs of your customers, you can develop strong, lasting relationships and increase your sales by improving your retention rate and Customer Lifetime Value. Different tactics are better suited for different situations and customer types, so get to know your customers, pick a few tactics, and test them out.

Remember—you don’t have to do it all at once. Gradually implement changes, start addressing a few areas for growth, and identify the tactics you can use to reach your goals and implement them.

Final Thoughts

One last thought on Customer Retention

This article has explored some essential strategies for enhancing or starting your customer retention strategy and re-engagement strategy. By focusing on personalized communication, targeted marketing efforts, and responsive customer service, businesses can effectively cultivate loyalty and maximize customer lifetime value.

Throughout this article, we’ve highlighted various techniques for:

  • Creating robust retention strategies tailored to customer preferences and behaviours.
  • Identifying and engaging with sporadic and inactive customers through segmented approaches.
  • Implementing specific tactics such as re-engagement emails, special offers, and personalized incentives to reignite customer interest.

As you reflect on these strategies, remember that customer retention is not just about maintaining existing relationships but also about continuously evolving and adapting to meet customer needs. We encourage businesses to prioritize customer retention efforts by implementing proactive strategies and leveraging data-driven insights to keep customers coming back.

By investing in customer retention and satisfaction, businesses can build strong, long-lasting relationships that extend beyond individual transactions. This not only boosts profitability but also fosters a loyal customer base that acts as brand advocates and drives sustainable growth.

In today’s competitive landscape, the journey doesn’t end at the point of purchase; it begins anew with every opportunity to delight and engage customers. By integrating these strategies into your business practices, you can pave the way for enduring success and meaningful connections with your customers.

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About the Author: Dallas Mitchell

Dallas is an analytical thinker driven by numbers. With 24 years of experience in sales, marketing, website design, and research, he brings a unique blend of logic and creativity to every project. Dallas excels in delivering digital advertising campaigns that increase ROI, implementing effective sales strategies, and executing precise strategic marketing and website design projects. In his downtime, Dallas enjoys debating politics and immersing himself in anything related to history, physics, and astronomy.