Not all Customers are the Same

Retention Marketing Vs. Prospect Marketing

Most marketing plans are so focused on acquisition that they miss opportunities housed within their own internal customer base.  Acquisition marketing tactics tend to be more expensive and less effective than simply refocusing marketing efforts towards customer retention. The probability of selling to an existing customer is 60-70% versus the probability of selling to a new prospect which is 5-20% (Source: Top 5 Customer Retention Marketing Tactics” April Dunford, Rocket Watcher Product Marketing for Startups). Because they have purchased before, current customers have already proven themselves to be perfectly qualified prospects, and are more likely to redeem any offers presented.

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Not only are redemption rates on retention campaigns higher than their prospecting counterparts, but response rates, and in turn, return on investment are significantly better than prospect marketing campaigns. Test after test has proven that letters mailed to a list of past customers will achieve more than double the results when compared to the same

letter mailed to a list of prospects.  A perfectly planned postcard might entice a prospect to read, and even ponder the offer they received, but past customers are more inclined to respond to marketing material because they already have a certain level of trust in a company they have worked with before. Targeting customers that have purchased previously with direct marketing materials will result in increased offer redemption, and ultimately ROI.  Customer marketing should focus not only on driving the next transaction, but also on building the relationship between brand and consumer.

How?

Know your core Customers.

·        Customers who purchased recently are more likely to come again, VS customers who have not shopped in a while.

·        Customers who purchase frequently are more likely to buy again VS customers who made only one or two purchases.

·        Customers who spent the most money in total are more likely to buy again. The most valuable customers tend to become even more valuable.