In modern marketing strategy, a disproportionate emphasis is placed on acquiring new customers. Billions are spent every year, across all channels, trying to entice new customers to make that first purchase.
A Focus On Acquisition
According to an Econsultancy report, both companies and agency clients have a greater focus on customer acquisition than customer retention (44% vs. 16% for companies and 58% vs. 12% for agency clients).
However, newly acquired customers are still worth a fraction of the value of repeat and returning purchasers. And, given that 71% of consumers have ended their relationship with a company due to poor customer service alone, there are certainly other areas in which this money can be spent.
The Value Is In Customer Retention
To put the value difference into context, I’ve compiled a few statistics to illustrate my point. Firstly, marketers in Europe must bring in 7 shoppers to equal the revenue of 1 repeat purchaser (adobe).
This is a staggering discrepancy, which, in turn, makes the fact that, in the UK, 27% of online revenue is generated by returning or repeat purchasers, who represent only 10% of all online visitors, much easier to comprehend.
These stats perfectly illustrate the potential value repeat customers hold for brand. Furthermore, given that repeat customers have a 60-70% chance of making another purchase on a future visit to a bricks and mortar store, it seems ridiculous that encouraging this trip isn’t the top priority for brands.
It is common knowledge that customers show loyalty to the brands they develop relationships with, and before we visit the how, I have one more quote, from the Harvard Business Review, stating it is estimated that a 5% increase in customer loyalty can produce profit increases from 25% to 85%. (Reichheld and Sasser, HBR).
For me, it is therefore self-evident, that brands should be devoting a greater portion of their resources to developing these relationships through customer retention programs, as this is where the true value lies.
Methods Of Customer Retention
I have spoken, at length, on the ability of experiential marketing to develop relationships between consumers and brands. It is the foundation, on which the tactic is built.
Add to this, the access to consumer contact information brands possess these days, and we see that highly targeted experiential marketing to existing customers is not only possible, but may also be one of the most effective tools for customer retention.
As an empathetic soul, I’m not going to tell you what you need to be doing without telling you how. Thus, the rest of this article will be dedicated to explaining 5 different ways in which experiential marketing can be used to develop existing customer relationships and reap the rewards on offer.
Improve The Product Experience
Give more value than you take, this mantra is repeated throughout all forms of marketing, and so it should, it is the basis of a good relationship. It is not, therefore, a huge jump to suggest the more value a customer can draw from your product, the better their perceived relationship with your brand will be, roughly.
With this in mind, it is clear to see why a widely used experiential marketing tactic is creating experiences that help the consumer get more out of the product, after all:
“Customers do enjoy receiving helpful recommendations on new information and products that will help them achieve better results.”
These events can provide supplementary improvements. For example, Nike+ operate run clubs in cities throughout the UK, whilst Reebok use their FitHub stores to host fitness classes ranging from CrossFit to Yoga.
Most people over the age of 3 understand how shoes or leggings work, however, providing these experiences provides customers an extra opportunity to get more use out of these products whilst learning from professional trainers. These experiences help customers generate their own value from the products.
Conversely, there are experiences which develop a customer’s ability to use the product itself. This can be anything from a lesson in piping cake frosting, to a masterclass on getting the most out of your new VR goggles.
Beauty brand Sephora use this tactic in their TIP (teach inspire play) stores, housing beauty workshops, where guests learn cosmetic techniques, including foundation, lip and concealer shade matching. Customers are more likely to repurchase the product if they know how to get the most out of it.
Reward Loyal Customers
The strategy of rewarding customers for loyalty isn’t novel, businesses have been running customer retention programs since the late 18th century, when retailers in America gave out copper tokens with purchases which could be redeemed for goods on future purchase.
In the modern world, often brands will offer their loyal customers access to exclusive content, Lidl for example gives subscribers access to My Lidl, an online community of recipes and discussion, whilst every major airport has at least one executive lounge, exclusive to premium customers.
In the context of experiential marketing, O2’s priority moments give customers access to a vast range of benefits, namely access to cheap tickets and exclusive experiences, the O2 Blue Room at Twickenham being a prime example, all that’s required is an O2 phone.
Similarly, dating brand Bumble offered its users exclusive access to a dating experience at the London Eye for Valentine’s Day. Rewarding customers for their commitment to the brand incentivises them to repeat the behaviour, plus, exclusivity empowers the consumer, making them feel valued.
Bring Customers Into The Boardroom
Beta testing is a common practise in the gaming industry. Developers invite loyal players to test unfinished versions of upcoming titles to get their feedback and iron out bugs. This became common practice due to the overwhelming popularity of the tests, the takeaway being customers want to be involved in the development of the products they love, a finding which remains true outside this industry.
Just-Eat gave customers a glimpse into the future of food delivery tech with their ‘The Future Now’ campaign; whilst Walkers hold regular competitions where new flavours are faced-off in a public vote, bringing winners like ‘Pulled Pork in a Sticky BBQ Sauce’ into production.
“When customers know an organisation cares about them, values them and is improving because of them, they will return.”
This can be achieved at events through surveys, interviews and feedback forms. It is important to include both qualitative and quantitative questions, so as to provide a diverse range of data which both accurately reflects the variety in consumer tastes, whilst remaining actionable.
Finally, reach out to ex-consumers, the people who have become disenfranchised with your brand. Find out what made them leave in the first place, and would make them return. After all:
“When a client is frustrated or upset, it is a great time to show your dedication towards working with them to remediate the situation.”
Treat Them Like Family
One of the most effective customer retention tactics is to remind customers ‘how green the grass is’ with your brand. By continually giving back to consumers you create a deep personal bond with them, demonstrating the brand’s human side whilst providing value.
There is a myriad of tactics available to achieve this goal. Offering access to exclusive price promotions and limited edition products shows the brand as willing to make the customer’s money go that little bit further.
GAP’s latest experiential activation is a perfect example of this, offering visitors a chance to customise clothing with 90s and naughties slogans at no extra charge.
A critical factor in the success of this style of campaign is who you have working on it. To show a human face, you need to carefully select staff who can create a warm, welcoming atmosphere at the event, simply put, they are the human representation of the brand.
Get this right and customer retention events are sure to prosper, after all:
“Passionate, engaged employees can deliver personal customer experiences that create customer loyalty”
Create A Community
The final tactic to be discussed is also the one with the most longevity. By using events to bring like-minded consumers together, building a “branded community”, companies create value-driving machines, which will gradually require less and less input as the community flourishes in a strangely beautiful anthropomorphised way.
Similarly, as this community develops, those peripheral customers who are not engaged will start to feel the FOMO (fear of missing out). After all, the theory of conformity and social influence states:
“We change how we behave to be more like others.”
Successful examples of community-building brands include The Economist, who have used ‘gone off’ smoothies and insect ice-cream to bring their content, and the discussion surrounding it, to life. Similarly, Pinterest used meet-ups to build communities, based around what people were pinning.
As previously mentioned, these branded communities require upkeep. And, since, “customers are five times more likely to engage with you in the first 90-100 days than at any other point,” (Paula Tompkins CEO ChannelNet) just like content marketing, a regular schedule of experiences is required to keep the community thriving, integrating new customers and re-engaging existing ones.