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Solve the Retention Problem By Delivering the Emotional Connection Users Crave

Shivkumar M Shivkumar M has over 20 years of experience shaping technology product and GTM strategy. With B2B SaaS expertise across industries, he leads product launches, adoption, and GTM as Director of Product Marketing.
Solve the Retention Problem By Delivering the Emotional Connection Users Crave

Solving customer retention is the single most effective way to drive business growth. 
Yet too many companies focus their marketing dollars on attracting new customers, which drives down campaign ROI and customer lifetime value
For your business to survive, you need to build lasting relationships with loyal customers who are more profitable, more responsive to campaigns, and more likely to refer new customers. 
But how? 
In this article we tackle the customer retention problem by examining what today’s consumers expect, how they react to marketing initiatives, and what your business can do to unlock higher retention rates and revenue growth. 

Customer Retention by the Numbers

Consumers are less committed to companies than they’ve ever been. Only 3% say they feel devoted to their favorite brands.*
Consumers are also less forgiving. 32% of consumers stop doing business with a brand they love after just one bad experience.* 42% stop after two bad experiences.* 
The situation for mobile apps is just as dire. 
23% of apps are used just once
The average app loses nearly 90% of its daily active users after just 30 days
Without solving the customer retention problem, businesses get stuck in an endless cycle of costly acquisition campaigns — all in an attempt to replace the customers they’re losing in a matter of days. And the only thing it leads to is faltering ROI and stalled business growth. 

Business Benefits of Improving Customer Loyalty

By shifting their focus to retention, businesses can see a major boost in revenue. 
Even small improvements have a tremendous effect: a 5% increase in retention correlates with at least a 25% increase in profit,* and a 7% jump can boost CLTV by as much as 85%.* 
Highly-engaged customers buy 90% more often and spend 60% more per transaction.* 
Not only are loyal customers spending more, they’re also much more likely to return with every purchase.

  • After 1 purchase: 27% chance of returning
  • After 2 purchases: 45% chance of returning
  • After 3 purchases: 54% chance of returning*

Customer Retention Strategies & Solutions

In an effort to reduce customer churn, many marketers revert to an outdated way of retaining customers: attempting to buy their devotion with loyalty points and rewards programs.
Yet according to recent research, 71% of consumers say loyalty programs don’t make them loyal at all. In fact, more than half of consumers would switch to a new brand if it simply offered them a coupon.*
Instead, consumers are making purchases based on a brand’s relevance to their needs in the moment. 
Consumer research by Accenture shows that companies are losing $1 trillion in annual revenue to competitors — simply because they’re not able to deliver this level of timely relevance.* 
To earn loyalty, brands must find a way to anticipate and fulfill a customer’s most pertinent needs, acting less like a brand and more like their personal assistant or friendly concierge. 
How? Here are 3 proven ways to build the kind of relationship that will make your customers say, “They just get me.”

1. Deliver An Omnichannel Presence

91% of consumers say omnichannel experiences are either important or critical, saying companies should be where they want, when they want, and ready to communicate how they expect.*
With omnichannel marketing, you can deliver the right information to your users the moment they think to look for it, in exactly the place they need it. 
When your customers receive the same experience and messaging on every marketing channel, your brand becomes familiar and the relationship is strengthened. In fact, 31% of survey respondents rated being able to contact a company through any channel as the top driver of feeling emotionally connected to a brand.*
And it works! Marketers using 3 or more channels see retention rates of over 66%.* That’s a 90% higher retention rate than marketers who use a single channel.* 
Starbucks is one brand that’s mastered the omnichannel experience. Customers can reload their payment card via their mobile app, website, or in-store, and any change gets updated across all channels instantly. If a customer is waiting in line to order and realizes their balance is low, they can reload their card with one tap on the mobile app and the cashier will see the new balance by the time they check out. 
Starbucks also knows that music is a key part of their customer experience. A Music button is featured on the app’s top navigation bar, which lets users connect to curated playlists on Spotify, replicating the cafe experience no matter where they are. What’s more, users can influence the music that’s piped through in-store speakers by liking songs.

2. Personalize Customer Interactions

36% of customers commit to a brand because of personalized experiences.*
Whether it’s recommending a new TV show, sending price drop notifications on a saved airfare search, or offering discounts on a favorite designer, users expect apps to deliver personalized content that improves their lives. 
But in order to create messaging and offers that are specific to users’ needs, you’ll need to understand who they are and what they want.
That means going beyond simple demographics to technographics, psychographics, user intent, and more. Collecting and analyzing user data helps you understand your customers based on a complete picture — from their age, gender, location, and interests to how they prefer to interact with your brand.
These insights are required to engage customers over the long term. And it’s a virtuous cycle: the longer you keep your customers, the more you get to know about them — and the better you can meet their needs.
Spotify’s Discover Weekly and Release Radar playlists are a great example of using personalization to continually enhance the customer experience and improve retention.
To create such a deep level of personalization, Spotify’s algorithms look at over 2 billion user playlists—each one a reflection of a real person’s tastes. It then creates an incredibly detailed profile of each user’s individualized taste in music, comparing different users playlists to recommend new songs that fit a specific profile.*
The result? Nearly 100 million Premium subscribers* and a 94.5% retention rate.* 

3. Express Gratitude

77% of customers appreciate when companies express gratitude* — and they respond with deeper engagement. 
Thank you emails see 42.51% open rates, 18.27% click rates, and 10.34% conversion rates.* 
Surprise customers with tokens of appreciation and expressions of gratitude like birthday gifts, surprise upgrades, or exclusive access to VIP content. Even a simple thank you message with no giveaways attached can be meaningful for customers. 
Fitbit celebrated a major company milestone by thanking its customers for their part in its success and offering a celebratory surprise. The founder email highlights both the brand’s achievements and the (literal) steps customers made in achieving something special together.

What Really Drives Customer Loyalty?

68% of customers feel companies are indifferent to them.*
To keep customers from shopping around, companies need to focus on what actually matters: timely, meaningful engagement that deepens emotional connections. 
Customers with a strong emotional connection to your brand have a 306% higher lifetime value.* They spend over 150% more than even your regular satisfied customers.* And 71% of them will recommend your company to others.*
To build these emotional connections, you need to personalize every communication with every user. You need to express your appreciation for their business and their loyalty. You need to respond to their needs with the right message on the right channel at the right moment. 
All of this helps users feel like you understand their values, share a sense of purpose, and will treat them right. 
Technologies like CleverTap allow marketers to see and act on these in-the-moment changes for every customer, no matter the size of your audience. See how CleverTap’s analytics and engagement platform can unlock greater retention for your brand. Schedule a call with our mobile marketing experts for a personalized demo. 

See how today’s top brands use CleverTap to drive long-term growth and retention

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Last updated on March 29, 2024