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Customer Experience CX Personalization Marketing

How brands can optimize their customer retention strategy



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April 26, 2023 | 7 min read

How do brands play the loyalty long-game more effectively at a time when customer retention is more important than ever? Acxiom’s Tate Olinghouse, chief client officer, shares his thoughts on the topic, rounding out his series on customer acquisition, growth, and retention strategies

How do brands play the loyalty long-game more effectively at a time when customer retention is more important than ever? Acxiom’s Tate Olinghouse, chief client officer, shares his thoughts on the topic, rounding out his series on customer acquisition, growth, and retention strategies.

The first half of the year is often a time when brands redouble their focus on customer retention strategies. Retail brands in particular – if they had a successful Black Friday and holiday season – may find themselves faced with a pleasant problem: now that we’ve acquired new customers, how do we keep them engaged and happy - for the long term?

So, let’s turn our attention to customer retention. (I’ve written about how to optimize your customer acquisition strategies and customer growth strategies already.)

Customer retention vs customer growth: what’s the difference?

It’s a deceptively simple question, and it has some interesting implications for customer experience (CX) strategies. Here’s how I see the difference.

Customer growth is about moving from a transaction to a relationship - setting up a positive return on experience for people. Customer retention is about maintaining your commitment to that value exchange so you can win the long game. Said simply, if we don’t keep steady, on-going relationships, we can never reach our goal of longstanding, mutually beneficial relationships with our best customers.

Loyalty comes in different forms

We can’t talk about retention without discussing the ubiquity of loyalty programs, which it’s no overstatement to say have transformed industries like travel. American Airlines launched its pioneering AAdvantage program in 1981. Fast forward four decades and similar programs are becoming increasingly advanced. In fact, we live in a world where some loyalty programs are worth more than the airlines that started them.

Today, loyalty programs are massive profit centers that do more than award points. They can be used to predict what members need and inform a brand’s product or service evolution. When coupled with privacy-conscious technologies like data clean rooms, which enable brands to share data without revealing personally identifiable information (PII), loyalty programs unlock intelligent co-marketing opportunities, and help brands understand their share of wallet in the market.

These kinds of loyalty tactics are great for long-term retention strategies. But loyalty is a highly context-dependent concept. To get it right, it requires ‘customer intelligence.’ In other words, data-driven customer understanding of what’s important to your customers, where and how to connect, and how to keep the conversation going in a meaningful way.

Brand loyalty runs in the family

Loyalty also operates at different speeds, forms, and functions. A good example is a children’s clothing retailer. Before they retired, my parents ran a small business selling kids’ clothing for over 40 years.

I remember many dinner table conversations where they were terrified about the next big box retailer potentially coming to town and what it would mean for the business. Did those big box retailers eventually move into locations near my family’s three mom-and-pop stores? Of course. But my parents’ business survived and thrived because they understood and connected with their customers and created incredibly loyalty.

Kids’ clothing purchases are highly contextual, which means retailers must be intelligent about what kind of loyalty they’re looking to build. A first-time shopper might be starting a long relationship with the brand, or they might just be buying a one-off gift for a niece or nephew. So, an email nurture program could be as simple as an annual reminder that there’s a birthday coming up – or it might be appropriate to send regular information and offers to a parent. Without accurate customer intelligence, it’s difficult to know which is more appropriate.

Then there’s the cyclical nature of the relationships, for example if a loyal customer has more children to buy for in future. When my parents ran their store, they had customers whose loyalty continued when they graduated from parents to grandparents. We talk a lot about customer lifetime value but there’s something amazing about building trust and loyalty with shoppers that turns the notion of lifetime into a multi-generational opportunity.

Personalization drives loyalty

Personalized customer experiences drive loyalty. Because my parents’ business was in a small town, their marketing was naturally hyper-focused. They understood and connected with their audience, and one of the channels they used was social media. They knew this aspect of connection and loyalty so well that when one of the large social platforms held a conference in their town, the social platform used my parents’ social marketing as an example of how to get a return on ad spend.

Were my parents data scientists or did they have fantastically complex models? No, they achieved understanding naturally because their business was small, and they paid attention. They had virtual and in person conversations, which is akin to data collection and analysis. They put that customer understanding into every interaction they had with their customers. In short, they built personalized relationships.

For large brands, the same is possible, but it takes a commitment to data, analytics, and technology to make it happen. According to a recent Winterberry Group report, spend on data infrastructure and analytics is expected to grow to $32.4bn by 2026. A strong data foundation that can fuel models and insights at scale is what it takes to deliver personalization built on understanding. When you can do this over time, that’s where long-term loyalty comes in.

The key to retention is in the data-driven CX

Whatever the context – and whatever ‘speed’ of brand loyalty we’re talking about – the key is always in the intelligent use of data. And when the customer journey spans years and decades, the brand needs to develop a great memory.

In practice, marketing with a memory means having the ability to:

● Optimize small moments by understanding the bigger, long-term picture

● Orchestrate CX elements across all channels – at different times

● Connect the dots between pre-purchase and post-purchase to win long-term love

● Build the data and identity foundation that makes it all possible

As marketers, we should use data to create highly effective messaging that delights customers in those magic moments – when personalization meets the customer exactly when and where they need it. In those moments, loyalty is deepened, and trust is built.

But there’s also the flip side. Once that trust is built, brands have an obligation to live up to it. Once customers get the platinum treatment, they come to expect it (as well they should). It’s on brands to retain the level of sophisticated data-driven understanding for the long haul. Loyalty depends on it.

Play the customer retention long-game

From personalized points programs and cross-sell/up-sell offers to anti-churn analytics models and even customer journeys that span the generations – driving loyalty can look very different from one brand to the next, and from one product to another.

Understanding the kind of loyalty you need to cultivate is a critical part of any retention strategy. But whatever loyalty speed you’re dealing with, success will always rely on your commitment to the value exchange and ensuring your customers keep enjoying the return on experience you gave them through the acquisition and growth stages of your relationship.

Customer Experience CX Personalization Marketing


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