This post is sponsored by Marketing AI Institute partner Persado.
Research has shown that it costs more to find a new customer than to keep an existing one. Whether the multiple is 5X or 25X more, the fact is that the longer you keep a customer, the more value they deliver to the business. Research from Bain & Company finds that in the financial services sector, an improvement of 5 percent in customer retention produces 25 percent more in profit.
This suggests that organizations looking for growth must pay at least as much attention to customer retention and loyalty as they do to customer acquisition. That isn’t the case today in many organizations. The reasons vary, but many come down to sales-dominated cultures that value new accounts more than the old stalwarts.
Don’t get me wrong—new accounts are great! And like any new relationship, they can feel more gratifying to work with customers that were convinced enough to choose YOU. But the organization can’t grow if it’s constantly churning existing customers due to neglect or unfulfilled promises. Successful organizations marry effective acquisition with strong retention. Customer data coupled with language AI can help.
Achieve retention success
Language AI like Persado’s Motivation AI platform can leverage the first-party data that your organization has in its customer data platform or other data repositories to develop relevant and engaging messages that speak specifically to a customer’s wants and needs. That data can inform campaigns designed to encourage engagement and deeper relationships.
Of course, the right message, channel, approach and cadence depends on the industry you’re in. The financial services sector’s transactional accounts, credit cards, and loan products are all long-term relationships. In this market, powerful retention might come from cross-selling another product line, or encouraging a savings or investment customer to keep more of their assets with you. A retailer, in contrast, may not have that ongoing, existing hook, and must find other ways to motivate new interactions, such as a new product release or a sales event.
But any industry can more effectively engage and drive powerful results by using customer data to inform the campaigns they use to drive future purchases. Here are some examples on how.
Inspire existing customers to make a purchase
We’ve all had the experience of opening our inbox to see a pile-up of messages marketing a product that we already bought, or that we have already said we didn’t want or like. It’s annoying, especially when the brand is one that should know you better than that. Organizations can avoid delivering that type of negative experience by leveraging customer data related to past purchases, returns, cancellations, and other behaviors to inform campaigns.
Take the example of a leading arts and crafts retailer that worked with Persado to improve customer loyalty and repeat purchases. The retailer had an existing customer data platform (CDP) that provided insights into the past behaviors of specific customer groups. For one campaign, the retailer identified distinct customer segments. Persado used those segments to generate unique campaign messages with a specific and relevant appeal based on what had motivated them in the past.
One group, for example, was most likely to respond to information about new products—no discount necessary. Another group was motivated by a discount off of a full-priced item. A third group was most likely to respond to a Buy-One-Get-One offer. The retailer would never have known that different offers motivated different customers if it hadn’t captured that insight from its CDP. And it would not have hit on the right messages for each if it hadn’t been for Persado.
Combining data with effective, motivation-driven messaging generated by Persado’s Motivation AI platform has produced more than $1 million in incremental revenue across a range of campaigns.
Optimize key moments to extend the relationship
Each customer has certain trigger moments when they are more likely to consider an alternative provider. Renewals are one example, as are seasonal events during which customers are more open to considering alternatives from other providers. Brands can use these trigger moments as an opportunity to proactively engage customers or remind them of the value they have received.
The Spotify Wrapped end-of-year campaign is one example of how a brand can remind the customer about the relationship and create new value with a personalized playlist built from the member’s favorite artists. The fitness device and content provider Peloton produces a similar end-of-year round up for members that highlights their favorite instructors and workout types.
Brands can also leverage data about the broader economic context to drive “moment” campaigns. One example comes from a U.S. mortgage lender that saw the record-low interest rates of 2020 as an opportunity to offer refinancing rates to its existing mortgage customers. The lender knew from past experience that customers often shop around during these low-rate cycles. To get ahead of the moment, the lender worked with Persado on a campaign for email and web aimed at motivating borrowers to refinance with their lender.
The lender’s original email tagline tried to coax the borrower with a message of Challenge – Could your loan be even better? But when Persado’s Motivation AI platform analyzed the intent of the message, and generated variants to test in the market, the company found that a message of Gratification produced a 37% increase in conversions.
No doubt, the challenge of retaining customers through consistently high quality experiences can be difficult. But the benefits are clear in the form of higher lifetime value and lower acquisition costs. With accurate customer data and powerful Motivation AI on your side, campaigns can more effectively deepen your customer relationships.
Brooke Gocklin is Senior Manager, Content Marketing at Persado.