The conventional wisdom says that acquiring a new customer can cost as much as five times more than retaining an existing customer. The scale of the variation shifts when more custom offerings are involved and a 500% differential may not be exactly right any longer. But customer retention strategies, both in the fast growing subscriptions market and in the advertising market, have become a key focus for publishers trying to maintain and grow revenue.
Why it matters
Keeping customers – subscribers, advertisers or both – seems like common sense, but many businesses instinctively spend more time developing new business than nurturing existing customers. This ignores the fact that, as well as being more expensive to acquire, new sales convert at much lower rates than repeat business; 5% to 20% vs 60 to 70% according to one study.
The need for effective retention strategies has been thrown into the spotlight for publishers dealing with subscription drop offs following the highs of the pandemic’s stay-at-home shopping sprees. Current record growth in advertising revenues could morph into a similar slump as the cost of living crisis bites harder and marketing budgets tighten in line with consumer spending.
Writing in Editor & Publisher magazine, the senior director for retention at the Daily Beast, Richard E. Brown, says that retention strategies are complicated. According to Brown, they involve complex decisions around pricing, data, marketing and logistics and efforts can be disrupted by many factors from product adjustments to natural disasters. He said:
Any retention strategy demands a concerted effort that must be leveraged in synergy with your organization’s overall growth blueprint.
How to develop retention strategies
Brown goes on to outline six things that he has discovered to be essential in the sustainability of both advertiser and subscriber retention.
- Retention relies on constantly challenging the status quo with a mindset that brings together data with marketing and sales acumen. The assessment of available data helps identify retention gaps to drive marketing in what Brown calls the ‘perpetual pursuit of enhancing overall retention percentages’.
- A commitment to continuously enhancing products or services to accommodate your customer base, will make retention easier. You will get recurring business from advertisers and subscribers if you are easy to do business with and their perceived value exceeds cost. Conduct customer and market research to focus your future on being customer-centric.
- “Data is your bow, and communication is your arrow,” says Brown. Robust data helps you understand your advertiser or subscriber audience, when they engage, how and what they interact with, and why they ultimately retain or cancel. Data-driven marketing should embody your commitment to improving the lot of your advertisers or subscribers.
- Focus across the advertiser or subscriber life cycle, from onboarding to re-engagement, cancellations and saves. Remember that the first 60 days after acquiring a new advertiser or subscriber are vital to long-term sustainability and retention. Keep things simple, make an impression, communicate your value and build trust by engaging consistently.
- Concentrate on immediate wins to help with long-term efforts. Agree on both short and long-term metrics that help identify trends for the future and grow with those metrics. Recondition your data to help you deepen understanding to engage and target the right audience with the right message at the right time.
- Your payment retention strategy should be ‘superlative’. Where service or price changes are planned, make sure transaction processes are effortless, tactful and effective. Make sure payment processing vendors are compliant and optimise all communication touchpoints.
Brown describes retention as re-earning the trust your brand promises to deliver against a perceived customer value each recurring day, week, month and year. He says:
If emphasized, it can yield exponential growth opportunities for your advertiser or subscriber base and a phenomenal impact on your bottom line.