Customer Retention Analysis - First Measure Then Improve

Filling the top half of the sales funnel has long been the marketing target, but for the first time in history the tides have turned. Instead of focusing on acquiring new customers and subscribers, marketers are putting the spotlight on customer loyalty, or the art of retaining them.Driving engagement and ongoing revenue is at the top of the priority list, with the overall goal of increasing customer retention and loyalty across the entire customer base. But in order to know where your customer loyalty stands, it’s essential for you to measure it – which is not the simplest task.Measuring Customer Retention and Customer LoyaltyRather than being distracted by the dozens of different metrics that can illustrate the level of engagement a person has with your brand, one way of measuring loyalty can be done using five key categories. They are:

• Registration
• Frequency
• Conversions
• Advocacy
• Rewards

RegistrationRegistration involves prompting anonymous visitors to sign up for your community or your loyalty program so you can find out who they are. This first step is perhaps the most vital one, as it’s impossible to engage with your visitors and develop meaningful relationships if they remain unknown.Getting people to register with your company lets you track each touchpoint they have with your brand, gathering data on their demographics, behaviors and engagement levels on every device they own. This allows you to create truly personalized experiences for your customers, increasing their levels of enjoyment, engagement and loyalty to your company.Encouraging visitors to register can be done by:

• Creating calls to action encouraging them to sign up
• Showcasing benefits of signing up using pop-ups or other techniques
• Using email campaigns to invite registration
• Featuring an opt-in to register section in your newsletters

FrequencyFrequency refers to how often a visitor or customer visits your website and engages with your company, site, content or other aspects of your brand. The more frequently they visit and engage, the more likely they are to make purchases and ultimately join the ranks of your loyal customers.Frequency can be aligned with “recency,” or how often a visitor returns during a predetermined period of time. Gauging a visitor’s frequency allows you to establish an engagement baseline, which is essential for determining their levels of customer loyalty.Tips for increasing frequency include:

• Maintaining a steady flow of fresh, valuable content
• Launching drip email campaigns to prompt visits
• Rewarding frequent visits
• Using game mechanics to encourage visitors to explore and learn more about your company or site

Conversions Conversion in the customer loyalty equation refers to a visitor completing an action that is valuable to your company. You have revenue-based conversions and engagement-based conversions, both of which are important for measuring and building customer loyalty.Your loyalty campaigns can aim for different goals, such as driving repeat purchases or encouraging engagement by visiting a specific web page, watching a video or downloading a specific resource. Increasing conversions can be done by:

• Setting up a Conversion Rate Optimization (CRO) tool
• Regularly testing your CTAs’ effectiveness
• Investing in an effective and clear navigational design
• Highlighting the value and features of your conversion goals

Advocacy Advocacy is when a consumer publicly supports and vouches for your company. This can come in the form of a referral, a content share or simply mentioning your company in one of their social circles. Social media has created a veritable brigade of brand advocates, with consumers having more influence than ever.Brand advocacy is a powerful way for companies to reach fresh audiences and encourage them to register, purchase or otherwise engage with their brand. Many marketers don’t bother tracking advocacy, wrongly believing that it cannot be encouraged. Not only can it be encouraged, but it is also a vital statistic for measuring customer loyalty.You can increase brand advocacy by:

• Making it easy for visitors to share on your company’s behalf
• Rewarding sharing with badges
• Establishing a referral program
• Rewarding referrers as well as referrals
• Creating an advocacy loyalty campaign
• Personally engaging with those who advocate for your company

Rewards Right after registration, rewards are the most important aspect in the customer loyalty equation. Rewards refer to any extra bonus you give consumers that goes above and beyond what they expect. Your company can do this with tangible rewards, such as a discount coupon or valuable resource, or intangible rewards, such as extra-special treatment with your services.Measuring customer loyalty in this category involves measuring the rewards offered as well as how often customers take advantage of them. When customers feel appreciated, they are much more likely to become a loyal fan. Increasing reward participation can be done by:

• Ensuring rewards are relevant and meaningful
• Featuring rewards in a prominent area of your site or materials
• Making reward redemption easy
• Communicating the reward process every step of the way
• Frequently revamping reward offers to keep customers engaged

Improving Customer Loyalty and RetentionNow that you have a good idea on how to measure customer loyalty and increase specific measurements, you still have to bring everything together. A common way to do this is through cohort marketing.Cohort marketing involves breaking down your audience into specific groups based on things they have in common, and then pinpointing your marketing efforts toward each specific group. The concept is heavily used when it comes to obtaining new customers, but often ignored when it comes to retaining existing ones.Breaking down and analyzing everything on a per-user basis allows for amazing marketing insights and opportunities. You can begin the process by reviewing the different groups and measuring each group’s level of customer loyalty in each of the five categories: registration, frequency, conversions, advocacy and rewards.Those that rank highest in all categories across the board are the most likely to be your loyal customers. Here you can also see where specific groups are weak in specific categories, then boost your efforts in those categories accordingly.Quick Way to BeginIf you're unsure where to begin focusing your efforts with any group, consider starting with the two most important categories: registration and rewards. Boosting measurements in those two end categories typically buoys up those in the middle. Getting people to register and then rewarding them for their business generally results in them coming back more often, converting more readily and taking on the role of brand advocate.No matter where you start, don’t forget to first establish a benchmark so you can determine if your efforts are having a positive impact. Paying attention to the five key measurement categories and engaging in cohort marketing can help ensure they are.Photo Credit: MarkGregory007 via Compfightcc