Retention Marketing and Artificial Intelligence for Customer Retention

Stable and effective development is what absolutely every business strives to achieve. But such a task requires the most comprehensive and creative approach, detailed elaboration of each stage, thinking through several steps in advance, a comprehensive study of competitors and more. Business representatives will also have to pay a lot of attention to the target audience. Here it is important to determine who exactly your customers are, study their interests, preferences and do everything to satisfy them, transfer them from the rank of random to permanent. That is, one of the extremely important tasks of any business will be customer retention.

Practical studies have repeatedly proven that attracting one new customer costs a company about 5 times more than retaining an existing one. And here are some more interesting figures: an average 1% increase in the number of customers brings an additional income of 3.3% to a business, while professional work with the existing customer base can provide an average increase in profits of 7%.

But the problem is that not every business can retain its audience for a long period of time. Over time, even fairly loyal customers can lose interest. And here, such a technology as retention marketing comes to the aid of a business. Literally translated from English, the word retention sounds like “retention”. That is, we are talking about a direction in marketing aimed at retaining the attention of a regular audience by a business.

Now we will dwell in detail on what retention marketing is, what indicators will be relevant for it. We will describe the opportunities that this technology opens up for business and talk about the tools that can be used to implement the tasks. We will talk about how you can simplify and speed up the upcoming work by introducing artificial intelligence technologies into retention marketing. The information presented will allow you not only to improve the work of your business with regular customers, but also to automate some of the same type and routine tasks, and involve AI-based chatbots in their solution.

What is retention marketing?

Retention marketing (RM) is a fairly impressive set of methods and tools designed to effectively retain the attention of regular business customers and increase their loyalty to the brand. That is, the bet here is made directly on those who have already bought goods or services from you. This direction did not arise by chance, since almost every business representative clearly understands that it is the repeat sale that is the basis of their stable work and good profit.

A similar technique began to be actively used around the 2000s. Previously, few people thought about such concepts as regular customers, their loyalty, brand reputation. But every day this direction is developing more and more actively, techniques, methods, tools are expanding. All of them are intended to achieve a single goal - ensure the longest possible relationship between the buyer and the brand, make sure that when a new purchase is needed, a person does not go to competitors with orders, but immediately turns to the previous counterparty.

In many ways, increasing loyalty and trust is due to the quality of the products, but we must also not forget about the importance of professional service, prompt delivery, as well as many other components, which we will mention more than once in our review.

Indicators that will be relevant in retention marketing

In order to understand whether you are moving in the right direction in retention marketing, it is important to define a number of key indicators and check them with enviable frequency, monitor deviations from the norm and take appropriate measures to achieve the predicted figures. By and large, such key factors are present in absolutely any marketing approach. But in this case, we are talking about the following indicators:

• CRR, that is, the customer retention rate. This is a key parameter that reflects how effectively a brand manages to capture the attention of the target audience and maintain interest at a high level over a long period of time. To calculate this indicator, you need to divide the number of customers who re-ordered the product by the total number of buyers and multiply the resulting figure by 100%. The higher this indicator turns out to be in practice, the better for your business. The CRR is significantly affected by the length of the reporting period, as well as the characteristics of the product or service that the buyer is applying for. If these are essential products, perishable, then they will run out quite quickly, requiring repeated orders. A completely different picture will be for a business selling furniture, household appliances, textiles.
• RPR, that is, the repeat purchase rate. It is defined as the ratio of the number of customers who made more than one purchase during the studied period of time to the total number of customers during the same time interval. If we talk about the e-commerce niche in general, then here RPR is about 30%. This allows us to conclude that approximately every 3rd customer repeatedly contacts the same company for a certain product.
• CLV, that is, the customer lifetime value. This coefficient is directly related to the previous parameter. Higher numbers will be for a customer who buys goods or services from a brand over a long period of time than for a new customer. In practice, you can use both a qualitative and quantitative expression of this indicator. In the latter case, the benchmark can be made on the average check: for a long-term consumer, it will in any case be higher than a one-time purchase.
• CSS, that is, customer satisfaction rating. It should be used in companies that specialize in serving the audience. It is determined by surveying people who have placed orders with a request to measure their opinion on a scale from 1 to 5, where 1 is complete dissatisfaction, 2 is dissatisfaction, 3 is neutral, 4 is satisfaction, 5 is complete satisfaction.
• CRR, that is, customer churn. It can rightfully be called a quantitative display of customer departure from a particular company to its competitors. To calculate it, you need to subtract the number of new leads from the total number of customers, and divide the resulting figure by the total number of customers of your business at the beginning of the study period. If you regularly monitor fluctuations in this indicator, you will be able to respond in time to the mass outflow of consumers and make every effort to return them to long-term and fruitful cooperation. By and large, the norm for small businesses can be called a 5% customer churn. But for large businesses, it is optimal not to allow a churn rate of more than 2%, because in this case the risks for subsequent stable development will be much more serious. But here, too, much depends directly on the company's niche. In particular, there are a number of areas where the churn rate will be much higher, while being considered the norm. In particular, here are some figures: video services - up to 11%, education - up to 10%, online games - up to 6.5%, SAAS-business - up to 6.2%. If you see that the figures are close to the limit, you need to launch closer interaction with outgoing customers and try to retain them.
• NPS, that is, the customer loyalty index. This is an indicator that demonstrates how satisfied your customers are with the purchased goods or ordered services. There is no standard formula for calculating it. It is determined simply by surveying the audience in order to receive feedback on cooperation on a ten-point scale. If your indicators are in the range from 0 to 6, this indicates customer dissatisfaction, if it turns out to be 7-8, then we can talk about neutrality and only 9-10 points are evidence of loyalty.

Most businesses need to use all of these characteristics in practice. Moreover, it is best to observe them in dynamics in order to understand how they change and in which direction the trend is: for improvement or for deterioration.

Business opportunities from retention marketing

Using retention marketing technologies and tools in practice will allow a business to solve many issues necessary for effective development in the market, in particular:

1. Customer retention. This is the main goal of retention marketing. With the correct organization of the upcoming work, you will be able to significantly improve the loyalty of the target audience to the brand, minimize the outflow of buyers. This means that people who have interacted with your business at least once will come back to make purchases again and again. For additional incentives, you can offer them additional bonuses, discounts, interesting personalized solutions. Alternatively, you can launch a loyalty program. This is what will stimulate the audience to make new purchases.
2. Increase in sales. At the beginning of the review, we already mentioned that regular customers bring much more benefit to a business than new ones. Firstly, this is due to minimal risks: people understand that they will receive a proven product that will suit them in all respects. In addition, there is no need to search for new sellers, which saves not only effort, but also time. Accordingly, the income level will also be higher.
3. Cross-sell and up-selling. Thanks to retention marketing, you will be able to offer your customers additional products or services, focusing on their purchase history, preferences. Alternatively, these can be related products, updated versions of those products that they have already purchased. This will also contribute to an increase in sales, and along with this, business income.
4. Increasing the number of feedback, reviews, recommendations. Practice shows that satisfied customers respond more positively to requests to leave feedback. They easily interact with the business. By providing some additional bonuses for your customers, you can encourage them to write reviews. Based on the experience they have gained, they give recommendations to their friends and acquaintances, thereby attracting new customers for you absolutely free of charge.
5. Minimizing advertising costs. Attracting new customers to a business always requires not only effort, but also material costs. Working with regular customers is associated with significantly lower costs. But the lower the costs, the greater the business income.
6. Obtaining a lot of information about the behavior of the target audience, customer preferences. Thanks to this, you will only have to structure this data, analyze it and, based on the figures obtained, revise your own development strategy, and then - build a new one on an improved understanding of customers. This is what will give excellent results in practice.

All these features allow us to confidently state that retention marketing can become the basis for long-term and mutually beneficial relationships with business clients, and along with this - stable income and successful development in the market as a whole.

Main strategies and tools of retention marketing

Gaining loyalty to a business from customers is a rather complex and painstaking process that requires an extraordinary approach, as well as a lot of time and effort from specialists. We have already said that various coefficients are used to evaluate the effectiveness of retention marketing. But in any case, you will not be able to simply measure them and expect that customers will start contacting you with repeat orders on their own. In any case, you will have to develop a set of measures aimed at stimulating the audience, using the data that you managed to collect during the study. And here reliable and proven tools, retention marketing strategies will come to the rescue. In particular, this could be:

1. Launching a loyalty program for regular customers.
2. Creating a customer journey map or making appropriate adjustments to an existing solution.
3. Building retention marketing based on personalization.

We will now consider each of these strategies in more detail, which will allow you to thoroughly understand the features and implement the upcoming work as correctly as possible.

Loyalty program for regular customers

If you have not yet thought about creating a loyalty program for your regular customers, now is the time to implement such an idea. By and large, this solution is a retention marketing standard. It can solve a number of key tasks:

• ensure long-term relationships with the target audience;
• increase the level of trust;
• improve the brand's reputation in the market;
• increase the average purchase check;
• identify the interests and preferences of the audience.

But the effectiveness of your idea in this case will directly depend on how interesting and attractive the loyalty program for customers you develop. Research shows that almost 60% of business clients simply leave the incentive system if the process of accumulating bonuses is difficult to implement, requires additional time and effort from them. And about 54% of clients do not use such programs at all, because they simply do not see value in them for themselves. That is, you will not be able to implement your idea if you cannot interest people with your offers.

To get a truly effective loyalty program, you need to take a comprehensive approach to its development. The first thing you should pay attention to here is simplicity. You do not need to develop and implement complex schemes on the basis of which your clients will receive bonuses. The simplest solution is to set a certain percentage of the purchase, which will be credited to the bonus card each time after placing an order. It is also worth understanding that the audience always reacts more loyally to individual offers and gifts than to banal discounts.

Try to make your customers realize how valuable the points they have accumulated will be, because the retention effect itself largely depends on this. In parallel with the launch of such a program, you can also develop a system of special offers that will act as gratitude, for example, for a purchase, for a review, for a recommendation.

Creating a customer journey map or adjusting it

Customer journey, that is, customer journey map —is the basis for a business to understand the requests and needs of its target audience. The loyalty of customers and their desire to return to you for new purchases again and again directly depend on how well you perform these works. Creating such a map involves:

• segmenting the target audience based on interests, preferences and other characteristics;
• creating a portrait of the target buyer;
• creating a communication map with clients;
• selecting the optimal communication style for each buyer.

Almost every business today has tools that will help it automate the segmentation process based on pre-established algorithms. But such work can also be done manually. However, automated solutions will be more reliable and effective in practice, since with their help you will be able to provide comprehensive control over the actions of each of your clients, literally accompanying them along the entire chain, starting from the first visit to the site and up to the registration of a request for a call back or even an order. And at each stage of interaction, you will be able to receive information that is of truly significant value for the development of the business as a whole.

You can also use the information you receive to create a consumer profile, select the most effective style and communication scenario for each segment of the consumer audience. Thanks to all this, you will be able to create a truly high-quality communications map that will help you find an individual approach to each buyer.

Development of a retention campaign taking into account personalization

By and large, a retention campaign is the practical implementation of a pre-developed comprehensive strategy. All those methods and principles that will be relevant here are not much different from the classical methods that modern marketing uses to retain the attention of the target audience. In particular, the following factors are taken into account here:

• communication format;
• creatives, interactives;
• conversion rates;
• responsible persons.

You can only get decent results here by personalizing offers. This is the only way you can build long-term and effective relationships with the consumer market. This means that you initially need to understand the desires and needs of your customers, their pains and choose the best solutions. It is also important to provide for a maximum of communication channels, thanks to which each person can choose the option of interaction with the business that will be most convenient for them.

The main options here are email and SMS mailings, social networks, specialized applications, CRM systems, chat bots, etc. The work ahead is voluminous and painstaking, but you can significantly simplify it. And artificial intelligence is ready to provide significant assistance in this.

Artificial intelligence as a reliable assistant in retention marketing

Modern capabilities of artificial intelligence allow us to radically change the approach to retention marketing, increasing its accuracy, efficiency, and speed of implementation. This is largely due to the ability to quickly process huge amounts of data, analyze the results obtained, predict user behavior, and build good personalized strategies for communicating with the audience.

Using artificial intelligence technologies in your work, you will be able to solve the following problems:

• Analyze the actions of the target audience in real time. The neural network that you will use in your work will be able to track all customer activities in real time, including whether they opened the mailing list sent to them, followed the links, how active they were on the site, what pages they visited. You will also always have the purchase history of each individual person at hand. This is all that will allow you to respond as quickly as possible to all changes that will occur in user behavior and immediately adjust your working strategy to them. Alternatively, if you see that a particular buyer has begun to track a certain category of products, the neural network will make a corresponding selection of the best offers and send them to him for review. This is what will most likely increase the chance of placing an order.
• Create personalized offers based on the collected information. Modern machine learning systems are able to determine what types of content are most relevant to a particular person, at what time there is more intensive interaction. Thanks to this, it will be possible to create the most relevant offers, if not for an individual, then for a segmented audience. Thanks to this, conversion rates increase significantly.
• Automation of monotonous and routine work. Today, manual settings in marketing are gradually fading into the background. They are being replaced by automated solutions. In particular, thanks to artificial intelligence, it is possible to create quite complex trigger scenarios and implement them without human intervention. Alternatively, the system itself will remind your client that he left the product in the basket without placing an order, offer a personalized discount to stimulate the client to make a purchase, etc.

As you can see, there are not so many tasks themselves, but everyone involved in sales clearly understands how labor-intensive they are in implementation, how much time they require from managers. And all this can be quite easily accelerated, simplified, the efficiency of communications with the audience increased, and along with this, the lifetime value of the client.

How can artificial intelligence be used to retain customers

Thanks to the use of artificial intelligence, retention marketing will become more flexible, effective and quick to implement. It will help not only to attract the attention of customers, but also to retain it over a long period of time. This is ensured in the following ways:

1. Preparing personalized offers. In this case, the system will be able to analyze the buyer's behavioral factors, pay attention to what goods or services he has already ordered on your website and prepare a corresponding selection of the best options for him. This is what can significantly increase the likelihood of repeat orders and ensure effective interaction between the business and the buyer.
2. Preparing fairly accurate forecasts regarding customer churn. Properly trained neural networks are able to predict with high accuracy when a buyer may refuse to use the brand's products in the future. By analyzing the audience, AI will identify the category of users who are more likely to churn than others. Then a strategy is launched to retain attention. As an option, this could be sending a letter containing an additional discount, an offer to purchase exclusive products, etc.
3. Adding dynamic content to mailings. Surely you already know that modern artificial intelligence technologies have advanced so far that they allow changing the contents of a mailing in real time, focusing on the behavior of a potential buyer. As a result, representatives of different segments will receive different versions of messages. Some will see an attractive product recommendation in the mailing, others - additional discounts, others - individual offers based on previous purchases. Thanks to this, the effectiveness of communication and the chance of placing an order significantly increase.

All these are the tools that will help brands maintain effective interaction with the target audience, hold their attention for a long time, and prevent churn. This improves the quality of service and increases loyalty from the audience.

AI-based chatbots as an effective tool in retention marketing

One of the latest innovations that can significantly increase the efficiency of retention marketing is rightfully called chatbots based on artificial intelligence. With their help, the most prompt and personalized support for potential buyers is provided around the clock. This is what significantly improves the customer's experience of interaction with the business, stimulates increased loyalty and new purchases.

In operation, AI bots are able to analyze the requests of a particular client in real time thanks to natural language processing, providing relevant answers to them. The learning process itself is based on studying the previous history of communication between the buyer and business representatives, and subsequently it is improved, which has a positive effect on understanding and context.

Among other advantages of using AI bots in retention marketing, we can highlight:

• Providing instant round-the-clock support. Modern customers do not want to wait. If they are interested in something, they are set to receive an answer literally here and now. And it does not matter what time of day it is, day of the week. It is extremely difficult for a real manager to work in such conditions, but intelligent chat bots will cope with the task without any problems, that is, they will help solve the user's problem without delay. As a result, the level of satisfaction will improve and the likelihood of churn will be minimized.
• Providing personalized recommendations based on the behavior of a particular person, automatic selection of the most relevant offers.
• Automation of trigger mailings. The chatbot will be able to predict the buyer's next actions, remind them about an abandoned cart, tell them about new products taking into account the buyer's interests, which can stimulate repeat orders.
• Predicting customer behavior and preferences. Thanks to AI bots, you will know with a fairly high degree of accuracy what step your potential buyer will take next. As an option, the bot can offer a girl who buys an evening dress original accessories for it, shoes.
• Optimization of all email marketing processes due to the integration of the chatbot and the mailings themselves. So, after receiving the letter, the client will be able to contact the bot to get answers to any questions that have arisen or ask for an additional discount.

We would like to draw attention to the fact that AI bot technologies continue to develop at an accelerated pace. We can confidently say that in the foreseeable future they will become even smarter and more sociable. Today, voice AI assistants are being actively tested, which are capable of interacting with the audience not only through correspondence, but also through communication. Bots are also learning to recognize the context of communication, human emotions, which allows them to literally intuitively understand intentions. Additionally, work is being carried out to integrate chatbots into CRM systems, thanks to which subsequent actions will be performed based on an analysis of the previous history of interaction between the buyer and the brand.

All this allows us to confidently say that AI bots will become reliable assistants in building long-term and promising relationships with the target audience and business clients, will be able to increase loyalty rates and strengthen trust. That is, this is no longer just support automation, but a full-fledged retention marketing tool.

Summing up

We hope that we have convinced you of how advanced and effective a tool for retaining the attention of the target audience retention marketing can be with the right approach to its implementation. Artificial intelligence can be of significant help here, analyzing user behavior in real time, predicting their subsequent actions, assessing the likelihood of churn. Thanks to this, you will have a huge amount of information at your disposal, which will increase brand loyalty on the part of buyers, automate many routine and similar processes, improve conversion thanks to dynamic trigger mailings and accurate recommendations.

It is clear that you should not fully rely on artificial intelligence here, since this technology is still in the development and improvement stage. That is, it should be used only as an assistant, monitoring the most responsible and important stages. Also, in marketing in general, it will be useful to use additional tools designed to speed up and simplify upcoming work. And one of such solutions is these are mobile proxies from the MobileProxy.Space service. With their help, you can automate the process of collecting and structuring information, analyzing competitors, and will easily bypass any restrictions on the part of the system, including access to sites from any country in the world. Also, mobile proxies guarantee high rates of anonymity, confidentiality, and security of work on the Internet in general.

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