Customer Retention Efforts Boost Revenues By 40%
There is still incredible value to be found in activating, engaging, and retaining existing customers, rather than simply concentrating on customer acquisition, according to a two-year pilot study from technology firm Bumped. This article is copyright 2021 The Best Customer Guide.
Telecomms (mobile phone carriers), Club Warehouses, and Restaurants were the focus of Bumped’s report, but the broader study looked at retention efforts across some 85 brands on the Bumped platform and found that the average revenue increase across all of them was 40%.
As more and more companies are incentivizing their Marketing teams to increase customer acquisition, the Bumped team highlights the following retention results:
Bumped rewarded users for every transaction at AT&T, Sprint, T-Mobile, and Verizon Bumped found that even in a subscription-based category, rewarding for every transaction (retention & loyalty) drove significant behavior change.
The three mobile brands had an average retention rate of 89%. What’s more, on average, customers who became owners of their mobile brand spent 13% more monthly, and transacted with them 14% more often.
The Club Warehouse (i.e. Costco, Sam’s Club) model is another example of an industry that depends on new users – yet Bumped looked at what happens when users are rewarding recurrently on transaction as a retention play.
The average Costco customer visited the warehouse store 30% more often and spent $80.68 more monthly – focusing on retention and engagement in this case can account for almost $1k in additional spend annually, per customer.
In the Restaurant category Bumped found Red Robin customers doubled their spend with the restaurant as a result of retention-based rewards.
When some users selected Red Robin, they received an email alerting them that they would get $10 of Red Robin stock as a thank you for choosing Red Robin. Customers who were given the $10 stock reward spent twice the amount of users who were not (by both increasing transactions and visiting more often).
Those users showed a 143% increase in spend over the first six months, and a 116% uplift in spend among those users 12 months later. Impressive staying power for a one-time $10 investment.
So if the data is there, why are so many Marketers focusing on consumer acquisition? “This could be because we lack the mechanisms to create true loyalty. But if data shows that there is a solution that results in 53% top line revenue growth by leveraging your existing client base, or gives you the ability to steal 24% of market-share from a competitor (like we saw in the case of Lowe’s and Home Depot), it’s a true loss to focus only on acquisition,” says David Nelsen, Founder and CEO of Bumped. “The consumer ends up on a merry-go-round of incentives without ever building a true relationship, and the brands miss out.”
This article was first published by Customer Strategy Network. Permission to use has been granted by the publisher.