Why Should We Focus On Customer Retention

so why should we focus on customer
retention in digital marketing Daniel
like a lot of these videos we try and
base this on our own experience to try
and give proper insights not as inio
this is the business Theory this comes
from the fact that for a long time
Target internet online learning platform
as a subscription base of customers
and we had
very broken setup of systems like our
data wasn't joined up so we had
um WordPress was our content management
system we had all these disparate
systems like it was really hard for me
to set any particular Point how many
customers have I got it sounds
ridiculous but how many customers have
got how much is it worth how much they
pay how long have they been customers
all those kind of things
um so we struggle to struggle with it we
then integrated in with HubSpot
brilliant CRM system big fan of HubSpot
but we plot Plugged In This brilliant
thing called profitwell
if you want all these links go to Target
internet.com and we'll put the links up
as well
but profitwell basically connects that
to our payment processor and allowed us
to go in and see
current subscription status monthly
recurring Revenue how many people's
credit cards were about to expire how
many people had stopped after a trial
subscription how many how much money
people are spending on average all on
This One dashboard
and then it would also connect to the
website and it would basically tell me
how many people were actually engaging
with my content there might be a
subscriber where they're actually using
the content things like that and what we
saw which is pretty shocking I shouldn't
laugh I mean this is terrible is that we
were losing subscribers
only at a slightly lower rate than we
were gaining subscribers
so although we were seeing gradual
growth we were basically churning so
much that that growth rather than being
a much much steeper curve was just kind
of trickling along so that was a big
problem
so by focusing customer retention are we
then wasting our marketing budget well
no the thing is we're wasting marketing
budget by not doing it right because
what's happening is that your you're
spending money in order to get new
customers all the time there's a big
spend on bringing new customers in and
you always say this thing it's much it's
much cheaper to keep a customer than it
is to bring a customer in well that's
that's generally true but but the
reality is that actually what's
happening otherwise instead of bring
your customer in and having a larger
lifetime value what I was doing is
bringing customers in short lifetime
value just more of them whereas actually
if you think about it bring more in at a
higher value I'd get much more value for
my marketing budget and I'd actually be
building brand as well because people
would love the product even more every
business seems to have this as well like
there's e-commerce
um clients I have who who work in a
similar way and actually just looking at
the analytics and looking at year on
year month and month comparisons
everything looks great yeah but killing
it
but then you realize gosh the cost of
acquiring each new customer is huge
you know one of my clients has like a
like a 12 pound product they sell loads
of them but in some cases at certain
points a year it could cost them eight
to ten pounds
so it looks like we're great but
actually marketing costs are kind of
kind of ramping up and they use some
Shopify and they have a it's brilliant
yeah it's called life timely it does a
very similar thing for for profit well
and suddenly now you can see you know
average lifetime value of customers and
you can even segment them it's very very
useful and suddenly you start making
much smarter decisions just another
thing if you're in the startup world and
you're looking at building a business
getting investment all those kind of
things monthly recurring revenue is
something that more and more people ask
questions about and they want to
understand what that recurring revenue
is and as it is it going up what growth
level are you see in MMR as well so it's
a really important metric from that
point of view so does that mean that
marketing shouldn't always be the focus
yes which is an odd thing from digital
marketer to say okay
um the reality is that you can really
easily focus on this effort of more
traffic more customers look at how great
we are but you should the two things you
really should be focusing on product
and uh relationship kind of brand okay
if you create a phenomenal product it
will Market itself to some extent in
that people go I love this this was
really good this was useful I found this
engaging whatever it might be and then
actually that helps build the brand and
Trust around that as well it's much more
trustworthy to hear something from a
customer than it is from us
so actually
incredible product is really good
Marketing in its own right and actually
you know think about Apple right so
think about the fact they built these
amazing products but they're also
beautiful they're beautifully packaged
they know the product is the marketing
at some extent very much early on that
was one of their kind of approaches to
it
um and there's other brands that do this
when you'll buy something and it's a
beautiful color and it's in beautiful
packaging and all these kind of things
as well so I think that if you focus on
product
don't just build it and believe they'll
cut them not just product as well like
customer service well customer service
is a piece part of that right so let me
give you a simple example of what I just
spoke about
in profit well tell me those people
whose credit cards are about to expire
and it it was like a good 20 of
customers that were just lapsing because
their credit card was expiring they
probably weren't noticed oh my
subscription ran out whatever
we started calling them and just saying
just want to let you know we ping an
email first and then we call and saying
um we'd love to see you using our
service your credit cards better run out
could we replace it on the system for
you or you can go to this form and you
can replace it
um 80 of those people will be subscribed
so suddenly a huge level of growth okay
then contacting the people that are
existing customers and saying are you
happy do you like the platform like a
real honest anything you'd like us to
change then when they suggest change
trying to make it again customer
lifetime value goes up a huge percentage
because suddenly they feel valued as a
customer now these are just a few phone
calls and emails and it's really manual
we go through profit well we look at the
customers and we just ask them questions
and so on so I think that that
that focus of customer service and
product does a lot of your marketing for
you it's so important with the digital
business because so much of what we do
is just automated you know and you Chun
chunder along quite happily and it's
like Oh no you're missing a trick you
know you don't the data doesn't you
haven't got all of the data and it has
big holes in it and it can and it can
let you down and suddenly you can go
from I thought we were doing really well
to like we're struggling to make cash
flow this month and yeah you know all
these things can like kick in because
they're all these things are
accumulative of every month you're
losing what they understand like that's
that's right and and so right let's just
spend more money no let's just stop a
second be a bit more sensible about this
and do more with the people we've
already got but you're doing the right
day to be able to do that yeah see
there's a little bit of investment to
get that data and then suddenly you're
in a situation where you can start to
address the issues see what they are and
do something about them so to sort of
summarize what's the best way that you'd
say to do retention I think get the data
right so you can see what the problem
actually is but until you've got that
it's really hard but if your business
isn't phenomenally big you don't need
the date you just need to speak to your
customers you need to better speak to
people and ask them the question next
one customer service which is to speak
to people respond to things do all that
that kind of good customer service thing
but focusing on product development
product roadmap telling your customers
what the roadmap is getting them engaged
building that advocacy if you tie those
three things together you end up with
pretty great marketing you can feed the
marketing off the back of that as well
and it doesn't then take a lot you don't
need to spend as much on that in order
to do those things I'll just give you
one great example of this so it was a
beauty company that I work with I was
with them for about three years in 10
years the founders of that company went
from literally business idea where they
were like wrapping the products on the
kitchen table and rooting the kids in to
help wrap to get the Christmas orders
out to a 50 million pound turnover
employing over 500 staff
um and selling out the the business for
a lot of money to a big International
conglomerate
that company in 10 years never spent a
pound on Advertising right the focus was
always on product development and
customer Delight authenticity was
authenticity and their whole model was
built on Word of Mouth which is free oh
no it's not free yeah but they would far
rather like rather than all the other
Beauty companies which were pushing out
you know huge advertising campaigns in
all the glossy magazines no we're gonna
just make exceptional products that
delight and we're gonna go out of a way
to Delight our customers
um we're going to give free samples with
everything we're going to gift wrap
every single item that goes out so it's
our gift to the customer we're going to
have a like a Customer Loyalty Rewards
program you know nothing about but when
you spend a certain amount you suddenly
get something amazing free from from
delighting people to to delight and the
word of mouth on that was was awesome
and that's how they grew the that's how
they grew the business and it was so
extreme that actually when I came along
and said actually I want to do Google
Google ads and we're like is that
advertising like no no no no no no no
it's a different thing it's a different
thing kind of what I argued was I know
you're using the very words customers
are searching for yeah they're already
again yeah they're already in case it's
not like you know in your face and they
were like good we'll give it a go we'll
give it a go anyway yeah and that was
successful as well but but yeah I'm like
amazing things can come from you can see
like not every business has to work like
that but you don't have to invest in in
marketing in the traditional sense like
just be exceptional and go out of your
way to Delight your customers and you
can't really lose and that's the thing
like you do all that stuff and then
suddenly you've created the man that's
there and the marketing is so much more
effective your return on investment is
huge I think it's a it's a great example
to finish up on