Customer acquisition is only half the battle… That’s how they use data to retain customers.

The last few years have been very good for digital business such as eCommerce or digital subscriptions, as the framework of the Corona pandemic has driven consumers even more into the digital world.

But the wind has changed. Some of the initial positive effects for digital business have faded. The reasons for this are very different. On the one hand, global supply chain issues are putting pressure on online sales at retailers, and on the other hand, many consumers are more sensitive about spending due to the extreme inflation rate. The number of subscriptions one has in the household for media consumption are questioned and the purchasing power – and desire has also reduced.

Offsetting these trends through increased customer acquisition has also become more difficult. Due to additional restrictions, the targeting possibilities are significantly smaller and the general costs for advertising have risen steadily.

In addition to current trends, however, there are other aspects and figures – collected over the years by various studies – that highlight the importance of retention marketing.

Source: https://hbr.org/2014/10/the-value-of-keeping-the-right-customers

The question now is how to approach the topic of retention marketing and what campaigns or actions can be launched for this purpose. The first thing to consider here is the relevant data points.

• Last login/activity
• Last purchase
• Survey results
• Web/Portal Engagement
• Email commitment

Segments or, better yet, scores can then be derived from these data points. In the context of retention marketing, RFM Score, Net Promoter Score, and Churn Score are useful. How exactly these are calculated or weighted always depends on the business model. An RFM score is calculated differently depending on the frequency of conversions or touchpointst (purchases, logins, etc.). The generated scores can then be used either as a starting point for campaigns or as a basis for special personalization within rule communication.

Retention campaigns should be differentiated between two different types. Although both types have the same goal, they are applied to different ones in the customer lifecycle.

1. Prevention: After successful acquisition and onboarding of a new customer, retention marketing actually already begins. From a campaign perspective, for example, you can use the purchase of a product or service to follow up directly with a post-purchase campaign to gather feedback or generate a cross-sell or upsell with the right incentive. Cross-sell and upsell increase “customer stickiness,” i.e., the transactional value of a customer. The higher the “customer stickiness”, the better for customer retention.
   
   In addition to multi-touch campaigns, personalization also plays an important role in prevention. The right incentive, the right approach as part of regular marketing communications can also drive additional purchases or conversions.

2. Reactivation: If prevention has failed and the risk of the customer dropping out increases, reactivation comes into play.
   
   Here you commonly see two different types of campaigns. On the one hand, the classic reactivation with campaigns based on the above mentioned scores or data points (e.g. re-engagement based on last purchase date or email engagement data) or winback campaigns. Winback campaigns are used when previous customer retention campaigns have not worked. At first glance, this may seem to be a purely semantic distinction, but it is very important from the company’s point of view, because the level of incentives I use to retain or win back a customer are usually very different. To win back a customer in a winback campaign, I have to invest significantly more.

How exactly the campaigns are structured and the data points and scores are defined varies greatly depending on the industry and business model. However, in Salesforce Marketing Cloud, there are some out-of-the-box functionalities that a marketer can always use to build a foundation for customer retention.

1. Einstein Engagement Scoring: Based on historical email and app data combined with machine learning, Salesforce Marketing Cloud provides prediction models that show how recipients interact with email or push notifications. This can be used to generate beautiful re-engagement campaigns with little effort.
2. Einstein Engagement Frequency: Again, Machine Learning comes together with email engagement data. This feature in Salesforce Marketing Cloud gives marketers insights into the saturation of recipients in terms of email communications. Are we sending too many or too few messages to an individual person? If oversaturated, the risk of unsubscribing from the email newsletter is higher. The undersaturation of a recipient can again highlight potential for further communication and thus the possibility of possibly increasing customer stickiness.
3. Einstein Content Selection: Personalization plays a hugely important role at every stage of the customer lifecycle. And as mentioned earlier, it should also be used specifically for retention marketing to set the right incentive to reactivate or win back at the right time. With Einstein Content Selection, I can combine my set of rules for personalization with Machine Learning. Assuming you want to use a specific incentive for reactivation, with the help of Einstein Content Selection, you can test several variations of this incentive and continuously optimize performance. Based on the historical engagement data, it is possible to quantify whether an incentive has already been played out to a recipient and whether this has led to a click. If the incentive is not initially well received, machine learning automatically replaces the incentive or the associated content the next time. A beautiful combination of Descriptive Rules and Machine Learning that can be configured with relatively little effort.

In this article, we have focused a lot on the marketing perspective on the topic of customer retention. In general, however, it goes without saying that the most important component of customer retention is customer service. Because it’s not for nothing that they say that good service is the best marketing. And the best automated, personalized campaigns lose their power when customer service disappoints in the event of service incidents. But we will take up this point in a separate article in the future.