avatarMofrad Muntasir

Summary

The article discusses the importance of using a marketing funnel to retain existing customers and turn them into loyal advocates for a brand, illustrated with examples from writing on Medium and selling t-shirts online.

Abstract

The provided content emphasizes the strategic use of customer data and engagement techniques to enhance retention and encourage referrals. It contrasts a grocery store that fails to leverage customer information with a food delivery service that effectively uses data to incentivize repeat business. The article, which is part of a series on the Marketing Growth Funnel, outlines the necessity of setting realistic retention targets based on customer purchase patterns and introduces the concept of the Acquisition to Retention Ratio. It provides practical examples of how to retain customers through targeted communication and offers, as well as how to convert them into brand ambassadors through referral programs. The author underscores the effectiveness of word-of-mouth marketing, suggesting that referred customers are more likely to make a purchase, and highlights the importance of customizing the marketing funnel to fit specific business needs.

Opinions

  • The author believes that many businesses underutilize existing customer information, missing opportunities to increase profits through improved retention.
  • A key opinion is that retention strategies should be grounded in reality, with achievable targets based on average customer purchase behavior.
  • The article suggests that businesses can effectively retain customers by offering personalized incentives, such as discounts or early access to new products.
  • It is expressed that word-of-mouth referrals are a powerful marketing tool, with referred customers being four times more likely to purchase.
  • The author distinguishes between paid referral methods (like affiliate marketing) and unpaid methods that focus on customer satisfaction and organic sharing.
  • The importance of customizing the marketing funnel to suit individual business models and goals is highlighted, suggesting that the standard funnel may not be one-size-fits-all.
  • The author advocates for the use of a tailored Marketing Growth Funnel as a foundational strategy for marketers, which can involve hiring specialists for different stages of the funnel.

Data-Driven Marketing

How to Use Marketing Funnel? Proven Secret to Retain Existing Customers — Part 2

Your existing customers are your biggest asset — Learn to Retain them and Make them loyal— Explained with Writing and Product Example

“It’s easier to love a brand when the brand loves you back”

— Seth Godin

Photo by freestocks on Unsplash

I visit a grocery store regularly — they have my name, contact number, and purchase details. Every time, the guy at checkout asks for my membership number. He types the number in and does something with it. I have absolutely no idea what they use it for. As a customer, I haven’t found any benefit of carrying the membership card.

I also shop from Foodpanda regularly — they too have my name, contact number, and purchase details. Foodpanda rewards me for shopping regularly by giving discounts. Often they waive the delivery fee if I spend over a threshold. They compensate me if there’s any delay in delivery.

Both of them have my information.

One does nothing with it. The other makes sure I stay satisfied with their service.

One doesn’t care about my basket size. The other incentivized me to spend more.

One doesn’t care about me. The other doesn’t want to lose my business.

Guess where my money is going these days.

Like that grocery store, many businesses don’t know what to do with existing customers. A lot of them don’t even collect consumer information. And those who do, they sometimes just sit on it. The company misses out on more profitable sales — As increasing customer retention by 5% can boost profits by 25% to 95%.

I started the series on Marketing Growth Funnel earlier. You can read the first article here —

In today’s write-up on Marketing Funnel, we will have a look at what we should do — after we have acquired a customer.

Marketing Growth Funnel — Developed by Author based on AARRR Metrics and Experience of Leading Marketing Teams

Retention — It makes sense right?

You have acquired a customer and you want them to keep coming back to your product. If you are making bread, you want them to buy 100s of loaves every day.

Is that realistic?

Retention has to be realistic and based on reality. If you are making bread and on average a person purchases 1 loaf, you can assume that the person needs 30 every month. If you sell 15 to her, then you have a 50% share of her purchases. And that is an ambitious yet realistic target.

It is up to you to have targets grounded in reality. From there, you should try to achieve more.

Writing on Medium — Example:

We established in the previous article that you have email IDs of 500 readers. You are continuously writing articles — 15 per month. As they have subscribed to you, they would get notified of your new articles. By direct math, you may get a maximum of 7,500 (500*15) views from them every month. You end up getting 1,500 only. Only 200 of those 500 readers are coming back for more. That means you have a 40% monthly customer retention rate (200/500).

Assume that you have launched a course or published a book. You can offer early/ discounted access to these to your email subscribers. That will be retention through a new product.

T-Shirt Selling Website — Example:

As we established, 100 people bought T-shirts from you. Firstly, you should define how often they should purchase from you. You calculated that on average your target group purchases t-shirts 4 times a year. You can set up your retention period at a 3-month moving average or keep it at the annual level. Let’s assume that your target is to bring them back at least once per year.

You start offering your customers a 10% discount if they come back within 6 months. You calculate at the end of the year and see that 40 (out of 100) customers have come back. You are happy as you went over your target and have achieved a 40% retention rate.

Acquisition to Retention Ratio — Developed by Author

To get an even better conversion rate, you can introduce a year-end sale for the other 60. They can be offered a limited-time discount for purchasing from you. These are the types of activities you will be able to do efficiently when you will use the funnel. Otherwise, you may end up sharing the discount with everyone. That will create some remorse among existing customers or those who have purchased just before the discount season.

Referral — Make them your ambassadors

A friend of mine recommended a place for a staycation. I didn’t even question it. I became 80% convinced when he was singing the praise of the place.

Word of Mouth is stronger than any other form of marketing. Customers referred by a friend are 4 times likelier to make a purchase.

And, you can take action to convert your customers into Word of Mouth generators.

There are two ways to do it — Paid and Unpaid. The Paid method is also called Affiliate Marketing. For example — Jack promotes a book on Amazon and then gets a cut if someone purchases through his link. Jack doesn’t even have to be a user of the service to be an affiliate. Because Affiliate Marketing often doesn’t require one to be a customer, the audience may not believe the marketer. That is why it is relatively harder for Affiliate Marketers to generate sales.

The unpaid method is all about delighting the customer. The customer should be happy with your product so that when someone looks for a similar product, she voluntarily promotes your business.

Writing on Medium — Example:

You have written a new article and it reaches your subscribers through email. 10 of them share the article on social media. These 10 have become referrers of your product.

For example, Dr. Mehmet Yildiz, Founder of Illumination publication, tweeted one of my articles —

Another way of referral would be —

You have published a book on Amazon. 10 of your subscribers have sold 10 books through affiliate links. You can track affiliate links better than social shares.

Image developed by Author

T-Shirt Selling Website — Example:

Similarly, your customers can talk to friends about your brand, post on social media, or do a review on YouTube.

You can also introduce Affiliate Marketing or provide discounts to new users brought by existing ones. Imagine that you have 20 extra customers thanks to the referral program.

Just by engaging existing customers, you have brought back 40 of them through retention and acquired 20 more through their referrals. If you don’t utilize this portion of the funnel, you will miss out on the revenue from these 60 customers.

Final Thoughts

To recap, you need to make your audience aware of your business, activate them and acquire them through further communication. Once they are your customers, you should retain them and encourage them to refer.

Marketing Growth Funnel should be the starting point for all marketers. This article is an entry point to understanding how it works. For each of the steps, as you can see from the examples, you need to dive deeper. You will see that companies hire conversion specialists, media managers, customer satisfaction officers, etc. to cater to different stages of the funnel.

This funnel is also not set in stone. You can see that I have made some changes to the regular one to suit my needs. You should customize if it’s necessary for your cause.

Growth Hacking
Data Driven Marketing
Marketing Funnels
Mba
Marketing Strategies
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