It’s the 21st century, the customer is king, and loyalty can be fickle.
While customer acquisition is typically the first priority in terms of business growth, customer retention efforts have been ramping up.
With the cost of acquiring new customers reaching a tipping point, companies are finding effective retention strategies can be more impactful at affecting profits than successful acquisition campaigns. So much so that a mere 5 percent growth in customer retention can increase profits 25 to 95 percent.
Similar to customer acquisition marketing, retention marketing makes use of multiple channels to connect and communicate with customers. While email remains the number one customer communication channel, companies are increasing the usage of direct mail in their retention marketing mix, as shown by the 23% growth of retention-focused direct mail in 2019.
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| Source: Compremedia |
Because of how its tactile presence engages the brain, messages delivered via direct mail imprints on our memory longer. Plus, research has shown consumers believe personalized direct mail to be of higher value than many of its digital counterparts. Here are a few ways we’re seeing companies leverage direct mail post-acquisition to strengthen customer relationships and build brand loyalty.
Loyalty Mailings
Telecommunication providers such as Comcast and Verizon are using loyalty mailings to offer promotional pricing that encourages customers to add new lines of service to their accounts and highlight bundle savings. The same opportunity holds true for insurance providers who offer home, auto, and other types of related personal insurance lines.
In the automotive sector, Ford is a frequent user of loyalty mailings to cross-sell their service and warranty programs and provide limited-time offers on maintenance services at their dealerships.
Loyalty mailings also provide an opportunity to encourage enrollment in rewards programs and remind customers at regular intervals how to earn/redeem rewards, building a positive brand image.Credit card issuers frequently use loyalty mailings to activate promotional offers, providing their customers more ways to save or earn points. This not only helps the card become top of wallet but increases the customer’s perceived value of the card.
Birthday Mailings
Birthday mailings are a great way to make customers feel valued and special. While we often see this tactic used in retail, other verticals are making great use of this provided piece of data to acknowledge their customers as well. For instance, in addition to wishing their customers ‘their best year ever,’ Tracfone, a pay-as-you-go mobile phone provider, included a promotion in their birthday mailer offering customers 30 free bonus minutes when they add a 60-minute card.
Birthday mailers offer retention-building opportunities that go beyond retail discounts. Health insurance provider Aetna uses their birthday mailing to help customers manage their health. The piece offers well wishes in addition to simple steps to staying healthy all year long. To emphasize the importance of preventative care they also include a list of annual screenings. This not only increases the lifespan of the piece but enables it to function as both a loyalty driver and a helpful resource.
Welcome Kits
Welcome kits provide a key opportunity to reaffirm your customer’s choice, showcase your brand values, and provide an opportunity to foster customer loyalty from day one. While emailed welcome kits offer an immediate opportunity to initiate a relationship with a new customer, mailed welcome kits offer more real estate to communicate, especially beneficial for complex purchases or services that offer various features and/or benefits.
Use your welcome kit to not only inform customers on how to use your product’s features and tools but to encourage additional practices that will benefit them. We’ve seen welcome kits in both the automotive and credit card sectors promote downloading their mobile app for on-the-go access and enrolling in their loyalty programs. United Airlines sends new United MileagePlus credit card holders a welcome kit that not only reaffirms the benefits they receive by using the card, but also provides personalized luggage tags, creating another way to increase brand awareness during travel.
Milestone Mailings
Concurrently, milestones such as purchase anniversaries, end of term for financing, and membership expiration all provide opportunities to strengthen customer relationships.
Direct-to-consumer lingerie brand ThirdLove uses a purchasing milestone postcard mailer to educate customers about product lifespan and encourage their next purchase by highlighting styles aligned to the customer’s profile.
To strengthen its connection with current customers and encourage a repeat purchase, automotive manufacturer Mitsubishi used highly personalized direct mail to start seeding a customer’s next vehicle purchase months before their financing came to term.
Warehouse clubs Costco and Sam’s Club both use direct mail to notify customers that their membership period is coming up for renewal and to remind them of the benefits and perks they receive by being a member.
Usage Updates
If you’re a service provider, direct mail is a great way to highlight customer usage. ComEd, for instance, recently sent my family an overview of our previous quarter’s energy usage. The two-page letter + envelope package included detail that spanned a breakdown of our daily consumption and peak usage periods as well as how our aggregate consumption compared to our neighbors. It also provided tips on how to reduce our usage and information on available energy efficiency programs.
Retention starts the moment an individual makes their first purchase. Unlike lead generation or customer acquisition, retention campaigns take relatively longer to produce results. When you publish a lead gen form or launch an ad campaign, you can often see results fairly quickly. This isn’t necessarily always the case in customer retention because it deals more with loyalty, relationships, and engagement, which yield results that are not immediately seen and/or are trickier to measure.
Customer retention is critical because it measures not only how good you are at acquiring new customers, but how successful you are at satisfying existing customers. When done right, customer retention strategies not only boost profitability by keeping those current customers but can actually bring in new business through word-of-mouth and referrals. Adding direct mail to your retention marketing mix provides a way to surprise and delight your customers with engagement that digital channels can’t match.
From simple, yet highly personalized, postcards to complex, multi-component welcome kits, SG360° is well versed in producing compelling direct mail campaigns that build brand loyalty and drive your customer’s next purchase. Want to learn more about what our versatile platforms can do for your retention marketing? Contact us today.
