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5 Customer Retention Challenges Facing Every Business Marketer

Rhys Williams
By Rhys Williams — December 21, 2023 -

Read time: 5 mins


Acquiring new customers is hard, and getting harder. Because of this, many brands put all their energies into the race to win new business. And while every brand needs to attract new customers to survive, this can’t be at the expense of your existing ones. 

Heavy discounting and exclusive offers to get shoppers through the door might help in the short term, but if your existing customers feel they’re not getting the same treatment and look elsewhere, the net effect could be to reduce your revenue. 

It’s far better to have a loyal customer base that buys from you again and again - and to use your existing customers as a launchpad to acquire new ones. 

 

Retaining customers allows you to:

  • Reduce spend on paid channels - Nurturing existing customers is much more cost-effective than acquiring new ones. Building a relationship of trust with your current customer base allows you to save on marketing and advertising expenses.
  • Build a consistent revenue stream - Customers who continue to buy from you over time provide a consistent and predictable revenue stream -  essential for financial planning.
  • Use customer advocacy in your marketing - Satisfied, loyal customers often become brand advocates. They share their positive experiences with friends and family, and on social media. These recommendations carry a lot of credibility and can influence others' purchasing decisions and boost the trust and credibility of your brand.

 

Why brands find customer retention challenging

With all these things going for it, why do online businesses regularly struggle with customer retention? Here are the 5 biggest challenges facing brands:

 

Challenge #1: It's not traditionally been a business priority

While companies used to prioritise customer acquisition above all else, the tide is finally turning. In fact, 67% of businesses have shifted focus from customer acquisition to customer retention.

Because the focus on acquiring new customers is all well and good… until existing customers start to churn or shop elsewhere. 

You know that colleague who’s only nice when they want something? Who breezes through the pleasantries before asking for a teeny tiny favour for a deadline that was, well, yesterday? That’s how your brand risks seeming if you only engage with existing customers when trying to upsell or renew subscriptions.  

After weeks, months or even years of neglect, these customers are entirely disengaged. Your sudden attention only highlights how much you've ignored them until now. It’s too late: you’ve lost them to the competition, and they're unlikely to return.

 

Challenge #2: New customers are treated better

Do you entice new customers in with a generous discount or exciting incentive? A 25% welcome discount or an exclusive free gift with their first order? 

We understand why so many brands do this. It draws people in and gets them buying for the first time. But how many of these customers return? Chances are, not enough.

More often than not, customers will claim the deal, enjoy the product and/or service, and then scour the internet for a similar offer next time. Even if they really loved your brand, they're unlikely to pay full price when they know first-hand they can get similar for less.

That’s not the only way new customer offers can backfire.

Imagine you’re a loyal customer of a particular brand. You've shopped there for years, told your friends all about it, and happily pay full price every time. 

Then you see new customers get 20% off. You’ve never had 20% off, and that makes you feel resentful. So resentful, in fact, that for the first time ever, you go to a competitor’s site.

A business model focused on driving revenue through new customers instead of retaining customers can get very expensive, very quickly.

 

Challenge #3: Knowing how to say the right thing (at the right time)

We’ve all been there. We get a message from a brand and it’s totally irrelevant. 

It could be an email promoting a product you’ve already bought, a notification urging you to upgrade a subscription you cancelled weeks ago, or a post-purchase overlay offering you a discount on a hotel stay you’ve already paid full price for.

At best, it’s annoying. At worst, it can actively deter customers from returning.

But saying the right thing to customers relies on having the right data and resources –something that many retention teams simply don’t have.

Blindly sending out mass communications in the hope that some land is a risky strategy. One that will probably result in spending even more on acquiring new customers to make up for all the existing ones going elsewhere.

Instead, use the customer data you already have in your arsenal (such as first-party advocacy data you can gather with the right referral marketing platform to create personalised messages that drive the right action at the right time.

You can even take it one step further by injecting advocacy data into your other marketing channels (such as your CRM or SMS marketing) to ensure you’re driving maximum engagement and retaining customers at every possible touch point.

 

Challenge #4: Understanding customers

Do your products and services make customers happy? Could you make them even happier? 

Continuously evolving your offering for customers is crucial to long-term loyalty. But knowing what customers want isn’t always easy. Surveys go unanswered, passive shoppers may be reluctant to leave a review, and customers can be reduced to faceless transactions and email addresses. That doesn’t give you a lot to go on.

By putting customer advocacy at the heart of everything you do, you can gather detailed insights into how your customers really feel about your brand, whether that’s through leaving an NPS score or referring all of their closest friends.

We know it can be hard work to understand what your customers want and then make it happen. But the results will speak for themselves.

 

Challenge #5: Using the right tools

Effectively engaging with your customers relies on having the right tools.

Tools that automate your processes so you can focus on making your customers happy. Serving highly targeted, personalised messages is an effective way of doing this.

Instead of relying on endless email campaigns that don’t quite deliver, interact with customers in meaningful ways throughout their online journey. There is a way to get your customers to leave a review, refer their friends, and give NPS feedback, it’s your job to find out what it is.

When you have the right customer data and a solid method for using that data to craft better-targeted messaging and a more relevant customer experience, the task of nurturing your customers to the stage where they’re ready to become advocates for your brand becomes a lot easier. 

We know how difficult it is to retain a customer when there’s so much demand for their attention from your competitors.

But by taking an advocacy-first approach, you can solve the challenges of customer retention and keep customers coming back, spending more, and bringing their friends.

 

Final thoughts on improving customer retention

With a customer retention programme informed by high-quality customer data and a clear execution strategy, it’s possible not only to retain customers but to tap into their networks and enthusiasm to acquire new ones too. 

 

The importance of continuous improvement

You should view customer retention as an ongoing process rather than a one-off endeavour. Continually striving to enhance your products, messaging and customer experiences keeps your existing customers engaged and satisfied. Regularly seek feedback, adapt to changing customer preferences, and evolve your offerings to meet their evolving needs.

 

Put the customer at the heart of everything you do

To meet the challenge of retaining customers, you need to put the customer at the centre of your organisation. Every department, from marketing to product development, should prioritise the customer's needs and preferences. Having actionable customer data with meaningful metrics attached to it encourages your colleagues to view customer satisfaction and loyalty as critical ways to drive value in your business.

Mention Me is your Customer Advocacy Intelligence Platform that puts customer love at the heart of your marketing strategies. We offer tools and expert support designed to identify, activate and nurture your brand's most valuable customers.

Ready to turn your satisfied customers into life-long, passionate advocates? Let’s start a conversation. Our solution empowers you to identify true advocates, harness their authenticity and drive organic word-of-mouth growth. It’s time to take action and elevate your customer advocacy game with Mention Me.

Get in touch today!

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