Growth is essential to a company's long-term survival and success. So, it's no wonder businesses often focus most of their budget on new customer acquisition. However, they may not realize that retaining existing customers is equally crucial to growing their revenue.
Think of retention and acquisition as a dynamic duo—a PB&J would not be as delicious without both peanut butter AND jelly. The key to high performance marketing is finding and keeping new customers, while ensuring that existing customers continue to engage at high levels.
Epsilon Digital uses industry-leading identity resolution to deliver better-performing and personalized ads that attract new customers and speak to existing ones too. And, because of our persistent, person-based data, we can evolve a brand's messaging as their customers grow and change.
Investing in existing customers is valuable
Customer retention—when done correctly— can be extremely cost-effective for your business. According to HubSpot, companies say they have a 60-70% chance of selling to an existing customer, versus a 5-20% chance of closing a sale with a new one. One Epsilon client found that when they shifted in-market dollars to focus just on new customers, they still ended the year with a net loss of 1.3 million customers because they weren't nurturing existing ones.
Brands that can convert a new customer to a repeat buyer see higher retention rates, higher spending and decreased advertising costs per customer.
Making the most of acquisition budgets while continuing to focus on retention creates a strong customer journey and gives brands confidence they're reaching new and current in-market customers with messages that resonate.
What does it mean to retain customers?
Retention can be challenging because marketers often rely on outdated retargeting strategies or use a variety of third-party products, which lose reach and accuracy. Most demand side platforms (DSPs) rely on cookies for retargeting, yet nearly 50% of the internet no longer uses them. Google Chrome—the internet's largest browser and remaining holdout for third-party cookies—is poised to get rid of them in 2024. The New York Times also reports that the number of iPhone users that consent to being tracked by advertisers is shrinking as well, with only about 24% opting-in. Therefore, retargeting leads to missed opportunities and can present a number of challenges.
- Negative impact on awareness: Retargeting that relies on third-party cookies reaches fewer people, therefore decreasing an ad's effectiveness. It also impedes the performance of A/B tests and awareness-building campaigns.
- Decreased conversion and re-engagement: Traditional retargeting struggles to track site visitors who abandon their carts, limiting businesses' follow-up strategies to re-engage potential customers. Without applying frequency caps across websites and devices, companies risk over-messaging individuals, leading to ad waste, consumer fatigue and reduced engagement.
- Unclear measurement: The inability to track conversions across browsers and devices hampers accurate measurement and analysis of retargeting campaigns. Brands that can't analyze data attributes and browsing habits of purchasing customers struggle to identify and target similar high-value customers.
To identify and reach lapsed customers, and to keep them coming back, brands need a first-party data strategy that measures site and non-site visitors wherever they choose to buy. Effective retention looks at customers based on their individual behaviors, interests and purchases across all channels, and takes those insights to continually drive more tailored messaging.
This helps with:
- Cost savings: Focusing on retaining existing customers saves you (your brand) money otherwise spent on marketing and advertising efforts. It costs companies 5 to 10 times more to gain a new customer than to sell a current one, and returning customers spend 67% more on average than new ones.
- Increased customer lifetime value: Engaged and satisfied customers are more likely to make repeat purchases, increasing their overall value to the business over time. Epsilon research shows customers who purchased five times in any given year had a 90% chance of buying again the following year.
- Building customer loyalty: Individualized retention efforts show customers that the brand cares about their needs and preferences. This fosters a sense of loyalty, encouraging customers to remain committed to the brand and its products or services. And mitigating defection to alternative competitive options.
One restaurant client found that focusing on lapsed guests drove a 40% increase in the average of number of trips for that group, and that they spent $16 more per trip during those visits. This generated $1.4 million in revenue over a single quarter.
Media activation powered by identity connects brands with customers, new and current
A robust first-party data strategy, grounded in strong identity resolution, makes connecting with all in-market customers easier. Epsilon Digital provides real-time data points on customer behavior and interests, and using CORE ID, along with an extensive publisher network and a brand's first-party data, we can identify site visitors across the web without the use of third-party cookies.
We consensually capture behavioral data for both authenticated and unknown site visitors across the web and devices, regardless of whether they're authenticated. Epsilon then provides real-time customer data that can be used to deploy relevant and personalized messaging to customers, drawing in the right new customers and also speaking to existing customers on the devices and channels they prefer.
Because Epsilon has the only identifier adding real-time online and in-store conversions back to the customer profile, we enable brands to maximize sales for double the amount of customers than our competitors, including acquisition, nurturing, new, retaining active and winning back lapsed customers.
Unlock the power of the dynamic duo
While acquiring new customers is vital for expansion, it's important not to overlook the benefit of cultivating long-lasting relationships with existing customers.
Epsilon Digital is a cutting-edge solution proven to drive engagement and revenue growth. Our data-driven outcomes give businesses a competitive advantage that enables continued innovation. Ready to take the first steps? Visit Epsilon.com to get started today.