Customer retention is top of mind for many brands after a year in which shopper behaviours and category norms have been turned upside down. The new WARC Guide to Customer Retention examines the nuances of retention marketing in 2021.

Customer retention is a controversial topic in the marketing industry. The idea that brand loyalty should be a major marketing objective has fallen out of fashion, based on the back of the work of the lauded Ehrenberg-Bass Institute. Many marketers now agree that the best way to grow long-term is to acquire new customers, and also that bigger brands will tend to have slightly higher loyalty.

However, Gartner research indicates that more than 70% of brands will be prioritising retention in 2021. In many cases, brands which have seen an uptick in new customers during the pandemic – think frozen food, fitness brands or streaming platforms – and now must work hard to keep them as life returns to ‘normal’. As Martin Hayward argues in his piece for this month’s Guide, brands will need to evolve and adapt for these new customer expectations.

This Guide focuses on new thinking in driving repeat purchase in this climate of constant change. It looks at the reasons retention is seen as important post-COVID, and how the rise of e-commerce, social commerce and subscriptions are creating new opportunities to encourage repeat purchase. It also considers how loyalty schemes are modernising for the digital age, and how more brands are starting to build customer lifetime value models which reflect a fast-changing consumer environment.

Acquisition tactics can also drive retention

Marketers often struggle to find the right balance between money spent on acquisition versus retention. Dr Kelly Vaughan and Alicia Barker, marketing scientists at the Ehrenberg Bass Institute, argue in the WARC Guide To Customer Retention that while marketers should be pulling the acquisition lever ‘all the way down’ , these same strategies also play an important role in driving repeat purchases.

Tactics do not build acquisition or retention strategies in isolation. Marketing activities typically build and refresh mental availability of the brand for all category buyers (if reach allows).

So, aim for acquisition, but understand that most tactics aimed at acquisition can also work to retain customers.

Retention looks different in online environments

With online shopping booming during the pandemic, many brands are now prioritising retention via e-commerce platforms, subscription models and social commerce channels.

Danny Silverman from Spotlight argues that a paid search strategy is a crucial pillar for shopper retention on e-commerce platforms, especially to defend against competitors buying up similar keywords. Likewise, subscription models aren’t necessarily a holy grail – brands will need to prioritise high-quality brand experience and ensure they are choosing the right products and services to be a success.

Matthew Nolan, of Mindshare China, explores the exciting opportunities of social media communities as a driver of retention, especially in a post-cookie world. China – a global trend setter in social commerce – offers fascinating lessons in creative retention strategies for brands with AI, gamification, and private traffic to the fore.  

Loyalty programmes need to evolve for a new era

Greg Paull, of R3 Asia, notes in his article that the general acceleration of digital transformation – both in business and society – during the pandemic has changed customer expectations, which impacts on retention strategy. Ease of payment and a desire for convenience are two major themes brands need to note, especially in Asia.

Likewise, Natasha van der Pas of Wunderman Thompson asserts that brands pursuing rewards programmes need to adapt for evolving customer expectations. In a comprehensive ‘how-to’ article, she outlines how brands can build a loyalty programme which keeps customers coming back.

Enjoy the WARC Guide To Customer Retention. 

WARC clients:  Join Kantar's Moises Cohen and Elizabeth Thomas for the WARC Guide To Customer Retention webinar (18th May, 5pm BST | 12pm EST | 9am PST) as they share practical advice on building future-fit CLV models which boost customer retention and build deeper relationships.