Research: Investing in customer retention leads to increased market share

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By: RickFerguson |

Posted on September 23, 2016

Research: Investing in customer retention leads to increased market share

From the research wire: A new study from Forbes and Sailthru gleaned from 300 global CEOs, media, and retail executives reveals that those brands that upped their spend on customer retention over the past one to three years drove a 200% higher chance of growing their market share.

That a focus on customer retention pays dividends is news long known to loyalty marketers. That said, it's always nice to see an attempt to quantify the impact. The Forbes/Sailthru inaugural "Retentionomics" study shows that companies that increase their investments in customer retention realise significant advantages in increasing market share, managing customer churn and optimizing acquisition over those that invest primarily in customer acquisition.

The complete report highlights the differences in how retention-focused organisations develop customer strategies, manage budgets and improve their understanding of customers. Within the report, leaders at The Economist, Marks & Spencer, Haymarket Media, Debenhams and Gannett reveal how they implement retention strategies to grow their businesses.

Notable findings include:

  • Retailers and publishers that increased their spending on retention in the last 1-3 years had a near 200% higher likelihood of increasing their market share in the last year over those spending more on acquisition.
  • Top performing organisations connect acquisition and retention, and rate their performance in both as above expectations: 100% in achieving retention goals and 88% in achieving acquisition goals.
  • Management teams at companies that focus on retention are twice as likely to understand the impact of customer lifetime value on revenue and growth.
  • Companies focused on retention are nearly 50% more likely to consider projected long-term profitability growth when making decisions about customer strategy.

Money quote from Sailthru CE Neil Lustig:

“Too often, executives and marketers focus their efforts on short-term growth and we’re seeing the impact of that in retail and media company earnings reports. The most successful modern marketers invest in and set specific retention goals, measure the value of their valued customers through that lens, and use that data to inform their acquisition strategies and deliver sustained profitable growth.”

Download the Retentonomics report here.

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