How to unlock the best strategies for churn prevention and CLV growth.
It’s a key business metric you’ve likely heard before: acquiring a new customer can cost five times more (or even greater) than retaining an existing one.
The reason is clear — acquiring new customers requires significant marketing investments, whereas existing customers already trust and recognize your product or service.
That doesn’t mean, however, that marketing efforts should cease after the initial conversion. That’s why the savviest software businesses are investing in retention marketing, a strategy aimed at keeping existing customers engaged and loyal to maximize their lifetime value. Instead of focusing solely on acquiring new customers, retention marketing builds lasting relationships that drive repeat purchases and interactions over time.
Similar to the concept of remarketing — re-engaging a prospect that has interacted with your company, but may not have purchased anything — retention marketing leverages first-party data you’ve already obtained, resulting in more targeted efforts to convert new business with existing customers.
In this guide, we’ll break down why retention marketing is a crucial companion to acquisition marketing, along with: ideal channels for engaging existing customers, key metrics to consider, proven strategies, and how to leverage data-driven insights.
To better understand the importance and strategies of retention marketing, you first must recognize its place in the customer lifecycle.
Acquisition marketing follows a traditional sales funnel: starting with broader awareness methods (e.g., lead generation, lead nurturing), then narrowing down to conversion. The goal is to cast a wide net at first, before focusing attention and efforts on prospects that have shown the most interest or intent in purchasing your product (e.g., qualified leads).
Once a prospect becomes a customer, the lifecycle shifts from acquisition to retention. At this stage, the sales funnel widens, forming what is known as a double-ended funnel. While acquisition marketing is about whittling down to the most qualified prospects towards conversion, retention marketing is focused on expansion — whether that’s through longer customer lifecycles, cross-sells, upsells, or referrals.
To truly gauge the success of your retention marketing efforts, it’s essential to measure key metrics that reflect the unique focus on customer longevity and engagement. Unlike acquisition marketing, where metrics often center around lead generation and conversions, retention metrics highlight customer satisfaction, loyalty, and ongoing value. These metrics help track how well you're maintaining relationships with existing customers and driving long-term revenue growth.
Churn Rate: The annual percentage at which customers stop subscribing to your service or buying your product.
Net Retention Rate (NRR): A metric that calculates the percentage of revenue retained from existing customers over a period of time, accounting for upgrades, downgrades, cross-sells, and cancellations.
Monthly Recurring Revenue (MRR): The total amount of revenue a company expects to receive from active subscriptions each month.
Annual Recurring Revenue (ARR): A metric that measures a business’s expected recurring revenue over a year.
Customer Lifetime Value: A metric that estimates the total revenue a business can expect from a customer over the course of the customer lifecycle.
Customer Risk Score: Also known as a customer health score, this score is compiled based on customer type, location, industry, transaction history, and business relationships.
While retention marketing efforts are meant to increase revenue and spur business growth, the strategies vary depending on business objectives. Unlike acquisition marketing, which is more-or-less defined by getting prospects through the sales funnel, retention marketing can have multiple paths to success:
Now that we’ve established the goals of retention marketing, how do we best execute on them? The baked-in advantage of retention marketing is that you’re engaging consumers already in your sales ecosystem — no more need for cold emails or top-of-funnel lead nurturing tactics.
Still, there is plenty of strategy that goes into choosing the most effective methods for retention marketing campaigns, either through owned channels (e.g., email, social media, in-app, mobile push) or paid media. Whether the goal is brand awareness or more sales-driven, choosing the right channel will be based on what you’re trying to accomplish, as well as customer preferences.
Email: The most widely used channel, email is effective at engaging customers for multiple purposes, whether it’s an automation journey for renewing or upgrading a service, an informative/actionable newsletter, or a means to gather feedback from customers (e.g., surveys) about their experience.
Social Media: For B2B and B2C companies, sites like Instagram, Linkedin, and even TikTok are effective platforms to promote your brand, whether it’s new products and services, events, or thought leadership content. Companies can opt for organic posts or paid social media (e.g., ads, boosted posts).
In-app: For companies utilizing mobile or desktop applications, there are endless opportunities for marketing to existing customers, including loyalty programs, promotions, and other in-app features.
Mobile notifications: While email is the most popular opt-in channel for retention marketing, SMS actually has a higher open rate. Companies are also utilizing messaging apps (e.g., WhatsApp) to connect with consumers about promotions, product updates, and other push notifications.
Affiliate marketing: More of a multichannel approach associated with acquisition, affiliate marketing is still effective for retention efforts as far as keeping your brand top-of-mind with existing customers while promoting new products and services.
Something many businesses fail to recognize is that retention marketing strategy starts from the onset, whether it’s converting a first sale or onboarding a new customer. Providing a seamless experience at the point of sale — e.g., multiple payment options, self-service features, and flexible account settings — is a great way to eliminate friction while laying the groundwork for customer loyalty.
From that point on, there are multiple, effective retention marketing strategies to consider that drive revenue and create lifetime customer value. With email in particular, companies can automate multiple campaigns for different intended goals:
Automation is key with regard to retention marketing, whether for emails or other notification channels, especially as your customers grow. While high-touch customers expect a certain level of attention and personalization, more low-touch customers may get lost in the shuffle if they, for example, only receive emails when it’s renewal time.
By automating email campaigns — enriched by data-driven insights — every customer in your entire book of business will receive a tailor-made, thoughtful customer experience. Emails are crafted around customer preferences and expectations, and carefully curated throughout the lifecycle to provide timely notifications, health checks, and educational content, while still providing a human touch.
In addition to email, for subscription-based customers (predominantly for B2B, but also B2C), in-account features can also support retention lifecycle marketing, as far as encouraging repeat purchases and building lifetime value.
As noted with onboarding, self-service options are critical to retention, as 88% of customers want access to self-service, while 67% prefer it to speaking with an agent. Subscription platforms should be fully optimized for self-service transacting, whether it's renewing, upgrading, or adding services, in addition to more advanced features like customizing your own billing cycle, setting reminders, etc.
The data culled from customers also has far-reaching capabilities in retention marketing strategy, as far as personalizing the user experience through loyalty programs, promotions, winback efforts, and other actions. Personalization is central to retention, as 76% of consumers say a company’s understanding of their personal needs influences loyalty, while 72% of B2B customers expect personalized content when using products and services.
While first-party data strengthens retention marketing strategies, leveraging artificial intelligence and machine learning technology allows companies to analyze vast amounts of information faster and more efficiently. On top of that, AI/ML software can power predictive insights by identifying customer patterns and trends, resulting in even better personalization efforts across the customer lifecycle.
It’s clear that retention marketing is a valuable component of a company’s broader marketing strategy, driving customer satisfaction, lifetime value, and revenue more effectively than acquisition strategies alone. However, as your customer base grows and diversifies, it’s crucial to have a platform in place that addresses all their unique needs, prevents churn, maintains a great user experience, and encourages ongoing business.
For businesses seeking a fully managed approach, our Digital Marketing Services (DMS) team is here to help. With years of expertise in retention marketing, our DMS team offers white-glove services that take care of every aspect of customer engagement. Whether it’s managing account renewals, executing in-app winback campaigns, or leveraging data to optimize retention efforts, our team will ensure that your retention marketing strategies are not only effective but tailored to your unique needs.
Alternatively, if you prefer a more self-service option, CleverAutomations offers an intuitive platform designed for businesses that want to manage their own retention marketing programs. CleverAutomations automates and personalizes retention campaigns such as renewals, upsells, and winbacks, while also providing AI-driven insights and predictive analytics that can guide decisions and strategies throughout the customer lifecycle. With this, businesses can easily scale their efforts while maintaining control over their retention strategy.
Interested in learning how our DMS team can elevate your retention marketing efforts? Or ready to become an early adopter of CleverAutomations? Reach out to ce@cleverbridge.com to book a demo today or sign up for our beta and start automating and personalizing your retention campaigns.