Insight: Brands focused on customer retention get better market share

  • Retail and media brands that increased their spend on customer retention over the last three years had a 200 per cent higher chance of growing market share, according to new research.

The global study, Retentionomics, from Forbes and Sailthru, analysed findings from 300 retail, ecommerce and media executives. The findings help quantify the value of loyal customers and reveals the strategies used by top performers to promote profitable growth.

Key findings include:

  • Top performing organisations connect acquisition and retention, and rate their performance in both as above expectations: 100 per cent in achieving retention goals and 88 per cent 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.
  • Retailers and publishers that increased their spending on retention in the last 1-3 years had a near 200 per cent higher likelihood of increasing their market share in the last year over those spending more on acquisition.

“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,” said Neil Lustig, CEO, Sailthru. “There are many studies that document the potential of retention, but none that dive into how well retail and media companies understand the economics of retention.

“The Retentionomics study validates that focusing on high-quality customers is a more efficient way to reach sales and revenue goals than simply delivering new customers. 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.

An important finding from the Retentionomics research is the role personalisation plays in overall marketing strategy. This strategy has been proven to increase the total percentage of customers and readers that retailers and media companies retain, in addition to increasing the value and revenue derived from those audiences.

“The work we have done together with Sailthru to surface the connection between retention and revenue is of such significance that it should spark dialogue at all levels within retail and publishing organisations,” said Bruce Rogers, Chief Insights Officer and head of the CMO Practice, Forbes Media. “I look forward to hearing from marketing leaders who are scaling their customer-focused businesses through the recommendations included in this report.”

This original research was based on a global study of 300 CEOs and media and retail executives. The report shows that companies that increase their investments in customer retention realise significant advantages in increasing market share, managing customer churn and optimising 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.

Download a copy of the report here