Traditionally, marketing campaigns have often been targeted toward acquiring new customers rather than focusing on retention.
Companies previously believed that the profits acquired via new customers would outweigh those of existing customers. The industry, however, is beginning to change dramatically. According to a 2014 report from BIA/Kelsey and Mantra, “61 percent of the SMBs surveyed report that more than half of their revenue comes from repeat customers, rather than new business. Meanwhile, a repeat customer spends 67 percent more than a new customer. As a result, only 14 percent of SMB owners now spend the majority of their annual marketing budget on acquisition.”
So how does a business go about marketing toward retention? Here are two examples of subscription models and loyalty programs:
Subscription models: Customers pay a re-occurring fee to access a product or service. This model ties access to a product or service
to re-occurring purchases. This is in contrast to “one-and-done” where unlimited use of a product is allowed after the single purchase.
Loyalty Programs: A “perks” program provided to customers who meet certain purchase criteria. These usually include early access to
products, sales, and (of course) freebies!