ROI

Want 15x ROI? Create Content to Retain Clients

By Erin Nelson December 18th, 2015

Your car has a flat tire. Do you head downtown to Lou, the local mechanic, or do you take a trip to the dealership to purchase a new whip?

Unless you’re Donald Trump (or maybe Don Draper), chances are you opt to fix your current ride. Besides the sentimental factor of all the good times you had with your car—that Vermont trip, though—the cost factor makes it an easy decision. It’s much cheaper to maintain a car than it is to acquire a new one.

When we talk about customer retention in the marketing world, the same principle applies: Smart brands understand that it costs much less to retain a customer (in marketing speak, this is known as the LTV or Customer Lifetime Value) than it does to acquire a new one (customer acquisition cost or CAC). In fact, a mature customer retention policy is not just money saved, but money earned.

A recent KissMetrics case study revealed that it costs six to seven times more to acquire a new customer than it does to retain one. Also, increasing retention by just five percent can boost profits anywhere from 25 to 95 percent.

There are a number of important factors that go into any effective retention policy. Customer service, market forces, and, of course, the quality of your product play huge roles.

But as you’ll see below, so, too, can content. When done right, it can inspire loyalty and secure a legacy of lifetime customers.

BetaBrand: Differentiate your experience

BetaBrand is not your average retail company. It sells clothes that users design and crowdfund into existence for an active community to model, promote, and buy. As a platform that requires active participation from incubation to purchase, retention is critical to the company’s success.

In a recent interview with Contently, BetaBrand’s CMO Aaron Magness revealed just how content inspired engagement, a key marker for retention, “All we’re trying to do is keep people engaged. If we start to behave like everyone else, our brand falls away.”

For one campaign, Betabrand produced a video of someone slapping a fish to against disco leggings. Earlier this year, its Spring collection exclusively featured female models that hold PhDs. In other words, Betabrand isn’t even close to behaving like anyone else. Instead, Magness and his team have embraced this differentiation by producing creative content.

“We always want to create things that will keep people engaged,” Magness said, “whether that be a nifty video, a funny response on Facebook, a newsletter that someone wants to click through.”

The purpose, of course, is not to initiate shock value, but to maintain the type of engagement that supports a lasting relationship between consumer and brand.

If the company’s email campaigns are any indication of the strategy’s effectiveness, BetaBrand is on track to drive a healthy amount of traffic to its site in 2016. Based on December 2015 data, BetaBrand’s email campaign saw open rates between 35 and 75 percent—figures after our own marketing hearts.

The New York Times: Power segmentation

Traditional media outlets are in a bind, forced to reevaluate how to communicate with and retain customers in a technological market that never stops evolving.

The New York Times has confronted this shift in customer engagement by creating a series of curated email newsletters that target users who register by specific keyword, topic, stock, or reporter.

This segmented content, according to Nicole Breskin, director of product for the Times, allows the publication to think more holistically about content strategy, tying company goals to user engagement (read: satisfaction). “We thought that there was huge value we could add by thinking much more in terms of reader segments, their interests, and their lifestyles,” Breskin said.

While the Times benefits from its brand legacy, the segmented content strategy reveals a tremendous shift in operational organization. In order to address a 50 percent plummet in homepage views since 2011, the publication put a huge emphasis on bolstering existing customer engagement—using email to drive previous users back to the Times with targeted, curated content.

Thus far, the strategy has proven to be successful. The Times has over 30 newsletters, some of which see open rates as high as 70 percent. It just goes to show that high-quality, personalized content is a great way to entice readers back home.

Marriott: Cultivate the right conversation

In the last two years, Marriott has morphed into a media company, producing a successful TV show, a hit short film, and a regional online travel magazine called Marriott Traveler that drove over 7,200 bookings in 90 days. The strategy? Use content to secure its role as a leader in the hospitality industry.

In a recent interview with Contently, Marriott CMO Karin Timpone said: “The idea is to create the right conversation about what’s happening with our brand so that members can easily engage.”

She also stressed that the purpose of this engagement is to inspire lasting loyalty. “The idea is that we want the content to help someone to discover a new brand, be more engaged with brands across our portfolio,” she said. “And I want that to happen over and over throughout a lifelong relationship.”

To measure success, Timpone’s team tracks enrollment in Marriott Rewards, the company’s loyalty program. Framing success around longevity allows the Marriott creative team to answer the question: Are we engaging the right customers so they keep coming back and remain loyal for life?

How to know if you’re doin’ it well

A crowdfunding retailer. A traditional publication. An international hotel chain. While the companies here live in different verticals, each demonstrates the importance of investing in a content-first engagement strategy that values retention just as much as, if not more than, acquisition.

How do these brand know when they’re on the right track? Rather than focusing on shares or site visits, BetaBrand, The New York Times, and Marriott look to retention rates as a marker of their longterm success.

According to a 2007 Harvard Business Review report, marketers who focus on customer retention see an ROI of up to 15x, while those who invest in acquisition campaigns see an average ROI of only 4x–6x.

Earlier this year, Ray Cheng, Contently’s VP of marketing, explained that the key to understanding the effectiveness of a retention program rests on a single metric: Returning Visitor Rate (RVR), which is calculated by dividing the number of returning visitors by the total numbers of visitors in a given time period. (A healthy RVR should range between 30 and 50 percent.)

“Your website is generally the most potent channel because it’s flexible, visual, and dynamic enough to simultaneously serve different audiences in real time,” Ray wrote earlier this year. “It often serves as the gravitational center for all other channels.”

The logic of retention rates, then, is simple. When customers return to your owned site for information, it fosters a relationship where brands can communicate directly with their customers. Essentially, monitoring this longterm trust is a great way for marketers to kick the tires on their content strategy, and most importantly, limit costs while maximizing revenue.

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