As many as 88% of respondents have adjusted their marketing and engagement strategies for 2023 in response to the economic downturn, revealed the State of Customer Messaging in the 2023 survey by OneSignal. Similarly, 82% have implemented cost-saving measures by reducing their marketing and product spending with the aim of improving their return on investment (ROI).
Although the majority of respondents saw the importance of adapting their marketing and engagement strategies for 2023, they still prioritized allocating more resources toward customer acquisition rather than retention. This is worrisome, considering that industry studies consistently indicate that acquiring new customers can be up to five times more expensive than retaining existing ones. Neglecting retention strategies represents a missed opportunity for achieving a higher return on investment (ROI) and driving revenue growth.
“Companies need to resist the urge to make cuts in the wrong places - our survey shows that many are making decisions that can hurt retention in today’s economy. Customers expect highly relevant, timely, and personalized communication and engagement at every touchpoint - this should be your customer retention strategy for the market we’re in right now. In a tight economy, increasing customer retention rates by just 5% can increase profits by 25% to 95%. Focusing on best practices like segmentation, personalization, multichannel engagement, and real-time, automated messaging will play a pivotal role in growth,” said George Deglin, CEO of OneSignal.
The paramount importance of customer retention
The survey revealed that customer retention was a significant concern for the majority of respondents, with 95% indicating that it was either very important or somewhat important to their business. Moreover, 71% believed that customer retention would grow in importance over the next three to five years. Industry estimates highlight that selling to existing customers is considerably more successful, with an average success rate ranging between 60% and 70%. In contrast, the success rate of selling to new customers is significantly lower, falling between five and 20%.
The shift in focus towards customer retention is crucial, particularly for subscription-driven industries like mobile apps and SaaS, as user retention and engagement play a vital role in their survival. However, even in more traditional sectors like finance and healthcare, when customers feel valued and engaged with a brand, they are more likely to recommend it to others, resulting in organic growth. By slightly reducing customer acquisition spending and redirecting those savings towards customer engagement efforts, companies can significantly enhance customer lifetime value (LTV) and improve profitability, especially in challenging times.
The role of omnichannel engagement
According to the survey, personalized communication is the most impactful strategy for driving customer retention. A majority of respondents acknowledged the effectiveness of personalizing messages based on customer behavior and preferences. This approach has been found to enhance click-through rates (CTR) by up to 58%. Additionally, implementing user segmentation techniques leads to a significant 21% increase in CTR.
Businesses that adopt an omnichannel engagement strategy experience click-through rates that are over three times higher compared to those using a single communication channel. In fact, utilizing in-app messages yields click-through rates that are 25 to 30 times higher than the average rates achieved through push notifications. By leveraging multiple communication channels, companies can cater to individual user preferences, improve the overall user experience, and cultivate stronger brand loyalty.
