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The Art of Prudent Retention Marketing Spend

Understanding the Baseline Retention Rate

Let's kick things off with a truth bomb: a slice of your customer pie will come back for seconds without you lifting a marketing finger. That's your baseline retention rate. It's the loyal crowd that would march back into your store even if you went on a marketing vacation. Knowing this number is like having the secret sauce recipe; it helps you figure out if your retention marketing is actually adding some zing or just watering down the flavors.

Retention's Role in the Growth Recipe

Now, don't get it twisted. Retention is the side dish, not the main course. It can spice things up a bit, but it won't cook up growth on its own. You need a steady stream of new customers to keep the growth stew simmering. If you're banking on retention alone to feed your growth, you might find your business belly grumbling.

The Pitfalls of Last-Click Myopia

Measuring retention marketing success on a last-click basis is like trying to read a novel through a keyhole. You're missing the big picture. This narrow view can lead to over-investing in strategies that don't move the needle, leaving you scratching your head when the revenue targets play hard to get.

The High Cost of 'Best Practices'

Beware the siren song of 'best practices' that promise a treasure trove of immediate revenue. These tactics might give you a quick win, but they're often robbing your future self by devaluing customer relationships over time. It's like eating your seed corn – sure, you're full today, but you'll be hungry come harvest time.

The Recession Conundrum

When the economic seas get choppy, some captains throw their ad spend overboard to keep the ship afloat. But here's the twist: consumers are still sailing the spending waters, even in a recession. Cutting ad spending too much might just let your competitors plunder your market share.

Retention Marketing in the FMCG Tempest

In the fast-moving consumer goods (FMCG) world, retention is the lifebuoy that keeps your brand from sinking. With consumers feeling the pinch, they're more likely to jump ship to another brand. Keeping your current customers happy is not just nice; it's necessary for survival.

The Opportunity Cost of Retention Myopia

Focusing too narrowly on retention marketing can be like wearing blinders. You might be missing out on the bigger picture and inadvertently making it tougher for your business to grow profitably in the long run. It's essential to strike a balance between nurturing existing customers and attracting new ones.

The Strategy Shift

Instead of channel-centric strategies, think of customer lifecycle. Align your retention goals with the journey of your customers. After all, a happy customer journey is like a storybook romance – it can lead to a lifetime of purchases and a happily ever after for your bottom line.

25-35%

Percentage of new customers making a second purchase

60%

Advertisers achieving higher ROI by spending more during past recessions

17%

Rise in incremental sales for brands that increased paid advertising during the last recession

15%

Potential revenue loss for marketers who cut ad spending during a recession

THIS WEEK'S MARKETING BLAZERS

Industry Highlights and Strategic Moves

This week in marketing has seen a variety of strategic plays and insights that have shaped the industry. From the influence of marketing in unexpected sectors to the early maneuvers in political advertising, the landscape is dynamic and ever-evolving.

Influencer Marketing and Gender Dynamics

A notable shift has been observed in influencer marketing, where a brand traditionally aimed at workmen and outdoorsmen has successfully tapped into a new demographic by leveraging women influencers. This pivot highlights the power of understanding and adapting to target audiences.

Political Advertising

In the political arena, Nikki Haley's substantial investment in early advertising indicates a strategic push to gain traction in key states. This move underscores the importance of timing and market positioning in political campaigns.

$10,000,000

Ad spend by Nikki Haley for early campaign ads in Iowa and New Hampshire

Marketing Investment and Education

Diageo's CFO has emphasized the significance of continuous investment in marketing, a sentiment that resonates across the industry as brands like Sanofi seek marketing insights from the FMCG sector. Additionally, the evolving legal landscape of name, image, and likeness (NIL) rules presents both challenges and opportunities for marketers.

Resource Access and Knowledge Sharing

Adweek's Resource Library has been highlighted as a valuable tool for marketers looking to stay ahead of the curve with access to exclusive guides, research, and white papers.

Consumer Engagement and Seasonal Campaigns

Adweek's Resource Library has been highlighted as a valuable tool for marketers looking to stay ahead of the curve with access to exclusive guides, research, and white papers.

REFERENCED IN THIS STORY

1. “Most Retention Marketing Destroys Value.” No Best Practices -, 13 July 2022, https://nobestpractices.co/2022/07/13/retention-marketing-destroys-value/.

2. “5 Reasons to Pause Before Cutting Marketing Spend in a Downturn.” Association of National Advertisers, https://www.ana.net/miccontent/show/id/ii-2022-09-marketing-in-a-downturn. Accessed 22 November 2023.

3. “How To: Reduce Your Media Spend Without Impacting Sales.” datamine.com, https://www.datamine.com/datafix/reduce-media-spend-without-impacting-sales. Accessed 22 November 2023.

4. “Pirate ship navigating during a storm. Thunder, rain big waves on the ocean. Black boat setting sails on rough water, sea. Digital artwork, painting. Stock Illustration | Adobe Stock.” Adobe Stock, https://stock.adobe.com/images/pirate-ship-navigating-during-a-storm-thunder-rain-big-waves-on-the-ocean-black-boat-setting-sails-on-rough-water-sea-digital-artwork-painting/528470481. Accessed 22 November 2023.