How Customer Retention Plays a Key Role in SMB Marketing

Limited ad budgets, lack of familiarity with digital ad techniques, and hardly any time to spare. These are just a few of the struggles SMBs face with planning and executing their advertising and marketing efforts. But there are still clear opportunities for SMBs to overcome these obstacles and make an impact — especially when it comes to customer retention.

Approximately 60% of SMBs spend the majority of their annual marketing budgets on retaining customers because it delivers such a strong return on investment. Within customer retention, email marketing is considered the most effective digital marketing tactic, followed by social media and content marketing (websites, blogs, etc.), according to a recent Gigaom survey of 300 digital marketers.

Since checking email is the second most popular online consumer activity in the U.S. behind social networking, it makes sense that this platform is considered a key way to retain customers. Local search might be one of the most common ways to find a local business, but SEO is less effective than inboxes — and social media feeds — in keeping consumers who already know and use a business coming back.

Email Marketing
One of the best things about email marketing is the price. There are some email marketing providers that start at just $20/month, making it very affordable. What’s more, when it comes to ROI, a study conducted last year by Econsultancy showed that after SEO, global marketers found email to be the second highest rated digital channel, with 22% ranking it as “excellent” and 44% ranking it as a “good” source of ROI.

Email also drives a compelling number of clicks. According to a study by Silverpop, the average email click-through rate in the U.S. in 2013 was 3.3%, which blows the average click-through rate of 0.1% for display ads out of the water.

In addition, the knowledge barrier is limited with email. It is an extremely familiar tool that around 3.8 billion people use. On the other hand the tool does require an email address collection strategy, time to manage and a moderate level of expertise. Nonetheless, given the effectiveness and ROI delivered, email needs to be a fundamental piece of any SMB’s marketing strategy.

Social Media Marketing
Given the difficulty of tracking a like, impression, comment or share to a call, store visit or transaction, social doesn’t deliver the same level of ROI as email or content marketing. So why do marketers rank the tool so high for retention? Partly because it allows businesses to engage with customers on a regular basis, but also because social is free for those who manage it independently. It also doesn’t require a significant budget to hire someone to do it for you, with some plans starting at $50/month.

When it comes to paid options on social, Facebook and Twitter are making moves to improve ROI for advertisers. Both are testing different versions of a “buy” button that will allow users to make e-commerce purchases without leaving the social experience, delivering clear ROI data. While Facebook is sharing some details about its tool, Twitter hasn’t said much about its offering as of yet. (Although, Twitter has shared some information regarding its click-to-call button).

While social media ROI is currently difficult to track outside of paid ads, it is still is a critical way to build audiences that are willing to receive an SMB’s messaging. In addition to supporting retention, social boosts SEO and offers more ways for potential customers to access information about the business.

Content Marketing
While content marketing spans everything from blogs to infographics, I will focus on one of the most basic and fundamental forms of content marketing: websites. Much like email and social media, websites need to be a central component of any local businesses digital marketing efforts. Even so, one study says a whopping 45% of SMBs still don’t have one.

SEO, SEM and other marketing concepts can be confusing to SMBs, but most understand the general benefit of a website. At the right price point and without needing to spend a lot of time, building a unique digital property for an SMB should take priority over selling a mobile display ad that only delivers short-term results.

A website with up-to-date content does more than just improve a business’s ability to be found online. While SEO is a benefit, regularly updated website content keeps the business relevant and is an opportunity to further inform about the business’ latest news, products/services and deals. When integrated with social media and email marketing, a website serves as a platform for consumers to learn more. This is critical for retaining customers who are already interested in a business’s products and services.

When focusing on customer retention, here’s the SMB marketing prescription: build a website, get on Facebook, collect email addresses and use these tools to influence the purchasing patterns of previous customers. The side effects could include improved SEO, higher customer retention and greater purchase consideration from new customers as well. The best part is that these customer retention tools are understood methods that require minimal time to manage and are cost-effective.

As the media space continues to fragment, email, social media and websites create a strong nucleus for any SMB’s digital marketing efforts.

Joe Morsello contributes to the Local Search Insider and is the Communications Manager at the Local Search Association, a trade organization of print, digital, mobile and social media companies that help local businesses get found. Follow LSA on Twitter @LocalSearchAssn.