In today's challenging economic landscape, businesses are under tremendous pressure to cut costs and maximize their return on investment (ROI). With the recent downturn, companies have scaled back marketing and product expenditures. However, a paradigm shift is underway, highlighting customer retention and engagement as crucial strategies to navigate uncertain times.
For our second annual State of Customer Messaging Report, we asked over 1,000 marketers, product managers, and developers across different industries about how they're adapting to today's economic climate. We leveraged their feedback alongside insights from billions of messages sent daily through OneSignal to come up with effective strategies that can help you transform your LTV:CAC ratio for long-term success.
A Sneak Peak at this year's State of Messaging Report
Key Stat from the State of Customer Messaging in 2023 Report:
The majority of survey respondents say that they currently allocate more resources toward customer acquisition rather than retention.
What it means:
Companies often overlook the opportunity to nurture strong, long-term relationships with their existing customers while prioritizing customer acquisition. Many don't realize that investing less in retention has opportunity costs, as potential profits derived from repeat business can be substantial and more easily won. Studies reveal that acquiring a new customer can be up to five times more expensive than retaining an existing one. In the long run, focusing on building and maintaining customer loyalty proves to be more cost-effective as repeat customers typically demand less marketing investment for retention while delivering greater lifetime value.
Our recent report highlights the significant impact of loyal customers on overall profitability and explores the challenges companies often face in retaining their customer base, as well as tips for overcoming them.
Key Stat from the State of Customer Messaging in 2023 Report:
Increasing customer retention rates by 5% has been shown to increase overall profits by 25% to 95%.
What it means:
As you examine your budget and your growth strategy, remember that you don't need to take an all-or-nothing approach. Even a relatively small reallocation of resources from customer acquisition to customer retention can yield a substantial impact on your return on investment. By prioritizing the cultivation of strong, loyal relationships with existing customers, you can enhance customer satisfaction, foster brand advocacy, and increase customer lifetime value.
Reallocating some resources to retention efforts allows for personalized engagement, targeted communication, and tailored experiences that resonate with your existing customer base. This approach not only deepens the connection between customers and your brand but also reduces the need for extensive marketing spending to attract new users.
Key Stat from the State of Customer Messaging in 2023 Report:
Loyal customers cost less to serve, spend more with companies they trust, and are less likely to make a switch during a downturn.
What it means:
If the 2008 downturn taught us anything, it's that customer loyalty is king. Loyal customers tend to have a stronger emotional connection to a brand, which makes them more likely to continue purchasing even in challenging times. This stability in customer behavior provides a consistent revenue stream that can help businesses weather the storm.
Additionally, loyal customers often act as brand advocates, recommending the company to others and bringing in new customers through positive word-of-mouth marketing. This organic growth can be particularly valuable during an economic downturn when marketing budgets may be constrained. Furthermore, loyal customers are more forgiving and understanding during challenging times, allowing businesses to navigate any temporary setbacks with their support. By nurturing customer loyalty, companies can establish a reliable customer base that not only provides ongoing revenue but also becomes a source of strength and resilience during economic turbulence.
Key Stat from the State of Customer Messaging in 2023 Report:
A majority of survey respondents said that personalized communication was the most effective customer retention tactic for their company in the past year.
What it means:
If you want to move the needle on retention, then delivering a personalized user experience is critical. Personalized communication and segmentation play pivotal roles in nurturing customer loyalty, driving engagement, and boosting long-term retention. In this year's State of Customer Messaging report, we delve into successful examples and real-world use cases that underscore the power of customization in enhancing customer satisfaction and overall engagement.
Unlock Key Insights, Examples, and Tips
As you rethink your budget, it's important to let data guide your decisions and inform the way you evolve. Understanding and evaluating CAC and LTV is crucial to assessing the effectiveness of customer acquisition and retention strategies. In this report, we cover how to calculate your CAC:LTV ratio, which serves as a vital metric for measuring the success of your customer acquisition efforts.
To explore in-depth strategies and discover real-world examples, click the button below to download the full report.
Download the State of Customer Messaging in 2023 Report
