Introducing the NOVOS Retention Loop

All marketers know about the traditional conversion funnel.

1. A person becomes aware of your brand
2. They consider making a purchase 
3. They convert and become a customer  

Different marketing channels have different roles within the funnel and utilising a strong mix of marketing channels helps customers find you at different touchpoints at different stages of their journey.

The funnel will always be an important tool because businesses need to continue to earn new customers to ensure sustained growth. The downside to the funnel is that it’s only relevant to acquisition channels as it drives customers to the purchase stage without considering how to encourage them to come back.

You may have an untapped audience of high value customers which you have the opportunity to nurture, if only you know where to start! The end goal of acquisition should be to boost your customer lifetime value, ensuring strong marketing efficiency across teams.

The funnel has a lot of emphasis on paid channels, focusing heavily on driving purchase, whereas the Retention Loop focuses on nurturing customer relationships at all stages of the journey. Learnings from the Loop can be actioned in all marketing channels including leveraging your owned database instead of relying too heavily on expensive activations.

So, What About Retention?

According to a comprehensive CRM study, 80% of revenue made by the most successful businesses comes from existing customers - this highlights the importance of retaining customers.

Businesses tend to place a disproportionate amount of focus on acquisition channels and try to use retention channels in the same way, using commercial messaging to drive immediate sales. However, existing customers require a different approach.

We believe the best way of depicting customer retention is in an infinite loop. The cost to acquire new customers is rising every year, so the ultimate goal should be to hold onto these customers indefinitely. 

How It Works

1. Brand awareness - A potential Lead learns about your brand.
2. Contact acquisition - A Lead signs up to your marketing channels.
3. First purchase - Lead becomes a customer by making their first purchase.
4. Post first purchase - Opportunity to nurture the customer as unlikely to purchase again so soon.
5. Passive purchase consideration - Customer is deciding if they like your product or service and want to purchase again.
6. Active purchase consideration - Customer is ready to purchase again.
7. Purchase - Customer makes another purchase.
8. Post purchase - More opportunity to build a relationship with the customer, not drive more sales.
9. Brand advocacy - The more a customer purchases with you, the more likely they are to refer you to friends or family and feed the loop with more potential leads.

This loop works differently depending on the business. For example, timing between purchases may increase. However, the basic principle of the retention loop remains the same - we need our customers to continue to choose us for our product or service. 

The Loop more accurately reflects desirable customer behaviour and covers the entire lifecycle journey, including advocacy and referral. Understanding customer sentiment at each stage enables you to understand what content they seek at every step to encourage deeper relationships.

Conclusion

It’s clear that brands must continue to use the funnel when discussing acquisition activity. The loop, on the other hand, should be used in the context of retention. Maintaining a relationship with your existing customers is a delicate balancing act, requiring different tactics at different stages. The NOVOS retention loop acts to help you identify the kind of communication required at each stage of the journey.