Customer retention is incredibly important for growing a sustainable business. The relationship you have with your consumers shouldn’t end once the initial deal has been done and an essential component of any customer strategy should be developing repeat custom.
Get it right, and your loyal customers can become key brand ambassadors, helping to bring in new customers from among their friends, family and acquaintances.
Using loyalty or reward schemes is one way to attract and retain customers. Here are some top tips for small businesses on how to make the most of them in order to establish a long-term relationship:
If your customers are entitled to be part of your reward scheme, then make sure they are clear why they are being given the reward and what value it holds for them. Remind them frequently that they have the benefit and relate it to their current requirements.
The reward on offer must be relevant to your consumers’ requirements, interests and aspirations and it must compliment your brand. In recent years, with many consumers having had to tighten their purse strings, those brands that have been successful in building loyalty are those offering rewards and discounts that are relevant in terms of product, brand and timing.
Don’t overcomplicate the rewards programme as your customers may not understand it and will not engage with it. Present consistent offers that offer the greatest level of flexibility and are not limited in number or by timescale, rather than one-off deals that are only available for a fixed period of time. This helps to establish a long-term relationship.
Keep the reward programme interesting by offering new opportunities. This ensures customers stay interested and shows your commitment to great customer service. This can increase repeat purchase and build loyalty and also gives you a reason to communicate more. This in turn enables the collection of valuable data, so you can develop more targeted communication going forward and have a real impact on the bottom line.
To achieve stand out from other loyalty schemes, reward your customers with something that is not readily available elsewhere. If you can deliver better value than those offers and discounts that are freely available on group discount and other websites, then your consumers will take notice.
Remaining in constant two-way communication with your consumers is key. If they feel they have a voice they will be far more engaged. Allowing them to feel they are shaping their reward package through feedback and suggestions will tell you exactly what they like and don’t like about the current offering.
Giveaways and welcome bonuses work very well for customer attraction. However, after the initial reward has been offered, a secondary element is required to aid retention. A programme that can do two jobs in one can save a great deal of time and money and have fantastic results. Impressive acquisition results can be achieved through promoting the benefits of the scheme. Then, through successful engagement and repeated usage, you can add a strong retention element. If your customer’s daily life is enhanced by a rewards package, they will be reluctant to sacrifice this through moving to another brand.
The right reward scheme can turn a customer’s first purchase into a lucrative, long-term relationship.
Daniel Nugent is head of Entice.
As business owners, we like to think we know our customers pretty well. After all, we spend much of our day either speaking to them directly or communicating with them by email and on social media networks.
But just how well do you really know your customers? Try answering these questions honestly. Do you know:
You may be able to answer some of these, but few of us can say we know all of the answers for sure — and of course some of the answers may be dependent on our different products and services and are likely to change over time.
Or you might think you know the answers but then be surprised by the results when you gather customer feedback — proving that your assumptions aren’t always accurate.
But you don’t always have to ask your customers for feedback to get the answers you need. Often your existing data can tell you a lot.
Start by segmenting customers according to the specific products they have purchased. From here you can identify the audience most likely to respond to future direct marketing campaigns, helping you to increase ROI.
You can also identify which criteria means a prospect is most likely to be interested in your product or service, based on your existing customer knowledge. For instance, for B2B customers you can analyse: best sectors, company size, regions, contact types and so on. For B2C customers, you can look at: best income bands, regions, hobbies, ages, social class and more.
This knowledge can also show you where your best cross-selling opportunities are with existing customers.
Ultimately, the more customer knowledge you derive from your data, the better you can identify prospects and target those with the highest propensity to become a customer. This, in turn, will reduce your communication costs, improve response rates and maximise the efficiency of your marketing campaigns.
Antoni Chrysostomou is sales and business development director at Data HQ.
If you’re in the business-to-business sector, then customer churn is a major issue. B2B companies are often obsessed with calculating “churn rate” which helps them remain sensitive to customer feedback.
There are three major reasons for churn:
So how can you achieve churn rates that are near zero?
It’s important to get your customers on board by under-promising. This is about being realistic and setting expectations for worst case scenarios. This doesn’t mean that you conceal some of your product features. The better you under-promise, the higher scope you create for delivering more than what’s been asked for. In addition, if your client needs are recurring, good service reinforces your values and creates an affinity within your customer base for your product.
Considering the three main reasons for churn is important during the pre-sales phase. Planning for the “could have”, letting clients know about the “can’t” and explicitly avoiding “surprises” is key to meeting expectations once a customer is on board.
Knowing the line between a bloat and a feature-rich offering
An offering should be such that it solves an end-to-end requirement without being an overkill. Getting this right is an art not a science and it develops with experience.
Your offering should not come across as directly hitting at competitor’s prices. Instead, the pricing should be justified by your product’s value as perceived by your customers.
Technologies change faster than anything else. It’s important for your product to adapt with the market dynamism, not just because the underlying technologies might be obsolete, but also because newer problems arise in the market.
If your customer isn’t doing well in the market, the chances are higher that they will go elsewhere. It’s important to get closely involved with your customers’ businesses, and keep asking for regular feedback on how well your offering is serving their portfolio. It’s worth identifying trigger points that indicate if your customers are using your product enough.
Often, long-term contracts are seen as a way to achieve lower churn rates. While this might work great for cash flows, the issue of churn isn’t eliminated this way. On the contrary, from our experience, this creates reluctance and curbs freedom at the customer’s end. It’s a better idea to introduce notice periods instead so that there’s enough buffer time to take action before your customer leaves.
Arpan Jha heads the products and market strategy at PromptCloud.
The pompously named “customer/client relationship teams” just don’t get it. In fact, the majority of the marketing team don’t get it. That certainly applies to many corporates but it could equally apply to small firms like yours — so read on.
Some marketers just don’t understand the whole “customer” thing. This isn’t a new fad or a naïve but sales-hungry business school professor’s idea of a good wheeze. This is here to stay and until your business gets it then you will lose sales to those businesses that do get it. This is the “it” they don’t get:
Meanwhile, like rabbits in the headlights, the large company marketing and customer care departments are frozen stiff, not knowing what to do next.
Your customer relationship is not something that you can outsource and control with service level agreements. Customers want to talk to and relate to you. Otherwise they will feel out of control and believe they have no real relationship with you (and vice versa) and they will tell the rest of the world. And they will vote with their feet.
So, rather than waiting for the consultant’s report, how about doing the simple stuff?
Get out there and talk to your customers and clients. Ask them what they think and feel about your product and your service. Stop following the conversations and join in.
They talk about you because they care. You can show them that you care. You can explain what’s gone wrong and what you are going to do. But you can’t do that by hiding behind the next report. Try it. You’ll be surprised.
Robert Craven is an expert contributor to Marketing Donut. Robert shows directors and owners how to grow their profits. As well as running the Directors’ Centre, he is a keynote speaker and the author of business bestseller Kick-Start Your Business. His latest book – Grow Your Service Firm – is out now.
Lifecycle marketing can:
A brave new concept that is slowly being nurtured by marketers, lifecycle marketing represents the birth of a new era. A drastic shift in marketing, it’s a technique that focuses on more than attracting a customer, but on converting them into your own personal brand advocate.
Lifecycle marketing requires thought, research, a hands-on approach, a finger on the pulse and staff that are as excited about a product or service as you are. It isn’t easy, but the rewards far outweigh the time and thought it takes to implement such an approach.
Lifecycle marketing embraces the entire customer experience process, not just the sale. It relies on rich customer experiences that transform clients into our best advertising tools.
Customer experience is the sum of all the encounters a customer has with a business. From initial awareness, through to discovery, attraction, interaction and purchase, to use and development, and finally ending in advocacy. So whilst they may not be shouting from the rooftops, a tweet and a positive review on your Facebook page will certainly go a long way in generating leads and attracting new customers.
This isn’t all about concepts though, this is about tangible results, and the use of technology to support the business/consumer cycle.
Lifecycle marketing uses lead nurturing pathways and marketing automation technology such as HubSpot to feed tailored content to prospects and engage with them before they buy, when they buy and after they’ve completed the buying process.
These technical resources provide a platform for tracking and analysing customer engagement, including detailed information about what content leads have read, and when. With technology like this, it’s easy to strike up the sort of conversation that your customer wants to be a part of.
Above all, lifecycle marketing is a thoughtful approach — it considers not only the customer experience, but also the employee experience. It relies on a degree of internal marketing that engages employees and motivates them to deliver the best possible customer experience.
Businesses have listened, learned and embraced the idea that the customer is at the heart of the marketing process.
Rhian Morgans is an online PR executive for Tomorrow People.
When I run sales workshops, I always test the temperature of the audience by asking them about their favourite customer; not necessarily the biggest one, but one that they like on a personal level.
This is to help me to get a feel for their business, how they deliver their products and services, and to look at how to replicate their best practices, based on successful customer case studies.
Occasionally some members of the audience look at me blankly and further probing reveals that they actually dislike all of their customers: difficult people, who always seem to be complaining and constantly looking for lower prices.
At this point I feel they are more in need of personal counselling than sales coaching, but do my best to rectify what must be a terrible situation for someone in a small business. In a large organisation you can at least look forward to the pay cheque at the end of the month, whereas in a small organisation, the buck stops with you. There is one consolation: in a small company, you are actually allowed to make some mistakes, so long as you rectify them swiftly.
This was an interesting observation made by Richard Richardson, who has seen both sides of the coin. He had a very successful career in advertising, most latterly with Young and Rubicam. His favourite customer was John Barnes at Kentucky Fried Chicken, and they used to spend many hours cooking up new business ideas, just for fun.
But one idea seemed to have some traction: what about the original British fast food — fish and chips? The best-known name, Harry Ramsden's, was a single large restaurant at Guiseley in Yorkshire, with a few other outlets, differently branded. The owners were looking to sell and Barnes and Richardson saw the opportunity to build a great brand, something they were both passionate about.
They had very complementary skills; Barnes the charismatic ideas man, Richardson the completer/finisher. They shared common values, particularly a love of customers and customer interaction.
They raised some money and then set about building the Harry Ramsden's brand, but without the large marketing budgets they were both used to. They developed a style that they later captured in their book, Marketing Judo — the idea that you use the opponent's weight to your advantage, using leverage, rather than brute force.
They kept the team lean but instilled a sense of customer awareness by insisting that everyone in the 25-person head office called at least five unhappy customers every week.
This caused some bemusement amongst their customers, particularly a gentleman in Bournemouth who had filled in a card to complain about some cold chips at their Bournemouth outlet.
He was so surprised to hear from a director of Harry Ramsden's that he dropped his mobile phone, and then explained that he had just bought a car for £35,000 and had less joy in having problems resolved than for this 70 pence bag of chips. Richardson's simple phone call also generated significant new income as the gentleman's wife resolved to take parties of visiting Chinese business people to Harry Ramsden's.
But Richardson explains that in a small business it is fine to make mistakes, so long as you resolve issues swiftly and personally. He feels that many large companies seem to have an ethos of never admitting failure, which can be disastrous, as customer expectations are increasing all the time.
Once the brand had become established, they decided to grow their business by a franchise model, as it meant that ownership of the brand was closer to the customers; a proven concept delivered by local people. But while the brand can be promoted generally by head office, it is still down to the local entrepreneurs to do what they can, often without much of a marketing budget.
In Marketing Judo, Barnes and Richardson have many tips for doing just this, including extending your offer in interesting ways (the Glasgow branch offered haggis) and providing complementary additional services (arranging coach trips for senior citizens to show off interesting local buildings after a fish supper). They refer to this as “getting the crowd on your side”, using emotional leverage rather than just marketing muscle.
If you do this, not only will you grow to love your customers, you will find they will love you right back, and do your marketing for you, by word of mouth.
Copyright ©Mike Southon 2012. All rights reserved. Not to be reproduced without permission in writing. Mike Southon is the co-author of The Beermat Entrepreneur and a business speaker.