27 Mar Are you preventing business growth by giving your competitors an opportunity to take your customers?
Our recent article highlighted that many brands spend the majority of their efforts focusing on trying to acquire new customers. First, let’s remind ourselves of the impact this one dimensional strategy can have.
- Acquiring a new customer can cost anything between 5 to 25 times more than retaining a customer¹.
- Increasing customer retention by 5% can increase profits from 25-95%².
- 80% of your future profits will come from 20% of your existing customer base³.
These three stats alone reveal one very important message – keep your existing customers happy and engaged. You can guarantee that your competitors are actively trying to steal them away from you – don’t give them the opportunity.
How big would your business be if you never lost a customer?
This is one of the first questions we explore with our clients. Imagine for a minute if you were able to keep every customer, happy and engaged, coming back more often, how big would your business be. Think of how more effective your marketing budget would be, the profits you would make, and the motivation impact to your employees, franchises and investors.
All sounds great in theory, yes? But impossible? We like to think not, but ok, perhaps you won’t be able to keep all of your customers happy and engaged, not all customers are equal. If you’re keeping 50%, why not aim for 60%, it’s the intent to keep them all that reaps the rewards. Every 1% of retained customers creates a significant return to the business!
What strategies do you have in place to help make this a reality?
Look after your customers or your competitors will be happy to
89% of consumers would move to a competitor if they had a poor customer experience⁴.
Business conditions are tough, especially in retail. It’s never been more important to protect your existing customer base. Your competitors are always going to be trying to tempt your customers away, you can guarantee they will have aggressive tactics up their sleeves (and not all price related). Remember, everything you’re doing to attract their customers, they’re also doing to steal yours.
Price, quality and service are no longer enough, how are you being remarkable?
Don’t leave your customers vulnerable to competitors – give your customers a reason to stay with you.
Mitigating the risk of customer attrition
- Don’t get caught up in a price war
What are you doing to reduce churn? – if it’s price driven then it’s a downward spiral – we recently discussed the impact of entering a price war, always remember that loyalty cannot be bought. Don’t put your brand at risk by thinking that it can.
- Get to know your customers
The best way to retain your customers is to really get to know them, segment your customers by behaviour, traits, profitability and potential value. Understand who they are, what motivates them, how else can you show them the value of your product/service, without expecting anything back in return. Your customers want to feel valued, respected and appreciated. As with any relationship, this can only be achieved if you invest in understanding them better.
- Think beyond the path to purchase
Our recent article highlighted our thoughts on the path to re-purchase. Recognise, remind and reward your customers. Continue the conversation – through their preferred communication channel and relevant to where they are in the customer lifecycle.
- Enhance the customer experience
When was the last time you analysed your end-to-end customer lifecycle? How do you reduce the pain points along your customer journey, are you actively promoting the moments of delight, and your value differentiators?
- Listen to your customers
Determine how happy your customers are – what does the voice of the customer look like? What can you learn and change? How do you leverage this feedback to drive action – not just capture intent. A fantastic example of a brand doing this well is muesli brand Carman’s. They have an exclusive online research community named ‘Carman’s Kitchen Table’, where their customers can share thoughts and bring their ideas to the table. When new products are released, Carman’s customers can then see their ideas literally come to life.
- Give them a reason to return
Sometimes, your customers need actual reason to return. Walgreens pharmacy in the US, in conjunction with United Nations Foundations launched an initiative ‘give a shot, get a shot’ – it’s still live today. Basically, for every flu vaccination which is given in the US, Walgreens donate a flu vaccination to a child in a developing country. To date, this initiative has delivered 34 million shots – which means 34 million customers have received a shot in one of their stores. Customers benefited not only by receiving a vaccination, but also knowing they have made a small contribution to a child in need. In the first 2 weeks of launch, Walgreens administered 1 million shots (which equalled the total amount for the whole previous year). Sales were up 500% – no other retailer came close.
- Build a customer-centric culture
Customer centricity begins at home, with your own people, your brand representatives. A well-known and respected quote from Richard Branson “The way you treat your employees is the way they will treat your customers”. We couldn’t agree more, look after your people – this will ensure they live and breathe customer value.
It’s a competitive market, well known brands are failing to remain sustainable and are closing their doors. I read an article recently that stated 2019 was the year of customer retention – but actually, every year should be the year of customer retention.
How would your business profitability change if you kept an additional 10% of your customers?
Put a strategy in place to help you understand who your customers really are. Only then will you genuinely be able to continue the right conversation with them.
Develop customer trust and respect through recognition and acknowledgement. Don’t give them a reason to switch to a competitor!
Customology are specialists in customer lifecycle management. Contact a Customologist today on 07 3902 7700 or email@example.com for more information on how we can help you understand your customers behaviours, traits and value to enable you to continue the conversation and keep those competitors at bay!
² Bain & Co
⁵ Walgreens Pharmacy