Customers are king! This phrase has been used since the early 2000’s and means that the customers are the ones determining the direction your business is headed, and they are still kings today.
It has been known that customers who can be further engaged after the initial sale are more profitable than the newly acquired ones. However many companies are still focusing on getting new customers rather than keeping the old ones.
“Increasing customer retention by 5%, increases profits by 25% to 95%”
Bain & Company
This makes us wonder which are the new trends regarding customer retention?
Consumers today have short attention spans and an abundance of options, and marketers have had to adjust accordingly. Therefore the future of Retention Marketing requires action at a large scale. For long–term success plans, companies have started introducing and adapt to new ways of thinking.
1. Redefine how customer value is measured
The way to create loyal customers is by investing into them, as well as redefining how we measure customer value. Measuring the result of Customer Acquisition Strategy can be easily done. However it is recognised now this is the ‘old way’ of doing business.
This trend is now shifting towards measuring the customers’ lifetime value, which measures the potential net profit during the amount of time the customer stays with the brand.
Invest into knowing your customers. Know their problems and needs. Investigate their buying behaviour. Follow up on them after the sale is done. Create customized products, services and shopping experiences for them. By investing into these you will make your customers feel more appreciated, adds value to your brand and will increase your chances for them coming back for more. Also customer satisfaction is key for customer retention, so next time you get a phone call or an email from a company whose products you have recently purchased, it will most probably so that company can assess your satisfaction level, as well as gain more knowledge about you which can be used in order to further persuade you to buy from them
3. Recognition of need of Data Technology
Let’s face it, you cannot draw a customer retention strategy on paper – you need extensive data in or der to understand customer behaviour.
Thanks to today’s technology, companies can create personalized and one-to-one communication with millions of customers. The key words which need to be highlighted here is customer relationship.
CRM (customer relationship management) systems do not manage customer relations by themselves, but it will provide you with the tools to help you manage the activities of you customers. Analysing customer behaviour helps predicting customer needs. The better you know your customers, the easier to sustain long term customer loyalty and retention.
‘Customers as a starting point’ is a statement which I heard my old marketing teacher say a lot and it is certainly true when speaking of customer retention.
Amazon.com can be considered one of the pioneers in this field as they invested into efficient CRM systems. Today every second there are thousands of customers searching on their platforms and each second their CRM systems take in more customer information through their searching, data mining, which lists and so on. Whether a customer buys or not they are providing information about them. These systems are smart enough to analyse the information and provide service accordingly, which leads customers to buy again and again, thus being retained.
In the past these technologies used to be costly. However this is no longer the case as there are many third-party companies who specialize in interpreting customer data.
The only obstacle here remains for companies to recognise the need for these technologies and to invest into them.
3. The execution of the new trends
The previous two segments focused on the need of recognition of these new trends; the last one is focusing on the execution of these. Customer retention must take central stage, as a main strategy, at all levels of the company. Furthermore, retention results must be monitored as much as acquisitions are.
There is no better example here than Microsoft which in the ‘90s was dominating the computing industry. However do to their “what we offer” way of thinking; they lost a lot of their customer to other competitors such as Apple who had a more “what our customers need” attitude. The consequences were that Microsoft lost is market leader position and needed a top to down reset in which they needed to focus on what the customers need, in order to retain them, and thus becoming market challengers – at least this is what we have been told on one of my school trips to the Microsoft Headquarters in Copenhagen.
If every acquisition is a short-term sale that ends the moment the customer completes a purchase, retention is a long-term investment. Businesses are handsomely rewarded when effective Retention Marketing strategies are implemented.
‘Make new friends but keep the old. One is silver the other’s gold’
Bending Bender Rodriguez
The above quote perfectly incorporates the essence of Retention Marketing, so are you and your company ready for a future with many old friends? Tell us below in the comment section
By Judit Barath