Loyalty, Loyalty, Loyalty. Why does such a straightforward concept create such a headache for marketers and executives? Maybe it’s because acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one, or that increasing customer retention rates by just 5% increases profits by 25-95%. So it’s not just loyalty that companies are struggling with; it’s the retention of these customers. While not as significant when just looking at one customer, scale that to an entire store-base and your bottom line could seriously suffer if you aren’t putting a focus on keeping those loyal customers.
What businesses are discovering in this digital era is that there is an increasingly high propensity for customers to churn because there are so many available options at hand. The game has been changed to the point where anything in the world can be brought right to your front door with just a few clicks. It is way easier for customers to diversify their spending habits if they had a bad experience with a brand or if they feel the value isn’t in it for them anymore, leading them to spend their hard-earned money at your competitor’s business.
Another major pain point for consumers that can cause them to rethink where they are spending is how a brand positions themselves among current world issues. With the rise in social media in the digital age and the hyper-sensitivity of the customer, brands must be careful with how they present themselves and what they stand for. Outrage towards a company can be amplified and shake loyal customers from the foundation of a strong brand. Companies that position themselves poorly have seen a sharp drop in customers (see: Papa John’s), while brands that give themselves a strong identity and purpose have built a strong base of loyal customers.
But as easy as it is for customers to churn, there are also increasingly better methods to efficiently re-engage your customers before that end-point. Greater efforts towards hyper-personalization of customer engagement have had much success, with 93% of companies that have an advanced personalization strategy in place seeing a revenue increase last year. Consumers are increasingly expectant that companies are able to activate the data they provide on themselves and utilize it to more effectively market their products. Whether it’s via a special “Surprise and Delight” promotion code that is sent out via email after a customer hasn’t shopped at a business in a while, or being able to provide relevant suggestions for future purchases based on a customer’s past purchases, there are a multitude of methods that marketing teams can use to expand their reach.
The other method that companies are using to retain their most valuable customers might surprise you…customer service. Everyone offers it, but only a few brands can actually say they provide “excellent” customer service. Just by listening to what your best customers are asking for can make a tremendous difference in your business. Oftentimes your customers are your easiest direct access to the pain points that ALL customers are experiencing, and taking care of a problem that one person has might improve the user experience for thousands of others, subsequently reducing their risk of shopping somewhere else. The easier you make your experience for your customers, the more likely they are to come back time and time again.
As the landscape continues to change around customer expectations and digital technologies, companies are faced with a wealth of resources to foster their customer base in creative ways. Loyalty and retention programs are constantly evolving with new strategies, features, and rewards to entice customers. With that in mind, check out SessionM’s recent blog on the Best Customer Loyalty Programs that are changing how the top companies do business with their customers.
If loyalty and retention are not something you are currently prioritizing, there’s a chance your bottom line could be suffering as a result. Too many customers expect a quality rewards program and a pleasant omni-channel brand experience to make their time feel worthwhile, and a failure to provide them with either can result in high levels of churn. Hence why loyalty and retention buzzwords are floating around so much these days, especially among those responsible for customer strategy for the world’s top brands. Much Ado About Something, indeed.