Customers are truly the kings in the digital age, where every business is oriented towards keeping its clients happy. The primary objective of customer retention management is to keep customers interested and engaged in the products and services. The way companies approach customer retention has changed, however. With the evolution of email and technologies, customer expectations have changed and the customer retention management now focuses on customer-centric engagement and personalisation.
Traditionally, retention marketing and customer retention management has taken a back-seat to acquisition. Generic loyalty programs, nurture campaigns and discounts in the present digital age, will however, only take you so far. While some companies have added automation to customer retention management, what is increasingly clear is that there is no magic bullet or one-size-fits-all approach.
- Rise in Retention Roles
Customer-retention focused roles were far and few in the industry before the advent of electronic mail. But with the rise of email and personalised marketing, there’s been a clear shift in priorities, with more companies engaging in resource allocation to focus on customer retention. On an average, 70 percent of the marketers said customer retention management needs to improve, in one survey. The fact that marketers are heeding the need for growth of customer retention is a sign of changing times.
- Increased Focus on Knowing Your Customer
Customer choices have reached an all time high, with the advent of the internet and email, while attention spans have dipped to an all time low. Companies need to take on a more customer centric approach to retention. This is because personalised forms of communication have necessitated a more engaging experience. Customers are now more demanding and companies must respond accordingly, to nurture brand advocacy and foster brand evangelism. Nurturing customers into advocates makes excellent business sense. According to Gartner, 80 percent of the company’s future revenue comes from 20% of the existing customers.
Adobe, on the other hand, found online retailers spend as much as 80 percent of web marketing budgets acquiring shoppers, for each 1 percent of shoppers who return for a subsequent visit, overall revenue rises by 10 percent. So if online ecommerce retailers retained 10 percent of present customer base, they could actually double their revenue. Customer retention has now become as important as acquisition. However, ROI of acquisition is more easily measurable. The effectiveness of customer retention campaigns take longer to measure than just working through one-off sales.
Yet another reason that successful retention campaigns require more advanced technologies than acquisition is that you need to know what your customers want. Correctly analysing data, therefore, is the key to gain in-depth understanding and enable your business to deliver relevant and personalised content. Companies have all the information and data they require; the key challenge lies in interpreting it and as far as technology goes, information holds the key in the present age of Big Data.
- Changing Retention Marketing Landscape
The landscape has changed since early forms of retention marketing. Marketers now see customer retention as a priority. The key to effective customer retention lies in anticipating customer needs and structuring campaigns accordingly.
Poor customer experiences are bad for business in the post-email age. Kolsky and Zendesk found 67 percent of consumers list bad customer experience as a primary reason for churn and over 95% of the customers take action as a result of this. New Voice and Zendesk found that 39 percent of consumers avoid vendors for up to 2 years after a negative experience; 58 percent will never even use the brand again ever.
According to research by Accenture, 54% of customers switched service providers with the top reason for this being poor customer service. Consumers have never enjoyed choices more than when it comes to services and products; consider every purchase they make a vote in favour of your brand. Faster and direct communication is the key to winning customer loyalty, whether you serve a millennial or a baby boomer customer, as per research by Narvar.
With a saturated and overcrowded marketplace, virtually every product and service category is inundated and retaining customers is all about improving customer experience. Research by Walker Info even shows that by 2020, customer experience will overtake price and product as the key competitive differentiator.
Considering the pay-offs of effective retention management, no firm or company would like to be left behind. Companies excelling at customer experience grow revenues of 4 to 8 percent above the market, according to Bain and Company. Accenture found cost of customer switching due to poor service was USD 1.6 trillion in the US alone. Additionally, loyal customers spend 67 percent more than new ones. Acquiring a new customer is 5 to 25x times more expensive than retention.
- Rise of Loyalty Programs
Accenture researched that 77 percent of customers participated in retail loyalty program, while 40 percent are part of the airline program and 46 percent joined the hotel program, as against 72, 31 and 36 percent in 2017. NASDAQ research however unearthed that while households enrol in over 29 different loyalty programs, they use only 5-12 of them on an average.
So, while retention management is catching on, the fact remains that it is not as simple as it looks. Companies need to redefine industry best practices, when it comes to retention management and loyalty programs. This is the essence of effective loyalty management. Standing out from the crowd, offering one-of-a-kind services or unique products is only part of the process. While the “build it and they will come” approach had many takers before the advent of electronic mail and other internet technologies, the story is very different now. Personalisation matters. Brand building is essential.
Loyalty initiatives and customer retention management programs are catching on in a world where the customer comes first. Deals, discounts, promotional offers – these take a back seat to customer experience ever since the advent of electronic mail. With the evolution of business communication, customers have reached a point where brand authenticity is the key. Customer loyalty is now about winning customers for life, not just for a sales deal.