Consumers have more options than ever and factors like better service, lower prices or innovative products have become the norm rather than differentiators. Plus, technology has become a dramatic enabler when it comes to consumer choice. Here are seven customer-retention trends that can help your business stand out if you watch and act.
First, let’s take a leaf out of the e-commerce model. Online retail firms have taken the lead in creating compelling and fulfilling customer experiences. Many of these firms leverage every touch point and every interaction to create an experience that is convenient, fun and meaningful, thus rewriting the rules for building and maintaining customer relationships. They have embraced the customer revolution and are raising the bar for every other business.
But it all starts with listening. Brands need to pay attention to the ways customers and prospects interact with the company. These behaviours can fuel real time communication and content that is unique to each individual.
The approach can lead to greater loyalty and revenue. That’s because customers are willing to spend more on a product or service if they feel a personal affinity to the brand or if the company demonstrates that it really puts the customer first.
There was a time when most firms measured customer loyalty on three dimensions:
- Level of satisfaction with the product/service or, if that’s not been measured, then the number of years the customer has been using the Brand/service (indicating the depth of the relationship).
- Total revenue generated from customer (indicating a monetary significance to the company).
- The number of products/services the customer uses (indicating the breadth of the relationship).
Then came the next level of refinement where softer factors like a sense of ‘belonging’ (I feel a connection to other users of the brand) and treatment (they know me and demonstrate it in their level of service) became important building blocks for great customer experiences.
In 2014, the rules are again changing and the relationship focus will shift to two key factors: ‘Relevance’ and ‘Resonance’.
Indian consumers, for example, have overcome their shyness about shopping online and the traditional brick and mortar shops need to learn a trick or two from online retailers if they expect to survive in the new present.
Here are seven important trends to watch in customer retention that could help brands resonate better and make marketing strategies more relevant to the customers and prospects they seek to engage.
1. Actionable data will be key. Your marketing is only as powerful as the (actionable) data on your fingertips – you need an agile marketing solution that can capture and respond to customer behaviours in real time rather than making large investments in data warehousing. Marketers today have to manage multiple channels and touch points with targeted content. But very few have a single view of customer interactions across touch points and interaction history.
Brands should take advantage of the web more to communicate with customers. Savvy marketers will understand who the website visitors are, how they have interacted and where they are in the buying cycle. This data can be deployed to improve web experiences for users and prospects.
2. Being relevant won’t be enough. We have to be good at identifying or creating seducible moments. The triggers for such moments could either be personal, such as an anniversary or birthday, or it could be brand relationship related, such as an anniversary since the first purchase, the 10th transaction, the 100th customer, etc. Whatever it takes, create compelling reasons for customers to keep visiting the brand’s store.
3. The Rules of customer service are re-defined. Effective and immediate customer service will be the key to creating loyalty and stickiness. And by this I don’t mean traditional methods like a helpdesk, relationship executives, etc. Consumers today want and expect immediate response to issues. Referring to online retail again, at sites like Myntra.com, if the shoe size you bought does not fit, the process to exchange or refund has been simplified so returns transact within 24 hours and shoppers have to do nothing about it. A man comes to the home, delivers the new shoe and takes the old away. No fuss! The customer is hooked and primed for the next purchase.
4. Look before you leap...into a loyalty programme. The investment a company needs to launch a loyalty programme is not insignificant and to abort a programme midway would be disastrous as customer expectations would have risen and an early exit would destroy that equity. Brands need to do their homework well on three areas before deciding to launch a loyalty programme. First, does the return on investment justify the programme; second, is there buy-in from top management for the programme and related budgets; and three, is there meaningful programme differentiation from the competition. If the answer to all three is yes, only then should a company begin the process.
5. Move fast to tap opportunities before they slip away. Remember, barriers to exit for consumers have dropped in many industries, especially online. If you cannot catch customer interest in the first few moments, shoppers will move on to a competitive brand. An old communication lesson for attention capture is: A is the B that does C for me. It still holds but now you need to communicate it in the first 15 seconds on an e-commerce site. Also, products in ‘Shopping Cart’ not purchased or products in ‘My Wishlist’ are opportunities to re-market to customers. But these need to be done in real-time and with sufficient seduction to be able to re-capture the consumers’ interest.
6. Adoption of Location-based marketing will increase in 2014. Everyone has been toying with this concept for years already but somehow there’s still little consensus about how to use it for a better customer experience. The time has come for GPS/geo-location based mobile applications that can enable customers to locate brand’s stores, find out what offers are running, inform the outlet when they plan to visit and for what. This could enable stores to keep customer requirements ready and save them time, which everyone needs more of. The goal is all about increasing personalisation and convenience.
7. Buyer intelligence will no longer be limited to just high net worth clients. Remember the traditional 80:20 rule? Well, it does not strictly apply anymore when it comes to budget allocations. Revenue is not the only key variable when it comes to segmentation, recency is more important than years of association and adoption of new products is more important than a single high-value purchase. Revenue will still be the most significant variable but there are other variables that will define today’s high-value customers.
Expect marketing relationships in the year ahead to be more personal and to reflect the individuality of each customer with growing regularity. Marketers, are you ready with your game plans?
Rajat Sethi is a founding Partner with Strategic Caravan International, a customer relationship and valuation advisory firm. He is also a former Managing Director of Wunderman India and Dentsu Marcom.