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| 11 Ideas for Improving Customer Retention
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Location: Blogs Neighborhood Newsletters |
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| Posted by: 23rd Street Association |
5/13/2009 11:30 AM |
11 Ideas for Improving Customer Retention
By Lee Marc Stein
In preparation for an annual off-site meeting with a major client, my
consulting firm developed a checklist for relationship marketing
program with copywriter Mark Hallen. Here are several ideas we came up
with to use as benchmarks when assessing program performance and
opportunities for improved results.
1. Realize your retention program starts on day one.
If
your business model involves lead generation, day one begins with your
handling of the lead. You not only affect conversion, but the tone of
the entire relationship.If you're generating most of your new
customers at retail, day one is what happens when customers open the
box after they've left the store. Are you doing enough to get them to
register with you? How can you help them use the product more easily?
2. Assume all new customers are created equal.
As
a general rule that worked in the past, a new customer generated
through direct mail always had a longer lifetime value than a customer
coming through direct response TV, inserts or retail. Now, because of
the Internet and because consumers are using all their channel options,
we don't know how good a customer someone's likely to be. Only
performance can dictate that. Therefore, you won't be able to pick and
choose which customers to invest in with a relationship program. As the
relationship unfolds, you can reduce or increase the investment.
3. Don't try to start the relationship in the middle.
While
an action-based loyalty program can be augmented at any time, a true
relationship program gets the biggest return by beginning at the
beginning. There is less effect with older customers.
4. Make it easy to be a customer.
Remove
some of the necessary barriers you set up for suspects and prospects
(e.g., automated e-mail and voice response, long login forms). Think
about a dedicated phone line for repeat customers. Some companies have
different (e.g., easy reorder) Web sites for customers than for
prospects.
5. Reward and recognize longevity.
You
can afford to give long-time customers discounts, special services and
red carpet treatment. Don't think so? Do the math. In many cases, it's
not even necessary to invest in a formal "loyalty" program. Recognition
can go as far in exceeding customers' expectations as rewards. Stage
and invite best customers to "inner circle" events, even if the
customer has to pay for the trip. Example: For its Select Banking
customers, Chase arranged a week-long golfing trip to Scotland. Even
having a dedicated phone line for long-term customers can help them
understand how much they're appreciated.
6. Divide and conquer.
Score
your customers as you would prospects and leads. You can do this in
many ways—everything from the old standard RFM (recency, frequency,
monetary value) to share of wallet and potential based on relationships
with other direct marketers. Once your customer files are scored, break
up customers into distinct groups, and build mini-marketing plans based
on the segments' unique needs, previous behaviors, established
predispositions and potential to grow. Be sure to establish control
groups within each segment so you can see the incremental value of your
new marketing efforts.
7. Personalize and customize.
Think
about how good it feels when the waiter at your favorite restaurant
greets you by name and knows exactly where you want to sit. You return
again and again and always tip more than usual. The same thing works
even with, say, hardened enterprise IT buyers. Give them advice,
counsel and content specific to their needs. There's no question that
direct marketers have the technology to do this.
8. Market to the lifecycle stage and to the customer's schedule.
New
customers have different needs and expectations than those you've had
for years. What's even trickier is that new customers acquired today
probably have different needs than the customers you acquired three,
five or 10 years ago. Do the research to understand and respond to
these differences.
Track triggers to certain behaviors, and
use those triggers to time your messages. When is a customer most
likely to buy again? Immediately? A month later? A year later?
9. Ask them what they want.
Most
people want their opinions heard. And they like being asked for them.
The act of surveying your customers makes them think you care. When you
report the results of the survey back to them, that's a double
confirmation of your concern. While you don't want to do format surveys
too often, you can get feedback after particular transactions.
10. Turn customers into stakeholders.
Build
a customer panel and/or an advisory board, and invite customers to
join. You'll be surprised by how many will join, share, refer and buy
more as a result of their participation. If you listen and act on what
they have to say, that not only builds their loyalty, but makes them
more willing to reach out to prospects.
11. Use the power of referral programs.
No
customer is going to make referrals and then defect. Most customers
feel even better about the value of your product or service when they
refer you to people like themselves who have stronger retention value.
Lee
Marc Stein is proprietor of direct marketing consultancy, Lee Marc
Stein Ltd. This article originally appeared in his e-newsletter, Increasing Return on Marketing Dollars. He can be reached via his Web site, www.leemarcstein.com.
Source: Target Marketing
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