Winning a customer is hard work so it makes sense to concentrate a lot of effort into keeping that customer and ensuring they repeat purchase. With the advent of so many different communication channels, customer retention has become something of an art form but there are some things that every business can do to make retaining a customer as straightforward as it can be.
Customer Retention – A Thankless Task?
In many cases, the effort put into customer retention is arguably less than what goes into acquiring new customers and this may well explain why companies often ignore or fail to understand how important a good retention program can be.
It's useful to study larger organisations and how they go about retaining customers because they have more resources, can afford to do it properly and are less likely to make mistakes.
So, what are the tactics employed?
Using Technology To Improve Customer Retention
For many organisations across all market sectors, the answer has been technology solutions that enable them to get closer to their customers. Their goal is often expressed in terms of delivering 'seamless' experiences to end-users while generating new business opportunities at the same time.
Increasingly, firms are looking beyond conventional use of data for direct marketing purposes and seeking ways in which they can use insights gleaned for business process improvement in general.
It's not surprising if you think about it; after all, when someone finds a product or service that they like, they are likely to recommend it to their friends and family.
One of the most effective ways for firms to make use of this type of information is by implementing a customer referral programme. But if you're thinking about rolling out such a programme, what challenges should you bear in mind?
What benefits can be gained from such an initiative? And how easy or difficult will it be to design and implement one that drives real value for your business?
Given that people are increasingly trusting their social circles when making purchasing decisions, it is not surprising that firms want to harness this trend through word-of-mouth and referrals. In fact research shows that more than 60% of consumers find word-of-mouth recommendations highly influential in their decision, which isn't surprising.
Another key customer retention tactic is to create a customer engagement programme, which is an often overlooked approach which you might wish to get outside help to develop.
Customer retention and referral programmes will deliver the following benefits:
1. They help to establish your firm as an industry thought leader and trendsetter; this is something that will continue to drive customer acquisition in future years.
2. They can be utilised by selling partners to grow their network and market reach, again increasing sales for all involved.
3. They directly increase profitability through upselling opportunities which arise from referrals and positive reviews of existing products/services - so it's win-win situation if you embrace these tactics correctly!
There are several steps you should take when designing a successful referral or retention program. Once you know who your target customers are and what your goals are, you will need to choose the right incentives for referral programs.
1. You must design an effective referral process that is simple for both existing customers/users as well as company employees to participate in. Complex processes often lead to low participation rates or can discourage existing users from becoming brand ambassadors at all - resulting in lost opportunities.
2. Ensure that it's easy to communicate this process with your existing customer base by providing clear instructions on how referrals can be submitted across social media channels, web pages etc... Ensure every touchpoint has the necessary information about how to make the referral.
3. Along with informative material online, take advantage of offline touchpoints to promote your referral program - be it in the form of flyers, posters etc. A good example here is an Indian telecom brand called 'Docomo' that carried out a fantastic sign-up incentive campaign at various malls across major cities. The idea was simple yet effective: when a user walked into any Docomo mall store and took a printout of their referral link along with the promo code they were provided by the company, they would receive free talktime on their next Docomo recharge.
4. To make this process even more attractive to existing customers/users, consider offering rewards for referring new users or taking certain actions. For example, posting something about the company on social media or inviting a friend to try out the service.
5. Incentivizing actions can be very helpful in maximizing your potential reach as both users and their friends are encouraged to come back and visit your referral program page. In Docomo's case, if a user managed to convince an existing friend to join them at a store for a recharge, they would receive even more free talk time due to this action being considered a second referral.
In conclusion, a customer retention program is an important part of a businesses strategy and should be considered in the initial stages of marketing. The upfront costs are well worth the long term savings, and with a few simple steps, anyone can effectively implement an effective customer retention program.
