Customer RETENTION or Customer LOYALTY have once again become hot topics for most companies. Why?
We have evolved from the days when television had only 3 channels to watch to a world where we can get anything and everything with the touch of a few buttons. We have choices…lots of them…and we want to explore them. And unless you stand out…offer something that causes your audience to “stick” they will be gone and may never come back to find you in the sea of competition.
So the critical question today becomes, “How to get customers to “stick” or be LOYAL to us and to retain them as ongoing and long-term customers?”
The other issue driving this focus for companies is COST. The ROI on marketing spend is going down for many companies…it is costing a lot more to attract new customers and then if they don’t “stick” with you, you have to REPEAT the acquisition process again, and again, and again. This is expensive…both in out of pocket expenses and in personnel resources to execute this strategy. It is a flawed strategy and isn’t working for companies.
So as good leaders usually do, when something doesn’t work time and time again, you make a decision to do something else. CUSTOMER ACQUISITION is simply getting too expensive to keep funding when you aren’t retaining the majority of these newly acquired customers. This is a key reason why companies are moving rapidly to trying to figure out ways to invest in RETENTION…increasing CUSTOMER LOYALTY… in an attempt to corral some of those customers that cost a lot of time and money to acquire. How’s that going for most companies? Not good…
Is CUSTOMER RETENTION the New Promised Land?
Loyalty programs, incentive offers, rewards, and other such gimmicks are short lived and actually can work against your loyalty efforts. In fact, many are viewed as secondary in value compared to the new offers that were used to attract them in the first place. Have you ever bought something from a company that offered you an attractive “introductory offer” so you could get to know their product or service? Of course you have, we all have taken advantage of one of these at one time in our lives. Let’s say it was 30% off your first purchase of something. That was cool…but then you see, as an established customer, they don’t offer you anything off with a new product or service…they have you and just figure you will stay with them…you don’t. And so the cycle continues.
This is a very dangerous loop for companies today. They become so focused on “acquisition offers” they forget about “retention offers” as well. It’s a difficult cycle for anyone to maintain…it continues to cost you money. There is a better answer…
The true beginning of CUSTOMER LOYALTY is offering your customers an INCREDIBLE EXPERIENCE. It is the foundation of all loyalty. You can’t buy your way through loyalty…at least not for the long term…it will consume you and your profitability. But you can leverage your profits by investing them back into the customer…giving them a reason to come back because they LOVE DOING BUSINESS WITH YOU. Not because you “bought them” but because they love how they are “being treated” as a customer.
Watch the 1 minute VIDEO with Tony Hsieh, CEO of Zappos talk about why they don’t spend money on marketing but put it back into their customers instead…much better return.
With the emphasis now being put on how to retain the customers that cost you so much to acquire, doesn’t it make sense to invest in the one thing customers tell us they love the most…being treated awesome, incredible, and amazingly well? Forget the gimmick offers and quick hit programs…invest in something with a “long tail” of success…something that has demonstrated value for hundreds of years…the experience we give our customers.
When you start thinking in terms of “blowing your customers away” with how awesome you make them feel, you have transported your company into one your customers see as truly caring about them…today and well into the future. This is the core of RETENTION and LOYALTY…it all starts with the CUSTOMER EXPERIENCE.
We, as consumers, aren’t loyal to the deal…it’s impossible…it’s just a deal that comes and goes. If we are loyal to the deal it simply means we are always looking for the new deal, not loyal to a company…we have turned the product/service into a commodity and will simply hunt for the next best deal and shop there. This isn’t loyalty, this is deal shopping. Loyalty happens because someone wants whatever they experienced to happen again, and again, and again.
Take a look at your own organization…is it focused heavily on acquisition or is it built around the experience? Would your customers stay if there was a better deal on your product/service in the market or would they chase the deal? Some tough questions…but critical ones to answer given the highly competitive nature of the markets we live in today as part of the Internet Revolution. If wanting more CUSTOMER LOYALTY is truly a vision and goal, start with the proper foundation…creating a truly awesome customer experience…it is the foundation for all loyalty.
