Create your customer retention strategy

Most every organization has a strategy for attracting new customers. But have you neglected to create a formal strategy for retaining the customers you already have?

Customer retention strategy is rooted in loyalty. That loyalty is driven, not surprisingly, by what you know about your customers’ needs and what you do in response. Businesses that want to be “best in class” focus on understanding the real needs – and intrinsic value – the customer derives from doing business with their company.

In years past, brand loyalty – an integral part of customer retention – was often taken for granted. Your grandparents’ likely devotion to a brand like Buick may best be summarized as ‘Til death do us part.” As recently as 1980, 80 percent of U.S. auto purchases were made by repeat customers. But those days are lgone. According to CNW Marketing Research, that has plummeted to 20 percent. It begs the question, “What could the automakers have done differently to keep those customers?” By not demonstrating value and appreciation of their customers, those customers fell off the radar – and so did sales. In the meantime, Mercedes Benz has risen to become the number one automaker in customer retention by J.D. Power and Associates. Their customer loyalty premise: High quality and resulting resale value. This is the company that rated even lower than Chrysler several years ago.

How can you make that kind of splash with current customers? It begins by rethinking customer engagement to boost satisfaction and ultimately, retention.

Get to know your customers. Begin by gathering information about your customers with the mind-set that you will act on it. Ask your customers what’s important to them. This might take the form of online surveys, conversations in the aisles or a few questions after a phone order. It might seem like common sense, but make sure you and your staff:

• look at complaints as opportunities
• engage customers in two-way dialogue
• survey customers and solicit feedback
• centralize customer feedback management
• give customers what they expect – and go beyond simple reward programs

Remember the good old days when the local grocery store owner knew your name? He probably knew the brands you liked and went so far as to set things aside for you. Getting to know your customers is about personal attention and recognition, two key ingredients to strengthening retention. Consider creating a customer advisory board and communicate their recommendations to all customers.

Look to past behavior as an indication of future purchases. Consider investing in a simple database or program that tracks customer purchases. You can then use that information to make suggestions based on past purchases and preferences. Employ strategies based on this information. Reward customer retention with membership cards or programs. Offer current customer-only specials and incentives that you communicate via newsletters, e-newsletters, bag inserts and other forums. Customer retention strategies only work if the customer benefits from them. Make them want to say, “I’m glad I’m in that database because…” If not, they won’t use loyalty cards, read your newsletter or respond to your attempts at communication.

Communicate, communicate, communicate. Don’t stop at welcoming new customers. More importantly, incorporate the use of thank-you communications via letters, calls and e-mail newsletters. Stay in touch with your top customers regularly. Make a list and touch base via phone with at least the top 10 to 25 every quarter.

Target your advertising. Once you know who you top 20 percent of customers are that make 80 percent of your sales, set marketing tactics specifically for this group. Make it clear what your brand is – what you hope to have come to mind about your business. This is definitely taking steps against the all-too-easy tide of temporary “flashes in the pan” – quick fixes like discounts. What kind of lasting memory and relevance will that leave with customers? Yes, marketing and advertising requires funds. The alternative – falling off your customers’ radars – leaves room for a competitor that’s advertising to gladly step into your place.

Reward current customers for attracting new ones. The top 20 percent of your current customers are the ones most apt to be your most ardent advocates – but only if you entice them to be. Expand your relationships by not only upselling and cross-selling to them, but also asking for referrals. Consider something like a “recommend a friend” campaign that has an incentive for both the new customer and the existing one.

Make it easy for loyal customers to do business with you. Ask about the customer experience and how to make it better – then be prepared to make changes. And always follow up on them. If you can turn dismay into delight – particularly for your loyal customers – you’ll only strengthen your relationship.

Define success. Ultimately, you need to define what customer retention success is to you. How you measure this is an individual decision –it might be based on transactions, data achievements or anecdotal feedback. What’s crucial is that you gauge it regularly. No measurements = no accountability.

Customer retention strategy is rooted in loyalty. That loyalty is driven, not surprisingly, by what you know about your customers’ needs and what you do in response. Businesses that want to be “best in class” focus on understanding the real needs – and intrinsic value – the customer derives from doing business with their company.

Copyright 2009. The MarketingSavant Group. All rights reserved