With 48 per cent of consumers admitting to having changed providers because of poor customer service, and 55 per cent admitting they would have stayed with a brand if they had been offered preferential treatment and rewards, brands really need to wise up to the importance of a solid customer retention strategy.
When taking the battle of the supermarkets for example, almost half of UK consumers (48 per cent) feel neither loyal nor disloyal towards their chosen store. So why then armed, with this information, along with the fact that the cost of customer acquisition is five times greater than keeping an existing customer happy, are brands not focusing on their customer retention strategy rather than acquisition, and placing the focus back to those loyal to the brand.
Brands must take notice of the growing competition in this market and how easy it can be now to have a loyal customer one minute and risk losing them the next. In an attempt to maintain customer‘s faith and entice new customers, brands are offering desirable incentives. Insurance provider, Aviva, is a prime example of a company rewarding customers not only when their policy is up for renewal but also when they are considering leaving. Combining proactive with reactive tactics contributes to a schemes success.
The majority of customer retention strategies are driven by reactionary panic. However, understanding the issues your current customers are facing and going the extra mile to maintain their trust in you is paramount. Here are my five key principles in executing an effective customer retention strategy for your organisation:
1. Ease of redemption
Rewards must be quick and easy to redeem, without any high level of effort on behalf of the customer. Vodafone Freebee Rewardz is a prime example. By offering customers lifestyle rewards and point based loyalty schemes, it is making the incentive easy to redeem, with the financial benefits instantly available for customers to see.
2. Reward choice
There is no optimal number of rewards that should be offered, as this varies on a programme by programme basis and is driven by factors including the spread of customer demographics, budget and programme objectives. New rewards can be trialled on a tactical basis to assess impact on customer behaviour and the most important thing is to remember they must be relevant to the audience and something they really do want.
3. Maintain excitement
Customers tend to get used to loyalty programmes quickly, so it is important that a reward scheme does not become too familiar. Customers can also, over time, begin to view loyalty rewards as an entitlement rather than a gift. This can be avoided by regularly refreshing or enhancing a programme so that there is always something new to please and engage the customer.
4. Surprise and delight
Providing a reward that a customer isn‘t expecting can be a very powerful tool. By giving customers an incentive to win as they spend, the perceived value and memorability of the brand is amplified. With Lloyds Everyday Offers, current account customers have the chance to earn up to 15 per cent cashback from places they already regularly shop at.
5. Communication and engagement
Effective communication is the key to the success of any loyalty programme. It is important to ensure customers understand the initiative and value of what they are being offered. Points statements, reward reminder emails and programme enhancement updates are simple and effective ways to drive customer engagement and cement the ongoing bond with the brand.