Daniel Nugent (pictured) offers top tips on customer retention.
Customer retention is incredibly important for growing a sustainable business but as consumers we can often feel that the best deals and incentives are reserved for new customers, and efforts to secure our loyalty and repeat business are secondary.
Things are changing though, due to the high cost of bringing in new customers. Studies, such as that by Lee Resources Inc, show repeatedly that it costs businesses five times as much to acquire new customers as it does to keep those they already have. Today, many more businesses are looking specifically to introduce programmes that focus on engaging with their current customers in order to develop strength in the relationship and ultimately retain them. Get it right, and these customers can become key brand ambassadors, helping to bring in new customers from among their friends, family and acquaintances.
Using loyalty or reward schemes is one way to retain customers. Here are some top tips on how to make the most of them in order to establish a long-term relationship.
1. Consistent communication is key
If your customers are entitled to be part of your reward scheme, work hard to achieve understanding from them so they are clear why they are being given the reward and what value it holds for them. Relate it to their current requirements and remind them frequently that they have the benefit.
2. Relevance is king
The reward on offer must be relevant to your consumers’ requirements, interests and aspirations and it must compliment your brand. Over recent years, given that many consumers have had to tighten their purse strings, those brands that have been successful in engendering loyalty are those offering rewards and discounts that are relevant in terms of product, brand and timing. For example, those that repay consumers for the shopping they would already be doing, such as the weekly supermarket shop, as well as the bigger ticket and perhaps more luxurious expenditures such as the annual holiday. We see engagement levels more than three times higher in reward programmes where the rewards, offers and associated messages and information are fully aligned with the interests and needs of their audience, than in similar programmes that lack this relevance.
3. Keep it simple
Don’t overcomplicate the rewards programme as your customers may not understand it and will not engage with it. We have all been confused and frustrated when we are unable to take up a seemingly good deal because of the restrictive terms and conditions. Presenting consistent offers which offer the greatest level of flexibility and are not limited in number or by when an individual can use them, rather than one-off deals that are available for a fixed period of time, helps to engage customers with the brand and establish a long-term relationship.
4. Stay fresh
Keep the reward programme evolving and interesting by offering new rewards and opportunities to ensure customers don’t become tired of it and to show you have an ongoing interest in their lives. This can increase repeat purchase and build loyalty, as well as giving you a reason to communicate more and therefore collect valuable data. However, customers won’t be happy if a popular offer is suddenly removed – so, refreshing a scheme needs to be done gradually to ensure the audience is not alienated by an abrupt change and loss of familiarity. As a general rule, around 10-20 per cent should be changed per month.
5. Stand out from the crowd
To achieve stand-out from other reward or loyalty schemes, it is important to reward your customers with something that is not readily available elsewhere. If you can deliver better value than those offers and discounts that are freely available on group discount and other general public websites, then your consumers will take notice.
6. Make sure you listen
Remaining in constant two-way communication with your consumers is key. If they feel they have a voice they will be far more engaged. The programmes we operate that have the highest levels of customer engagement are those that proactively seek feedback and input from their customers. Allowing them to feel they are shaping their reward package through feedback and suggestions will tell you exactly what they like and don’t like about the current offering. Even if a scheme cannot offer everything the customer says they want, if they see it evolving based on their comments they are far more likely to feel valued.
Consumers will engage with your loyalty or reward scheme if it is presented in a way that is relevant and offers real value to them, and the right scheme can be instrumental in turning a customer’s first purchase into a long-term relationship.
Daniel Nugent is head of Entice Loyalty.
