Customers are the backbone of any business. Without customers, there is no demand, no sale, and no business. If we look at business with the perspective of customer relationship management (CRM), there are three stages to it; customer acquisition, customer engagement and customer retention.
According to Forrester, marketers focus on
gaining new customers while not paying attention on customer retention. One of
the mistakes that businesses often make is to assume that if they offer good
products or services, customer would continue to be loyal to their brand.
Let’s look at the reasons at why consumers
leave a brand and move to a different one.
Quality of Products/Services
Returns and Replacement Policy
Customer Care and Support
Client Acquisition Vs Customer Retention: Which Strategy Works Better
Let’s look at the two scenarios:
Scenario 1: You focus solely on new customer acquisition by spending all your time and money on branding, advertisement, pitching and conversions without thinking about retention.
Scenario 2: After a new customer has been acquired take care of a customer post sales, by sending them loyalty offers and messages under an organised customer loyalty program.
Which one of the two seems easier and which
one ensures a regular sales flow?
The easiest and more efficient way of the two is obviously to acquire a customer and improve customer retention. Customers who are already aware of the products and services of a business, could easily be retained by offering them customer loyalty program.
Now let’s look at this analysis:
According to this chart, existing customers are five times (87%) more likely to purchase from the same brand again, and four times (79%) more likely to recommend the brand to their family and friends.
Hence, businesses need to come up with
strategies to retain their valuable customers and create a robust consumer base
to earn more profits.
Customer Retention Strategies: 6 Best Examples on How to Build Customer Loyalty
Here are 6 cases where brands employed
customer retention strategies and saw a massive transformation in their sales
and overall brand recognition:
Tesco used mass-mailing as one of the
customer retention strategies for marketing when they started. But after a
year, they faced issues such as bounced emails and invalid addresses.
Meanwhile, its customer loyalty program also failed, projecting a decline in
Tesco wanted to understand the mind of
their customers and figure out ways to be a priority brand in their purchase
choices. Hence, they used data from researchers focusing on customer
satisfaction. By understanding market trends, consumer behaviour and combining
it with the data from their club card, they learned how to put the customer
into the centre of their decisions.
Tesco started to look at how they catered to
the expectations if customers with personalised offers. In addition, they have
been able to understand their purchasing behaviour, helping them offer deals
that customers would prefer.
Over the years, Apple has garnered a loyal
consumer-base across the globe. In fact, according to a study
conducted by simonlycontracts.co.uk, 59% of the 2,275 iPhone users admitted to
purchase iPhone because of “blind loyalty”.
But what is the reason for this blind
loyalty? The key lies in making a brand identity which can be relatable for
users. Steve Jobs always believed to make the brand a statement in itself. With
its innovative periodic updates that evolve with time, to its simple yet
elegant design; apple ensures every product is created to resonate with the
Amazon began its journey from Jeff Bezos’s
garage at Washington as an online bookstore and has now become one of the
leading ecommerce platforms across the globe. What makes its consumer base
loyal is more prominent, due to its premium customer loyalty program, Amazon
According to a study by LoyaltyLion, Amazon Prime members, on an average, spend more than four times than regular Amazon shoppers.
But Amazon goes a step further than Costco
and provides more perks than any other ecommerce platform, which includes
Amazon Prime Video streaming service, express delivery, and no delivery charges.
This makes customers feel that they’re
getting more than what they signed up for and remain loyal to the brand.
For generations, Cola Cola has been
home to a loyal customer-base and with each generation it gains more. One of
the most striking features of the brand is its ad campaigns with tough the
heart of millions.
With taglines such as ‘Happiness is to
Share’ people of all ages remember its ads. Coca Cola engages masses with their
heart-warming messages to make the world a better place.
For instance, presently, the “Share a Coke”
online and offline campaign encourages communities to come together. This gives
the brand a humane personality that is loved by all. This brings customers
back, again and again.
If we talk about a brand whose foundation
was laid on customer loyalty, Starbucks is the ideal example. Starbucks started
their first coffee shop in 1971, but what transpired to make the brand a public
In 1982, Howard Shultz, was hired as the
head of marketing and he observed that often customers felt uncomfortable due
to their lack of knowledge about coffees. Therefore, he developed a
customer-friendly strategy that made it easy for customers to understand the
products with the help of brochures. This made them come to the store again and
However, the company’s founders Baldwin and
Bowker wanted the establishment to be nothing more than a coffee machine
seller. So, Schultz left the organisation and came up with a new coffee chain.
The tables turned when in March 1987,
Baldwin and Bowker declared their plan to sell Starbucks, which was quickly
bought by Schultz. He merged his own coffee chain with it and with time, Starbucks
came to be known as the largest café chain in the world. All of this wouldn’t
have been possible if Schultz hadn’t put customers before the company’s
Today, Starbucks is gaining more popularity
as its new chains are opening worldwide. Their key focus still lies on customer
engagement, experience and connect. With ‘My Starbucks Rewards’, their customer
loyalty program, ‘purchasing coffee and adding loyalty points to get prizes’
According to an Experian Automotive report,
Toyota has the most loyal buyers compared to other global players. The reason
lies in their impeccable delivery, and their on-time approach. Toyota is
committed to provide their consumers superior quality vehicles consistently.
This rings well with its consumer base, who turn to Toyota, whenever they wish
to get a new vehicle.
But Toyota had to overcome a brief hurdle
of losing customers after negative-perception issues. They did it by focusing
on their customer experience and cost-effective prices, without compromising on
quality. Taking consumer requirements into consideration, they maintained their
objectives and prioritising their faithful customer base.
The Art of Customer Loyalty: Smart Tips for Better Customer Retention in 2020
If we summarise each of the six aforementioned
cases, we get these tips on how to retain customers.
Tip 1: Personalised Offers (Tesco)
Like Tesco, if businesses understand the
behaviour of their consumers, they will be able to convince their customers to
come again and again. For instance, if consumers buy cereals and milk together,
a combination offer providing discounts would encourage customers to return.
Tip 2: Customised Products (Apple)
Taking the example of Apple, if you design
and deliver products based on the consumer’s desires and package it with
personalised touch, those are most likely to be a success.
Tip 3: Value adds (Amazon)
By providing value additions such as
express delivery for asking people to join the customer loyalty program, you
are likely to build customer loyalty in the long term.
Tip 4: Offline and Online Campaigns
With the help of offline and online campaigns
and ads, you can create lasting impression on consumers. Ad stories that help
connect with your customers, so that they choose the brand they’re attached to.
Tip 5: Purchase Experience (Starbucks)
Starbucks ensured that customers can easily
choose and buy the products of their choice. In addition, they also provide
loyalty points that can be redeemed for gifts as a part of the customer loyalty
program. With the help of the Starbucks app, they can easily order products of
their choice and also check their total loyalty points.
Tip 6: Quality and Price (Toyota)
One of the most basic business tips; Toyota
focussed on providing quality products at cost-effective prices. People will
stay loyal if you provide good quality products and services at competitive prices.
Tip 7: Social Media Engagement
After making a sale, social media platforms
can be a great tool to communicate with the customer. Today, customers often
tweet or post about their experiences with a brand. Acknowledging and
addressing their feedback creates a positive impact not just with the specific
customer, but also the people who are following the interaction.
Tip 8: Prompt Service
All popular brands have a reputation to
maintain. Therefore, they are prompt in responding to queries and concerns of
customers to improve client retention. As they say, opportunity delayed is
opportunity missed. This holds true for businesses. Hence, if a customer
doesn’t get a response from the company, they will quickly move to the next
Tip 9: Calendar
Many big companies such as TGI Fridays and
Titan, make sure to wish their customers on special occasions such as
birthdays, anniversaries and festivals. While wishing them the best, they also
offer personalised discounts to celebrate the occasion. Therefore, maintaining
a calendar can work wonders to improve customer retention.
Tip 10: Gratitude
A word and a token of thanks go a long way
in earning loyal customers. After customers have made a purchase, offer them a
discount or a promise of a free gift on their next purchase. This not only
makes customers happy but also think about how to use the discount coupon or
free gift. This makes them come back again.
From Client Acquisition to Retention: How CRM Software Helps
All the tips individually sound like a lot of work. However, each of them can easily be implemented with the help of a customer relationship management software. From assisting in sending promotional mailers to managing ad campaigns; a CRM software is an ideal solution for all tasks related to customer relationship management.
The main main objective of a CRM Software is to help in client acquisition and retention. All of this has to be done while minimising acquisition costs.
Here are some ways how a CRM
Software helps in both of these processes:
1.Automation: CRM Software helps in automating various processes such as business-client communication.This helps in offering quick responses to the queries and concerns of various customers at once thereby not losing them.
2.Data Storage and Retrieval: With the help of CRM software, data of customers can easily be retrieved. The data helps in looking at their purchase history to suggest products that they would prefer.
3.Targeted Offers and Promotions: With the Help of CRM software, businesses can send promotional literature and media to potential customers who might be interested in specific products. This is determined by their age group, gender, location and various other factors.Targeted advertisements work as an efficient customer acquisition strategy.
4.Campaign Management: CRM Software solutions help in managing social media campaigns and converting leads into new customers.
5.Customer Feedback: CRM Software helps in gathering information from surveys and feedback forms filled by customers, so that they can work on specific requirements for customer retention.
To conclude, reiterating the necessity of retaining a customer is far more important. A loyal customer will not only keep on purchasing things from you, but will also recommend you to other customers, thereby bringing new customers. But most importantly it is about creating your business story that your customers carry with themselves. Therefore, as Seth Godin said, “Marketing is no longer about the stuff that you make, but about the stories that you tell.”
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