By Chintan Bharwada, originally published on MarketingProfs.com
Customer retention is essential to most businesses. And ultimately, it is driven by value. Even the best segmentation, targeting, positioning, creative messaging, or promotion with flawless execution will fall flat in the absence of value.
Therefore, in developing a plan to maintain and upgrade a customer base, it is necessary to build on a solid foundation. Only then will the plan lead to greater customer retention and overall organizational success.
To succeed, customer retention must be a top-down, companywide initiative. Truly committing to customer retention is hard work because it affects virtually every aspect of your organization, but the payback in sustainable growth and profitability makes the effort worthwhile.
The path to customer retention involves six key steps.
1. Ask
Ask your customers what they want and what they like and dislike. Include customer surveys on your website, at the point of sale, and in package inserts. You’ll likely get “extreme” feedback from customers who love you or hate you. Customers who are mildly satisfied are not as motivated to speak their minds.
But ask only if you’re prepared to deal with the responses. Turning a deaf ear to a problem is the kiss of death.
Please remember that customers expect you to take action when they complain, especially if you initiated the dialogue. Use feedback from your surveys to make improvements to your product or service. Customers love it when you listen to them!
2. Evaluate
Evaluate your customer data to find out who your best customers are. That may sound obvious, but the devil is in the details. There may be trends that you’ve overlooked.
And keep an eye on profitability, not just transactions. In the credit-card industry, for example, deep spenders who pay off their balance each month usually are not as profitable as moderate spenders who carry a balance.
When you know who your best customers are, you can tailor your marketing programs to keep those customers and encourage them to spend more with you.
3. Stimulate
If you have sold your customers a service and they’re not using it, get them to activate (e.g., online bill pay, long-distance service, and credit and debit cards).
At the start of a new relationship, there’s that warm and fuzzy feeling when new customers sign on. You got them to say yes. Four months later, you’re wondering why those customers don’t love you. Is it something you did?
No. It’s something you didn’t do: You sold to them and moved on. You assumed that they would fend for themselves and figure out all the great things about doing business with you.
The first few days and weeks of a new business relationship are critical. Shower them with your kindness. Send direct mail and email reminders. Thank them for their business. Do everything you can to make the “honeymoon” phase of your relationship special.
In the long run, if they’re not using your product or service, they’re likely to bail when a better deal comes along.