blog: Online Marketing Strategies


September 22, 2011

Customer Retention in the New Millennium; Part 1

Kari-Lynn O’Neil — social media Strategist

The first in a two-part series on Customer Retention, using tools in the New Millennium. First We'll take a look at 4 key areas you should assess your company with, to get a feel for where you measure up. The second will help you create, then apply the 4 steps to implementing a successful CRM (Customer Relationship Management) program for your business.

Part 1 : Taking the Pulse

Back in the “old days” the rule was a 5% improvement on customer retention could increase profitability by 25 - 85%. It’s a whole new ballgame when it comes to customer retention, and it’s leaving many marketers wondering how to approach things in our new, socially engaged marketplace. Consumers rule the marketplace these days. They’ve taken control over what products stores stock, what services you provide and how much they’ll pay for them. A quick scan personal Facebook accounts will provide a list of comments ranging from prideful buys, happy check ins, to snarky posts about poor customer service. Recent research by John Fleming and Jim Asplund indicates that engaged customers generate 1.7 times more revenue than normal customers, while having engaged employees and engaged customers returns a revenue gain of 3.4 times the norm.

Taking control of your customer experience is the first step increating and maintaining a Customer Retention Program.

If you’re turning a blind eye to customer retention and still think customer acquisition is the name of the game, you’ll be in sorry shape this time next year. The good news is you can take control and actually make tremendous gains by implementing a great CRM (Customer Relationship Management) strategy. In doing so you’ll identify weak points in your customer links and increase loyalty. According to Forrester’s “The Business Impact of Customer Experience, 2010” the better the customer loyalty score impacts your bottom line improves in 3 ways:

  1. Incremental purchases from existing customers in the same year go up- even if only a fraction of them repeat, revenue increases can improve dramatically depending on your industry.
  2. Revenue saved by lower churn. Even if at-risk customers leave, the absolute number of customers decreases and revenue saved goes up. That means your competitor doesn’t get win your fair
    share of revenue.
  3. New sales driven by word of mouth. The higher your loyalty score, the more your customers recommend you. Those are free sales people advertising out there!

Now take a look at these 4 key areas and determine where you fit the bill. Take notes on what you find and brainstorm on ideas on how to improve. You'll need them in the next step.

  1. Customer Service: Poor customer service will ruin you every time. This is a top down issue, my friends. If your employees are providing bad customer service...gulp...it’s management’s fault. Happy employees make happy customers and if you have a problem here you need to find out why and fix it fast.
    • How you win: when customers interact with happy employees who are passionate about what they do, they want to come back. People like to feel wanted and appreciated. This is my personal definition of the “Starbucks Effect.” Ever notice how just because they know what coffee you drink, you just want to open the door for the next person in line? Who knew being acknowledged in such a small way could make you a nicer person and loyal enough to spend $102.00 a month to get out of your car. McDonald's price cut Starbucks for your business and it didn’t hurt a bit. (Yep, the place you post on Facebook who McMesses up your order 98% of the time.) Lesson: people pay more when the service is McBetter.
  2. That brings me to my next point, Check Out the Competition: with today’s economy and the changes in buying patterns, new business acquisition is harder and your competition will do just about anything to win your best customers.
    • How you win: Loyal customers are provided with offers, sometimes at a loss, to win your customers. Many will be tempted. If they have a great CRM in place you loose big. Being pro-active by implementing a strong CRM (especially with social media) program in many cases will keep them from even seeing those messages. People simply don’t have time to be loyal to many competitors, especially the higher you go in HHI. These aren’t price shoppers, they’re time savers. Assess the competition, and keep and eye on them often.
  3. Word of Mouth is King: Traditional media bends new ears, but for CRM, social media is a primary purchase influencer. But it needs to be done right. You will quickly loose your loyal customers to your competition without understanding your audience’s needs, or by attracting undesirables who post negatively.
    • How you win: Depending on your industry, how you use social media to engage and motivate your customers to continue buying with you, and become brand ambassadors for you to their networks is as individualized as your business. Develop a strategy that centers around key competitive separation points.
  4. Reputation Management: It’s not enough to open and close shop put the word out and hope it sticks. You need to have your ears open and respond to what people are saying about you. If you don’t, you may not know you have a problem until it’s too late.
    • How you win: Use Google Alerts other free social media tools to check your brand if you are managing this task on your own.
    • HowSocialble?: A simple, free, tool that can measure the visibility of your brand on the web across 22 metrics.
    • Addict-o-matic: A nice search engine that aggregates rss feeds, allowing you to quickly see the areas where a brand is lacking in presence
    • Socialmention: A social media search engine offering searches across individual whether or not the score is transparent enough to be meaningful is open to debate.

An agency worth their reputation can perform in depth reporting on your brand as part of their strategy and implementation of a customized CRM program. They can:

  • Find every outspoken blogger, and get them to post how you solved the issue.
  • Determine if you are carrying a product line that is inferior to your competitor.
  • Address serious reputation issues and create a targeted reputation management strategy.

A great marketing strategist can uncover market opportunities your target customer is searching for, (or your competition is loosing the game at) and you can pick up and run for greater growth opportunities.

Next week: Implementing a Customer Relationship Management (CRM) program.

 

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