Customer retention made easy?
‘The customer experience is the next competitive battleground.’ Jerry Gregoire
Companies are realizing the importance of focusing on their repeat customers via customer retention strategies and designing special loyalty rewards program exclusively for this category of customers.
A study conducted by Boston Consulting Group states that the cost of marketing to existing customers is about $7 whereas the marketing cost per new customer averages at around $34.
A happy loyal customer will share their experience with others building awareness that drives sales, increases revenue, and influences the way a brand is perceived. Basically, consumers who are highly engaged can directly influence purchases. Now with the social media as a powerful engine, customers are openly sharing real time feedback on the products & services. A repeat customer can act as a strong brand advocate.
3 easy ways to effective customer retention
1. Customer segmentation with Tiers
Understanding your customers and their interests, can help you introduce services and perks better-suited to them than any similar services offered by your competitors. If you can meet a customer segments needs exactly, the decision to shop from you instead of your competition will feel like a no-brainer.
Loyalty tiers are a way of segmenting customers based on their spending level. As customers spend more they move to higher tiers with better rewards. The tier rewards help in two ways- it provides an incentive to customers to spend more while moving to higher tier and it helps retain customers who have reached the higher tiers.
The benefits for higher tiers need not always be in terms of discounts. In fact, higher spenders may value exclusivity over discounts. Scottevest, an innovative clothing company, is using segmentation for customer retention. They decided to go beyond just discounts and set up experience-based rewards like expedited customer service, VIP sale events and free returns for the higher tiers. Scottevest was able to create, customizable loyalty tiers while maximizing engagement to make loyal users feel special.
Scottevest specialize in garments with conduit systems, specialized pockets and compartments for holding mobile phones, tablet computers and other portable electronic devices.
2. Free Shipping
The most common reason behind abandoned shopping carts is shipping costs. Customers hate when shipping costs get added to their purchases (especially when those prices are high). 39% of digital shoppers in the United States abandon their carts in 2017 due to no free shipping. When planning a solid shipping strategy, organizations must better integrate internal inventory tracking systems, this makes it easier to inform and satisfy customers externally.
A global sports clothing brand Icebreaker doesn’t usually offer discounts. Therefore, keeping their brand image in mind, Icebreaker did not want to launch a discount-based loyalty rewards program. Instead, they used free shipping as a reward option and customer retention strategy. This still provides a monetary benefit to customers while steering away from the perception of a discount-based brand.
Icebreaker created different levels of free shipping benefits for different program tiers. Creating free shipping rewards helped Icebreaker to achieve two objectives: Encourage customers to spend more while keeping them happy and avoid discounts.
Icebreaker is a merino wool outdoor and natural performance outdoor clothing brand.
3. Easy Redemption Process
A complicated maze of rules, regulations, and redemption exclusions can result in bad user experience and increase the abandonment rate. The 2017 Colloquy loyalty census report noted that 57% of customers abandoned a loyalty program because it took too long to earn points or miles for rewards.
In fact, in many cases ease of redemption is more important for the customers than the rewards themselves. Customers should enjoy every step of the rewards journey and not feel burdened or interrogated by complex steps and processes.
Maharishi Ayurveda Products International, Inc (MAPI), a company that provides ayurvedic herbal products, created a very easy redemption flow for loyalty program customers by integrating the rewards, in the checkout flow. Customers have the option of redeeming their points for discounts while making a payment on the checkout page. With this simple step, MAPI has a redemption rate that is twice that of other similar programs. Redemption rate is a good measure of customer satisfaction and the usage of a loyalty rewards program.
MAPI is a leading provider of all natural ayurvedic herbal supplements to promote health and consciousness.
Customer retention doesn’t improve overnight. However, with a few simple strategies up your sleeve, you can coax your existing customers back for more. Loyalty reward programs can help you to form lasting relationships with consumers who will become loyal to your brand.
Samir Palnitkar is the founder of Zinrelo, a technology company that specializes in loyalty rewards programs. An expert on building and growing “retention-first” businesses, he frequently writes on customer retention and loyalty rewards programs. Samir is also the founder of four other successful startups, holds five technology patents, and is the author of two technical books.