This week the Irish Direct Marketing Association holds its Customer
Loyalty and Retention Conference. If you haven’t already bought your ticket you
probably should consider it (http://idmaloyalty.eventbrite.co.uk/). Loyalty really is a
hot topic. If it’s not in your organisation you should ask why.
It still amazes me why so many companies invest huge resources into
finding new customers while, at the same time, neglecting the customers they
already have. In
truth, the average organisation loses about 20% of their customers every year.
The other fact is, retaining profitable customers is far less costly than
finding new ones. It is claimed by Reichheld and Sasser that a 5% improvement
in customer retention can result in an increase in profitability of between 25%
and 85%, depending on the industry.
If you
develop unbreakable customer relationships, you will decrease your
costs and increase your profits. If that wasn’t a good enough
reason to adopt a relationship marketing strategy maybe these other nuggets
might convince you. Loyal customers give free advertising through positive word
of mouth. They tend to buy more products from you over time. Your competitors
are less likely to steal them from you as strong relationships are hard to break
and even harder to copy. Increased customer retention and loyalty makes the
employees’ job easier and more satisfying, usually resulting in fewer employees
leaving. Convinced yet?
Why do Customers Leave?
In his book “World Class Selling”, Jim Holden
believes that these are the reasons why customers defect.
1. The customer dies. 1%
2. The customer moves. 3%
3. A friend of the customer becomes a
competitor. 5%
4. The competition converts the customer
to become their supporter. 9%
5. The customer becomes dissatisfied. 14%
6. The customer believes that the company
doesn’t care. 68%
Agreed, there is not
much you can do about point number one, all of us will suffer this fate one
day. However, the interesting point here is that most of the time, in fact over
80% of the time, customers leave because they become dissatisfied or feel the
company no longer cares about them, not because of some extraordinary effort
from a competitor.
Customers deserve to
be listened to, helped, and rewarded. I heard it said once that it takes 6
months to win a new customer and just 6 seconds to lose one. Whether or not you
agree with the timings of this statement, there is no doubt the sentiments are
true. So, the starting point of it all is providing an excellent service that
not just satisfies but delights your customers.
After that, the sole
purpose of your marketing strategy needs to be to develop strong
customer relationships, unbreakable bonds that provide, not just a functional,
but an emotional connection. When your customers are emotionally connected to
your brand they are loyal. This is the holy grail. But how can you do it?
Obey the 10 Commandments of Relationship Marketing
1.
Get intimate - You must aim to
understand your customers intimately if you are going to provide them with what
they want and engage with them in a manner that is meaningful to them. This principle
is universal, no matter what the nature of the relationship is. Intimacy in a
business relationship, leads to customer satisfaction, loyalty and
profitability.
2.
Get personal.
No really personal - Generic,
one-size-fits-all communications do not work. Mass marketing without some sort
of personlisation doesn’t work either. You need to speak to your customers in a
language that’s personal to them. This is particularly true in direct marketing
by mail, in printed or electronic form. You must use your customer’s name and
you must tailor your communications in such a way that it means something to
them. You will not get to develop a strong relationship if you don’t show a
personal interest in your customers.
3.
Communications
should be dialogue, not monologue - The modern savvy consumer does not want
publicity or spin pushed on them. Neither do they want one-way communications
interrupting them. They want to get involved and be heard. They want a
mechanism to respond to brands. They want engagement. This is partly why the
online social media world has been such a marketing and PR revolution, it is
like word-of-mouth on speed. Make sure that all your marketing communications
allow for two-way engagement, not one-way propaganda.
4.
Share common
interests and experiences - Think
about your personal life. Who do you want to share time with? Who do you find
yourself drawn to socialise with? It tends to be people you share common
interests and experiences with. When it comes to your customers, you must do
the same if you are to be real friends with them. Know what it is they like
doing and get involved. If you are to elevate your relationship with them to an
emotional level you have to make their engagement with your brand about much
more than functionality. You have to make your brand really
relevant to them and their lives. If they are into sport, talk about sport. If
they are concert-goers share this experience. It is up to you to find out how
to do this but do it you must.
5.
Regularly
keep in touch - Ok,
so don’t stalk them. Don’t be in their face so much that they feel they may
require a barring order. But do stay in touch regularly. And use all the array
of marketing tools at your disposal to do so.
6.
Be
spontaneous - When
you expect something, you take it for granted. It’s human nature. When you are
spontaneous you surprise people in a positive way. Try it. It has a striking
effect. It’s like buying your wife flowers on Valentine’s Day, it’s expected
(although, speaking from personal experience, I wouldn’t
suggest that you don’t). But buy her flowers on any other
ordinary day and you make a big deposit into your relationship bank account. Do
this with your customers. Thank them for their business when they least expect
it. Not only will this make them feel loyal to the brand but it will also make
them talk about their positive experience.
7. Be innovative - More than ever there
is a real need to be innovative when it comes to our marketing efforts. Think
about it. Who of us sits down to watch the advertisements on TV any more? I
rarely do. Digital TV has made our viewing habits much more on-demand. If you
have relied heavily on TV advertising to promote your brand in the past, you
really should also look to integrate your marketing efforts with other more
innovative techniques. Engaging and highly targeted direct mailings are
required. Clever online engagement. Smart social media
content. Viral
marketing. Guerilla marketing. It’s time to think outside the box people.
8.
Have
continuity with your brand messages - When someone hears or sees a brand for the
first time, they are highly likely to forget it. If they are reminded about the
message many times over, their chance of retention of the brand and it’s
message greatly improves. You can have different sub-messages within a
communication’s campaign. You can speak to individual customer’s with messages
tailored specifically to them. But you must do so in a consistant manner that
holds true to your brand values. You must have a core belief and hold true to
it.
9. Welcome complaints - What? Welcome
complaints? (I bet you’re convinced I'm smoking some good stuff
now. Stick with me.) Think about this;
the average person tells nine or ten people
about a bad experience they have had with a brand or supplier. Most unsatisfied
customers don’t complain to their supplier, they just switch
to a competitor. Is that what you would prefer? That they don’t bother you with
problems but just go elsewhere queitly? Of course not. You
want them to let you know when you let them down or don’t quite get it right.
They are giving you a chance to fix it. Research shows that customers who
complain, and have their greivance dealt with in a satisfactory manner, go on
to be even more loyal after the event. Complaining customers are your real
friends. You must let them know that they can talk to you when they are not
happy and that you will fix it for them.
10. Make sure your customers feel like VIPs - Your customers pay
your salary. They pay all our salaries. Without them you don’t have a business.
So treat them like the VIPs they are. Make sure they know how important they
are to you through your all your communications with them. Above all thank them for choosing to do business with you.
Marketing is no
longer a function, but a way of doing business. Developing unbreakable customer
relationships that leads to customer loyalty, should be the purpose of
everyone’s existence, from the receptionist right up to the CEO. If you want to
positively affect your bottom-line, this bottom-line is simple: Develop strong
relationships. That’s what leads to loyalty.
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