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What’s something JetBlue, Nike, Chase, Red Bull and Ben & Jerry’s all have in common? They were all category winners in Brand Keys’ 2019 Customer Loyalty Engagement Index, which celebrates brands that have demonstrated the best customer loyalty and engagement over the past 12 months.
That such successful companies have achieved brand loyalty is not surprising—it’s a critical component for business success. Although growing your customer base is important, customer retention is a key metric of a company’s health because attracting new customers is much more expensive than retaining existing ones. Brand Keys found that customer attraction costs 11 times more than retention. In fact, increasing loyalty by just 3 percent could shave 10 percent off marketing costs. And increased retention has been shown to massively improve profits as well.
Too often, the focus is solely on acquisition, a metric emphasized in meetings and presented proudly in graphs and charts. Maybe that’s because acquisition is sexy—it suggests an image of scaling up and capturing market space. Yet a frenzy over acquisition can obscure the reality of churn, or customer attrition. Without solid retention, winning new customers is like racing to fill a bucket with a hole in the bottom.
So, what can leaders do now to begin shoring up their customer loyalty? Here are three steps to improving customer retention:
1. Diagnose the churn.
A key step in bolstering retention is identifying where and why you are losing customers. Take a careful look at where in their journey your customers are bailing. Over time, you can build a churn map that indicates precisely the points at which you are losing customers.
Gayle Teskey, CEO and founder of Membership Corporation of America, a consultative and marketing services organization, recommends asking yourself the tough questions regarding retention: “What are the common denominators that connect churned customers’ experiences? Identify these push factors, and you could discover the most effective way to keep those customers around.”
2. Build trust so you can learn more.
Understanding attrition requires you to really know your customers, and the only way to do that is to gather data from them. In an era of highly publicized data breaches and increasing regulation of personal data privacy, however, this has to be done carefully and in a way that enhances your customers’ feelings of trust.
Begin by ensuring that your data security practices are top-notch, because one breach can erode trust, which takes years to regain. You must also create transparency for customers and give them complete control over their data. In most cases, customers are willing to share data if they trust your brand; if all else fails, six in 10 customers say they will share data if they receive something in return, like a discount. The more data they supply, the better an experience you can give them, which should serve to keep them around longer. If not, more data will at least offer insight into why they’ve left!
3. Engage unconventionally for long-term loyalty.
Finally, keep in mind that traditional advertising methods are not enough when it comes to keeping customers around for the long haul. Instead, you’ll need to think creatively and come up with some truly engaging ways to interact with your customer base.
So many of today’s most popular media formats are ones in which advertising can be avoided, such as online gaming, Netflix viewing or ad-free subscriptions. But companies are looking for ways to integrate with these formats. The NFL, for instance, offered in-game “skins” for players of Fortnite, while The Home Depot has launched its own YouTube channels with instructional content. The home improvement giant’s channel has already passed 100 million views, amply demonstrating that customers are interested.
It’s clear that customer retention should be a central priority for your company. By identifying your attrition points, building trust to collect customer data, and engaging your customers in new and creative ways, you will strengthen your retention strategy. That’s the healthy base upon which great companies are grown.
March 3, 2019 at 07:06AM
Forbes – Entrepreneurs