Businesses need to place just as much emphasis on customer retention as they do on acquisition.
Regardless of what sector you work in, customer loyalty is an essential part of driving sales.
It’s been well documented that retention is cheaper than acquisition, especially when it comes to customer numbers. We also know that repeat customers tend to spend more. It’s no surprise therefore that customer loyalty also plays a key part in impacting the bottom line, with it being reported that increasing retention rates by 5% can increase profits from 25% to 95%.
It’s clear to see from the stats that businesses can achieve some real benefits from customer retention, yet so many don’t see this is as a priority. For those businesses that fall into this category, they are missing out on forging meaningful and long-term relationships with their customers, which we know can generate significant financial gains.
Take the insurance sector as an example. There is certainly work that can be done to encourage business to place more emphasis on maintaining relationships with customers.
It’s a natural area of focus for us at CPP Group UK as we’re always striving to add value to our partners’ customers. A big part of this is getting under the skin of their customers so we can develop services and products that are going to improve customer loyalty.
Based on the work we’ve done in the last year, here are our top recommendations for businesses looking to improve customer retention:
1. Find out what your customers want and respond
Insight is invaluable when it comes to understanding what makes your customers tick. Despite this being a core part of retaining customers, many businesses don’t put enough value on customer insight. This is probably because there is the perception of it being a cumbersome task that produces findings that are hard to interpret and translate into actionable benefits. However, you don’t need huge teams and heaps of resource, you simply need to understand what it is that your customers like and dislike about your business.
With this insight, engaging your current customer-base is a quick and easy way of understanding what changes you should be making to the customer lifecycle. Being able to enhance the customer experience in this way not only strengthens current customer loyalty, but also gives them a reason to recommend your business to others.
Ria Cusimano is senior marketing manager for CPP Group UK
2. Use multiple touch points
There are multiple touch points you can capitalise on in order to strengthen your relationship with a customer.
The key thing to remember is that you’re in control of how a customer navigates and accesses your services and products, which makes it easy to create peak moments in order to ensure customers remain engaged with your business.
App-based technology can give businesses the perfect platform to continuously engage with customers for example, by using push notifications via an app. Whether it’s making your customers aware of an upcoming discount, offering deals or even making them aware of new products and services that they can access, these messages will show your customers that you understand them and want to offer them the best service. And this ultimately strengthens their loyalty to your business.
There are of course other channels you can use to reach your customers including email, SMS, direct mail and social media.
3. Reward customers
Once you know what your customers want and they have responded positively towards your activity, now is the time to reward them.
They’ve shown willingness to engage with your business in a different way so this is the perfect opportunity to show your customers that you value them. We know that loyalty programmes work, as we’ve seen with the likes of Tesco and Nectar. They have monopolised discount-based brand loyalty schemes, but increased competition has made it difficult for them to maintain this.
The move to making digital transactions also means that switching brands is easier, and the savvier customers are always on the look-out for the next best deal. The financial sector also has to contend with this with banks continually competing with each another on cash deals and other incentives to switch.
The key thing to remember here is that you don’t need to be a Tesco, Sky or 02 to reap the benefits of rewarding your loyal customers. There are plenty of attainable tools that offer rewards, for example our Smart Key Protection product help insurers offer more to the policies customers take out. It’s these low-cost, high-value products that are set to offer quick and affordable ways for businesses to add real value for their customers.
With an app being fundamental to accessing the benefits of the product, it means the customer is continually accessing it, providing insurers with an opportunity to up-sell other services.
We can’t stress enough the importance of looking after and understanding your current customers. While acquiring new customers is always going to be a key part of your business strategy, this shouldn’t overshadow the importance of building and maintaining your customer-base. And the key to loyal customers is understanding what motivates them and respond based on this insight.
Ria is senior marketing manager for CPP Group UK. She has 10 years’ experience of delivering products and services to the right people, at the right time, whilst making sure the customer, whether that be B2B or B2C is at the core of everything that the business does. She’s worked in many different sectors, but specialising in financial services and knows how to put an integrated plan together.
If you’re interested in working with CPP, a truly global company with a 30 year history, and tapping into expertise across a variety of disciplines, contact us by emailing firstname.lastname@example.org