In August, we’ll focus on ways to increase customer loyalty and retention before your competition cherry-picks your best customers, and, in this post, I’ll help you drive rapid results using 4 fickle factors affecting customer retention to identify the type of retention plan that fits your business.
Customer retention and loyalty comes down to getting beyond the hype of “customer relationship management,” where pseudo-customization is often a thin disguise for “buy more” campaigns that bombard customers with unwanted or irrelevant offers. It’s about taking the time to understand what kind of value your customers want from you and building that into your retention strategy, because make no mistake: the customer, not the company, always manages the “relationship.”
And customers can be fickle about which vendors they “choose” to have relationships with, regardless of the retention tactics you use. If you want to retain existing customers, the key lies in matching the retention plan to their view of the desired relationship.
4 Fickle Factors Affecting Customer Retention
- Sometimes you just want a simple transaction. When going to an ATM, fueling your car, going to the post office, or stopping off at a convenience store, you simply want the transaction to be efficient, cost-effective, and fulfill your needs. Think “no fuss, no muss”. That’s one form of value that drives customer satisfaction and retention. If the experience you create is friction-free and pleasant, they’ll come again. If the experience is time-consuming or aggravating, they’ll find a plan B. How does the experience you create, rate as a retention tactic with your customers?
- Sometimes it’s all about brand loyalty. If you drink soda, you’re probably strongly loyal to Coke OR Pepsi, and don’t switch just because one is on sale. You probably shop at Amazon OR Barnes and Noble for books, but not both. You have a preferred airline even if your wallet is full of loyalty cards for all of them, and even if you can’t always fly with them. If you have brand power working for you, customers will remain loyal as long as your brand fulfills their expectations of the value and experience that draws them to you. However, let them down, and they’ll desert your brand in droves, leading to excessive customer churn. Where does brand loyalty fit as a factor for your customers, and have you leveraged that in your retention plan?
- Sometimes trust may be crucial. A deeper level of interaction is appropriate when value-add and problem-solving are important components of the relationship, such as with financial planning, consulting services, or even car repairs. In that case, information sharing on both sides, a willingness to give and take, and a commitment to find a win-win are core elements of value-add efforts to retain existing customers that will be rewarded with authentic customer loyalty. Do you give your customers every reason to trust you? Or do you let them down or give cause for doubt?
- Sometimes there really is a “relationship”. High risk, high reward scenarios call for true customer relationship management, where both parties are constantly in communication, practically living in each other’s’ pockets, and committed to the same outcome. The focus is less on selling and more on partnering, hence listening carefully to the voice of the customer and a focus on the health of the long term relationship all need to be part of your customer retention plan.
How to build the right retention plan:
It’s likely that your ability to retain existing customers is driven primarily by only 1 of the 4 factors above, hence it’s critical to identify the driving factor for your business, and then optimize it.
As you analyze which of the factors affecting customer retention apply to your business, don’t make the mistake of assuming that all of your customers want a relationship with you. Take the time to determine whether their preferred approach has to do with your brand, with seamless transactions, with value-add interactions, or with relationships that help them achieve their goals more quickly and easily. When you find the sweet spot and deliver, you’ll earn the customer loyalty and retention you deserve.
Download the complimentary Which Strategy to Retain Customers is Right for You? and use the matrix to help you determine which quadrant you should be in.
What is the most effective strategy you’ve ever found to retain existing customers?