Unless your business is a monopoly, finding a way to create customer loyalty and retention and reduce customer churn is likely on your To Do List. But what’s the best way to build customer satisfaction, value, and retention and keep your customers longer with an effective customer loyalty strategy?
It may not be what you think, because long term customer relationships are not about retention tactics like loyalty programs – more often they create dis-loyalty because rewards are either invisible or full of loopholes when it comes to redemption.
It’s not about having the lowest pricing, best perks, lunches, event tickets and so on, because that doesn’t differentiate you from the least from your competition, it can be costly, the benefits are fleeting, and loyalty can’t be bought, it has to be earned.
Customer retention and loyalty comes down getting beyond the hype of “customer relationship management” where pseudo-customization is often a thin disguise to “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.
If you frequently pop into the same fast food location or convenience store, there’s likely no “relationship” at work – what keeps you there is value of some kind, even if that just means it’s conveniently on your way home. While there is no problem with tastefully inviting customers to do more business with you, make no mistake, the customer, not the company, always manages the “relationship” by being able to vote with their wallet.
Four Factors Affecting Customer Retention
- Sometimes you just want a simple transaction – going to an ATM, fueling your car, going to the post office are examples. In that case, 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.
- Sometimes it’s all about brand loyalty. Many customers prefer Nordstrom to Macys. Coach to Michael Kors. Google vs Yahoo. Trader Joe’s vs Whole Foods. Or vice-versa. 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.
- A deeper level of interaction is appropriate when trust 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 that engaged customers will reward with authentic loyalty.
- High risk, high reward scenarios call for true customer relationship management, where both parties need to build trust over time, and act in the best interests of both parties. The voice of the customer, a focus on long term customer relationships, a specific retention plan, and customer loyalty measurement all need to be part of your customer acquisition and retention strategy.
Don’t make the mistake of assuming that 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 for earning customer loyalty?