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The 4 Pillars of Customer Retention
by Carsten Cumbrowski, November, 26 2007.
Table of Contents
- Customer Service
- Usability of the Site
- Customer Profiles
- Expedited Checkout Process
- Save for Later/Wish Lists/Gift and Wedding Registries
- Offers
- Communication
Introduction
It is not a secret that it is much harder and more expensive to acquire new customers than it is to retain existing ones. Retaining customers is not a passive thing and many businesses fail to do it right and sometimes to do it at all. To prevent decline of their business, companies often increase their efforts and spending by expanding existing customer acquisition strategies. Such increase is often connected with increased cost for the additional volume and also tends to become less and less effective the more you do it, creating a vicious cycle that can lead to the failure of the business when expenses reach a point that profits get reduced to nothing and then turn into losses that will take away from the businesses substance and equity until it is too late to salvage what is left and change course.
Spending time and money on retaining existing customers and leverage the relationship that was build over time to increase their spending with you instead of somebody else is much more profitable.
Doing a good job with that also impacts indirectly your customer acquisition efforts in a positive way, because happy long term customers of yours are more likely to recommend you to their friends and colleagues than customers who have no relationship with you and only moderate or not happy with you at all.
1. Customer Service
It is only possible to retain a customer who is a happy customer or a customer how has no other choice (which is one of the reasons why a monopoly is a bad thing for everybody, but the company who has it). Forget about the customers that are impossible to make happy. They are in the minority and their number is insignificant. If you think that it is in the double digit percentage range, have a closer look at your marketing and advertising campaigns and what sales is doing. Customer expectations that are too high to meet are most likely the result of false promises made during the conversion process.
While presenting ones product and company in a good light is understandable and not a problem, are exaggerations of key elements of your product or service that are critical to your customers doing more harm than good. You might get the initial sale, but you will probably lose the customer as soon as they can away.
If you did all of this wrong, good customer service will not help you very much to make a customer happy and retain him. Good customer service can do exactly that in cases where something is not clear to the customer and requires explanation or clarification. Nothing is 100% perfect all the time and errors and misunderstandings happen. This is usually not the end of the world and can be fixed easily without letting it escalate.
Good customer service is critical in those cases to resolve the issue quickly and without having the customer go through a complicated and lengthy ordeal. Doing a good job here will turn an upset customer into a loyal customer and even evangelist for your company and your services.
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2. Usability of the Site
Make it easy for new customers to find their way through the site and get them to convert. At the same time keep in mind the existing customers who already purchased from your site and know their way around. Make it also easy for them to get what they want quickly.
2.a Customer Profiles
Allow users to create a profile to store address and billing information. This sounds obvious in this day and age, but there are still plenty of sites that do not provide this capability. Allow customers to store multiple shipping addresses with their profile. It is not unusual that people use their home and work address depending on the things they order. Also keep in mind that people buy more and more gifts for friends, family and business partners or customers (B2B) online, not just for Christmas, but also other occasions, including birthdays.
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2.b Expedited Checkout Process
A multi step checkout process that is simple and easy to follow for a new customer is great, but can be annoying for an existing customer where you have already everything needed to complete an order on file. Even if you pre-fill every page in the process, it does require several clicks too much to get the customer to "place" an order. Show one page with the existing and default data from previous purchases or defaults the customer specified and have links from there to pages to change individual parts like shipping address, billing information, payment method, gift options etc. Shipping method and coupons should be editable right from that screen. This will allow the customer to complete an order in a single step, if the defaults can be used for the current order.
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2.c Save for Later/Wish Lists/Gift and Wedding Registries
People don't always buy immediately something, even if they are interested in the product. Make it easy for them to save it and come back at a later time to complete the purchase. Let people create wish lists and gift registries like wedding registries if your products or services can be sold as gift. You do not only get more business from the customer, but also have the potential to acquire new customers. Why is that? If you allow customers to create those lists, also provide the means that the customer can notify other people about this list to purchase items for him from that list. Those people might be already a customer of yours, but some of them might not.
Related Resources
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3. Offers
If you only have promotions that are available to new customers and never reward existing customers for their loyalty, chances are that you will upset them or they start to create multiple accounts in order to get rewards they would not get otherwise.
Don't let that happen, because you either lose customers or litter your customer database with numerous duplicate profiles. This will also not help to build good customer profiles and decrease customer loyalty. They will be off to your competitor who does not require them to jump through hoops and appreciates loyalty by providing incentives for repeat and long term customers.
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4. Communication
Stay in touch with your customers and communicate with them on a frequent basis. It is not easy to determine the optimum frequency for contact initiations that you contact them often enough that they do not forget about you, but not too much that they get annoyed by it and start ignoring it or worse, consider it spam and filter it out by automated means. This is a science by itself. Next to the frequency is also the message itself very important. Not every customer has the same needs or interest. The "one message fits them all" approach is not only less effective and converts poorly, but also increases opt-outs and filtering out of those messages.
Making a message personal for every customer is not easy, although it is the ultimate goal, but you can at least make customers feel as if the message is personal for them. The easiest thing to do is to address them with their name rather than addressing them like "Hello Customer". To provide messages that are as relevant as possible, is it useful to segment your customer base. The segmentation can be done based on a number of criteria and depend on what you offer and the types of customers, their interests, financial status etc. A single customer can be assigned to multiple segments, which overlap and serve different purposes.
There are numbers of methods you can use to contact your customers. While a phone call or snail mail can be appropriate and useful so is email still the most common and cost effective way of communication between e-tailers and customers. There are tons of services out there that let you manage your email lists, segment your customers and keep the list clean and up to date. The cost vary significantly and depend on the number and type of features you need, how much of the work the services will do for you, if you can't or do not want do everything in-house and from the size of your mailing list and frequency of mailings (= email volume).
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©2006-2024 Carsten Cumbrowski
Replication of this Content in full or in part without written permission by the author is prohibited.
