Customer Loyalty versus Customer Retention:
Customer Loyalty is a proactive stance on trying to retain customers. You probably already have a few loyalty strategies in place and don’t even know. These are things like comment cards, surveys, and customer support. Customer Retention on the other hand is a reactive stance on trying to retain customers. Most companies do not have a reactive approach to keep customers simply because they do not see value in it. You want to consider the type of business you are in. Retail for instance does not fare well with a retention group simply because there’s never an opportunity to have that final transaction where the customer states they “aren’t coming back”. Although it could be said that the customer service or “returns” counter might be a retention group, it’s often just treated as a place to filter customers.
Customer Surveys: Probably the most common of loyalty tactics, customer surveys serve as a way to get a pulse for the type of business you are running. A good chunk of restaurants and retail stores rely on comment cards. The problem with comment cards is that customers only fill them out when they are very upset. This often leaves a false sense of being okay in the customer’s eyes. This is actually false; no comment cards mean that your customers are indifferent to your business meaning you are likely to lose them to a competitor. If you are a manager or senior manager, get out into your business and talk to the customers. Instead of asking customers if everything is “okay” ask them if everything is outstanding.
Escalated Support: For every business, there is a normal set of processes or “policies” that the majority of your entire customer base falls into. What happens if a customer gets caught in this process but can’t get out? I call this the Ping Pong affect. Essentially, the customer is passed back and forth from group to group because no one has it within their policy to address the specific need. A supervisor isn’t brought in because they are too busy managing staffing levels. Superior loyalty tactics would include a process to identify and address these abnormal issues and give them a escalated level of support.
Rewarding Repeat Customers: How many of us have a frequent shopper card to a local grocery store. Better yet how many of us actually use it? I personally don’t because the rewards from these cards only bring prices down the level of a much larger food chain. Finding a way to reward a customer means finding something that is meaningful to your customer base. Discounts need to be above normal levels to truly be considered a reward. Also, make sure you it is clear that you are rewarding customers so it’s not a surprise.
Employee Retention: One of the fastest ways to retain your customers is to retain your staffing. Happy employees equal happy customers. Take a look at employee rewards and recognition programs. Communicate openly about upcoming changes and company goals. Include them in conversations on how to improve the company so they feel bought in to the health of the company.
Retention Agents: Retention is not always customer service; it’s a higher level of sales. Retention agents are designed to resell the value of your products or services. Does your company have set aside a group of influential agents who can resell value? Make sure you put these agents in areas where they can make the most impact. Since this is a sales position, you might find it more motivating to make it commission based.
Retention Discounts: It’s less expensive to retain a customer than it is to gain a new customer. Retention discounts serve as a way of building value for your customers. Find ways to keep revenue at a neutral level while adding discounts on low cost items that customer didn’t consider buying. If you sell DVD burners add a few free blank DVD’s as a way of saying sorry for encountered problems. Also, keep up with what your competitors are doing and try match discounts apples to apples. What discounts do you have in place currently?
Exit Surveys: All companies should have some way of tracking defection reasons on a real time basis. If you are subscription based service this can be forcing customers to call then have a disposition tool track and analyze disconnect reasons. If you work retail, consider having an electronic log of why customers are returning products. Knowing why your customers are leaving gives invaluable information on how to improve you overall business.
In this economy, it’s nearly impossible to grow revenue. The only way to survive is to find ways to slow defection from your business. Invest in ways to retain your customers and build loyalty with indifferent customers. When the economy turns around the consistent revenue should put you ahead and the practices will serve in building greater revenue in the future.