Tapping into the value of customer retention, loyalty and advocacy

Tapping into the value of customer retention, loyalty and advocacy
16
Feb 22

Jackie Stierlin

Customer Experience

Customer Relationship Management

The most effective marketing out there is done by customers themselves. It’s word-of-mouth that carries the most clout, and that was even true before the digital age. But now, social media and online customer reviews have handed everyone a megaphone. So, what does that mean for your business?

The value of retention

In a world where anyone’s voice can be heard, if you consistently delight your customers you will be sending forth a slew of brand advocates into the wild to spread the message. There is much you can do to support, encourage and nurture them, and it starts with giving customer retention the attention it deserves.

Some businesses make the mistake of focusing too heavily on acquiring new customers while neglecting their existing customer base. It’s important to find the right balance between acquisition and retention, but retaining customers is simply more cost-effective than acquiring new ones. New leads generally require multiple interactions with your brand before they convert. In fact, new customers are between five and 25 times more expensive to acquire, according to a report from Harvard Business Review.

Repeat customers also tend to spend more. In fact, loyal customers tend to be worth up to 10 times as much as their first purchase, according to statistics from Martech Zone. And just a 5% increase in customer retention can lead to a 75% increase in profitability, as reported by Bain & Company.

Many companies are now going the route of doubling down on retention by moving away from the traditional pay-per-product (or service) model and towards a subscription-based model. The subscription economy saw staggering growth of 350% in less than eight years between 2012 and 2019, Business Wire reports.

The power of the advocate

Across the world, people are becoming less trusting, especially of media and advertising. This trend has been tracked by Edelman over the past 20 years and a number of factors are to blame, but it means that personal recommendations from friends and family carry more weight than ever. Even reviews from complete strangers carry tremendous clout online and Google has leaned into it with their five-star rating scale for businesses, which can have a dramatic effect on sales.

Nowhere is this more apparent than in the restaurant industry. Research at the University of California, Berkeley, sought to measure the impact of positive reviews on foot traffic during peak trading hours. Professors Michael Anderson and Jeremy Magruder found that it only took an extra half a star to increase the volume of customers by 30-40%.

If the overwhelming number of reviews are positive, detractors tend to get lost in the crowd. It’s the aggregate that carries the most authority in this context and tends to be a fair measure of your overall customer satisfaction.

How to create brand advocates

It’s important to gather customer feedback whenever possible, and preferably on your own channels and surveys rather than through third-party sites like Google. The insights that you can glean should then be used to inform product development and polish the customer experience.

To foster brand advocates, you will need to:

  • Start with a customer-centric vision at the heart of your business.
  • Step up your social media game to provide the space for conversations about your business and engage with customers who provide feedback.
  • Deal with complaints politely, apologise and offer the assurance that the matter will be investigated and offer to take the conversation offline. Customers with complaints can still become advocates if the matter is satisfactorily resolved.
  • Create a loyalty programme and build long-term relationships with customers.
  • Use your customer data to offer a level of personalisation that helps customers feel closer to your brand.
  • Surprise and delight your customers with an intuitive customer journey informed by your customer data and feedback.

Where we can help

Creating an army of brand advocates who will go and win over new customers for you might seem like a daunting prospect, but a carefully considered approach to the above steps is the way to achieve it. Our digital solutions can help you on that journey and our expertise can guide you every step of the way, from seeking insights to putting them into practice.

Take a look at how we can make an advocate production line out of your customer journey.

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