To remain competitive in a dynamic and increasingly multifaceted global setting, you need to create an environment in which your customers are at the center of every decision. The idea of having a customer-centric approach is the essential element for generating customer loyalty and retention. It is known fact that a 5% increase in customer retention has been shown to increase profitability from 25% to 85%.
Hence, here are the top 10 tips to empower your sales force for greater customer retention that drives loyalty:
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Customer churn in the services industry is still a growing issue, primarily because many consumers have little or no allegiance to a particular service provider.
So, how do we solve this? The answer is knowledge: know your customers and know your prospects. As retailers are the customer-facing end of the sales cycle, much of the responsibility for producing customer loyalty has to lie with them.
I know many companies who collect vast amounts of data for ensuring risk management procedures. However, this information can be converted into a powerful tool to reduce churn by helping to answer three basic questions:
- How do I sign up profitable customers?
- How can I enhance loyalty with my most profitable customers?
- How do I handle my existing customer base?
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These are the six key questions which you would use in an audit of a company’s customer loyalty program:
- What virtues of your business have the largest impact on your customers’ satisfaction?
- How do you divide and define your customer segments?
- Whose responsibility is customer service?
- What is your retention rate and what is the trend?
- What is the lifetime value of a typical customer?
- What percentage of new customers comes from recommendations and how has this changed over time?
The fastest way to grow your business is to reduce the number of clients who leave you. Thus, looking after existing clients should become your top priority. You would have to do more than just service your clients if you want to retain them for a long period of time – for which you would have to transform the business into a client driven organisation. There is a big difference between focusing on service and being client driven.
Follow these 8 Cs for Client Retention to avoid the 9 C – Cancellation:
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Let’s be serious. Nobody wakes up and decides to tell all their friends and family what a great place TOP’s Restaurant is! Marketers who want to take advantage of word-of-mouth communications need to take a more subtle approach. We take customers that arrive on personal recommendation but do little to cheer them to carry on the tradition of spreading the word.
I have outlined few ideas you could use for stimulating your customers to recommend your service:
- Catchphrase - You can’t go wrong in asking customers who express satisfaction to tell their friends. They might be more inclined to do so if you ask them and it will surely do no harm.
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The significance of data is that you can see behaviour change daily. If a trend emerges from analysis of your data, it is appropriate to review marketing strategy and assess the success or relevance of the plan under way. The data and the insight they provide become an extremely precious indicator of customer satisfaction. Data linked to loyalty programs becomes a rich source of market research. It is not what people say they do but what they actually do.
Naturally, market research still has a valuable role, it is still required to determine why customers have changed but its use has become even more focused. By analysing your loyalty program data, you can recognize which of your customers visit frequently (and spend a lot) which ones visit infrequently (but still spend a lot) and which are more erratic but still “profitable”. The loyalty program and market research data will allow you to look at the impact of competitors on customer behaviour. You know all the locations of your competitors and so are able to assess visit and spend behaviour in the light of proximity to named competitors.
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Customer retention programmes have historically had insufficient priority in most sectors, but then the forces affecting customer churn, and therefore the need for retention focus, have never been so great. The idea is not new. What is new is the approach. What is now being witnessed is a market increasingly commoditised and far more susceptible to competition – from other players and from new media. Customer knowledge and confidence have had a significant impact: it has become so much easier to compare and to swap products. Changing sales structures and wearing away of face-to-face interaction have helped to dilute or eradicate conventional ‘loyalty’.
What direction does this give the services marketer? It leads the way to a re-examination of profit drivers and a critical evaluation of current programmes. The business relationship with the customer has changed and is still changing, becoming far more complex. So too are the communications matrices within that relationship.
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