Customer retention is ultimately driven by value. Even the best segmentation, targeting, positioning, creative messaging or promotion with flawless execution will fall flat in the absence of value. In developing a plan to maintain and upgrade a customer base it is necessary then to build on solid foundation. Then, and only then will the steps unlock the door to greater customer retention and overall organizational success.
To succeed, customer retention must be a top-down, company-wide initiative. Truly committing to customer retention is hard work, because it affects virtually every aspect of your organization. But the ultimate payback in sustainable growth and profitability makes the effort worthwhile. The path to customer retention involves six key steps.
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Engagement marketing aims to engage people. It encourages them to participate in the evolution of a brand. Customer engagement and conversations are what marketing is all about. Rather than looking at consumers as passive receivers of messages, engagement marketers believe that consumers should be actively involved in the production and co-creation of marketing programs.
Recently I read an interesting article “Brands fail to follow rules of engagement” in Marketing Week. I was always aware of engagement marketing but I needed to dig a bit deeper to write something about it.
Engagement is a marketing approach that—in contrast to traditional brand and direct marketing strategies—allows a brand’s customers and prospects to shape the company’s marketing. People choose what messaging they will receive, and in what channels. Engagement marketing begins at the moment someone takes an action and initiates a dialogue, such as by signing up for an email program or reading a product review and requesting more information.
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Sam Walton founder of Wal-Mart nicely describes A Customer…
- A customer is the most important person in any business
- A customer is not dependent upon us. We are dependent upon him/her.
- A customer is not an interruption of our work. He/she is the sole purpose of it.
- A customer does us a favor when he comes in. We aren’t doing him a favor by waiting on him/her.
- A customer is an essential part of our business–not an outsider.
- A customer is not just money in the cash register. He/she is a human being with feelings and deserves to be treated with respect.
- A customer is a person who comes to us with needs and wants. It is our job to fill them.
- A customer deserves the most courteous attention we can give him/her. He/she is the lifeblood of this and every business. He/she pays your salary. Without him we would have to close our doors. Don’t ever forget it.
Sometimes in this busy world we forget the very basics of doing business… Customers the most important to us marketers. Companies seeking to grow their sales and profits must spend considerable time and resources searching for new customers. Customer acquisition requires substantial skills in lead generation, lead qualification, and account conversion. The company can use ads, Web pages, SEO, direct mail, telemarketing, and personal selling to generate leads and produce a list of suspects. The next task is to qualify the suspects as prospects, rank them in priority order, and initiate sales activities to convert prospects into customers. After they are acquired, however, some of these customers will not be retained.
Unfortunately, most marketing professionals focus on the art of attracting new customers rather than on retaining existing ones.
The key to customer retention is customer satisfaction. A highly satisfied customer stays loyal longer, buys more, talks favorably about the company and its products, pays less attention to competitors, is less price-sensitive, offers product or service ideas, and costs less to serve than new customers because transactions are routinized.
Striking the right chord to keep customers happy is the holy grail.
To achieve better sales and profits, most companies could be doing more to cultivate business from their existing customers. However, enthusiasm for customer-retaining strategies must not endanger sound customer-getting efforts. How companies balance the two is the big question.
To intensify reaching old customers while still seeking new ones, for many firms, will mean changes in market analysis, planning systems, management incentives, and marketing and/or operations organization. In the rush toward growth, consumer marketers have tended to regard success as stemming from obtaining new customers while unwittingly minimizing the importance of satisfying old ones. It is time for more companies to distinguish between their getting and retaining functions, to assess the balance between them, and to remedy any deficiencies in customer retention. This process requires management to value the potential of current customers and to treat them in special ways to get them to keep coming back.
