The term “Credit Crunch” has been bandied around for some time now. Not sure quite where this new name for what many of us remember as an old fashioned “recession” comes from – but nevertheless, as marketers, we can’t afford to ignore it.
The cause of the recent market downturns, whilst important, is much discussed and not relevant here. From a marketing perspective, what is critical is how marketers and agencies respond.
One of the most important things going forward will be retention of customers. A lesson we all learnt in Marketing 101, but the point that it costs less to retain a customer than to acquire a new customer is more relevant than ever. As budgets are slashed, and competition hots up, it’s a complete no-brainer to ensure you hang on to your existing customer, but how do you go about doing that?
7 rules for customer retention
1. Treat your customers as individuals. One size does not fit all, and approaching customer comms as though it does is dangerous territory. A good mailing will recognise a customer’s recent transactions, increasing the relationship between client and customer.
2. Recognise a customer’s value. Often, the top 10% of your customers will deliver about 50% of your profit, and even more scarily, the bottom 10% will lose you money. When budgets are tight it makes more sense than ever to increase the return you get for your marketing pound. Careful identification of the customers that will represent the biggest profit to you, through careful data analysis, allows you to develop strategies that maximise this business – for example offering premier customer care services, preferential rates or dedicated offers.
3. Use the most appropriate medium to communicate. In a multi-media world, businesses have a variety of methods available to them to speak to their customers. All too often though, the customer’s preferences are not taken into account. It is not enough to create an integrated media campaign that works seamlessly across a variety of media. Ensuring that each customer is contacted via the most appropriate method for them, as well as their preferred method, increases response rates, and reduces costs by minimising ineffective communication.
4. Ensure communication is a two-way street. There is no real communication if your customer is talking to you, but you’re not listening. Ensure feedback is properly analysed, dissected and the results applied and tested. By giving your customer a voice, you encourage them to buy in to you, and strengthen your relationship.
5. Make the most of your data. It can seem a time consuming and costly exercise to clean and clarify your data, but in the long run, it will not only save you money, but improve the standard of your customer communication. There is a good chance that 10% of your customer base will be duplicates. This skews the picture of your customers, and increases your marketing costs by duplicating your communication. The negative perceptions from a customer receiving the same mailing two, three or even four times is at extreme odds with trying to retain customers by communicating effectively.
6. Communicate strategically and consistently. A clear and coherent strategy to communication over a period of time is invaluable. Without it, communication becomes inconsistent or knee-jerk, devaluing the relationship with the customer.
7. Measure your results. By putting in place a clear communications strategy, with clear objectives, you can measure the success of your activity directly against the targets you have set. Too often, campaigns are never truly measured, and important learnings are lost, resulting in ineffectual campaigns being used again and again, wasting budget and harming the customer relationship.
By implementing the above techniques to all activity, you can be sure that you are communicating at the deepest level with your customers, strengthening their bond with you. You’re also maximising your budget, improving results, and most of all, ensuring you retain the customers that matter the most to your bottom line.
PCD has worked with many top name clients on customer retention, and is ideally placed to offer tailored advice on what will best suit your business and your customers. If you would like to look at how youcan make your budget work harder through increasing customer retention, drop us a line at think@pcdagency.com