A common criticism directed at companies in general is that they focus too much on capturing new customers and neglect the nurturing of current customers.
Think of it in architectural terms: do you focus on building upwards to even greater highs but expose the skyscraper to vulnerabilities? Or do you focus on strengthening the foundations to ensure a solid building yet small in size?
Too many companies want to reach the heights of the skyscraper. But what they expose themselves to is that by overlooking the strength of the structure it is open to regular evacuations of its inhabitants.
And anyhow, the pennies don’t add up evenly when it comes to the comparison of expanding the customer base and retaining the customer base..
“The cost of customer retention is a small fraction of the cost of customer acquisition,” said Candyce Edelen, the CEO of a digital solutions for the financial industry, PropelGrowth. “This is particularly true for any model where the CAC isn’t recovered in the first couple months of the customer lifecycle.”
Put another way, the unbalanced approach that prioritizes expanding the customer base mirrors the act of pushing a boulder all the way up to the hill only for it to fall back down – and that can easily play out for each customer’s journey with a particular brand.
“Businesses that don’t focus on customer retention and nurturing those relationships are really shooting themselves in the foot,” added Candyce. “Nurturing existing customers can have a huge payoff in reducing churn, improving lifetime customer value, and encouraging referrals, references and positive word-of-mouth.”
Backing up these claims is Kunal Chopra, the CEO of Kaspien, who helps companies sell on Amazon and Walmart. “The cost to acquire a transaction on platforms such as Amazon continues to go up,” said Kunal. “In addition, freight costs have been increasing substantially globally. This has put pressure on profit margins for marketplace businesses, so gaining loyal, repeat customers is a great way to increase a customer’s lifetime value relative to the cost to acquire a new customer.”
And the events over the last year have had a big impact. “Covid has pushed more brands to sell online,” added Kunal, “which has increased competition for sellers… In addition, Amazon itself has over 5 million sellers, so it’s vital for sellers to retain loyal customers and market share.”
Mixed in with this is supplemental data that shows brand loyalty has been smashed under the pandemic. For example, 36% of consumers have tried new brands, and among these, 73% of them expect to keep buying from them.
“Eroding trust through a poor customer experience is one of the most surefire ways to lose out on a repeat customer,” explained Kunal. “For example, if a customer receives the wrong item after ordering on Amazon and reaches out to you for a solution, be sure to provide them with one.
What else is key is to give attention not just to new customers, but to existing ones, and talk to them on a more personal level by tailoring your communications depending on their own set of experiences and behaviors.
“I’m always shocked when companies offer discounts or rewards only for new customers,” exclaimed Candyce. “They’re basically telling existing customers, ‘We don’t care about you.’”
In order to combat this, Candyce recommends that businesses “train teams to be effective in this area; set goals and KPIs, and reward success just like you track and reward sales.”
You can even setup complex reward system programs that allows you to offer levels of rewards depending on any number of factors such as age, sex, how long they’ve been a customer for, etc. There are ecommerce platforms like Salesforce B2C Commerce Cloud that can do just that. This gives you the best of both worlds: incentives for new customers to bring their business to you, and rewards for current customers so that they feel recognized and valued.
Salesforce B2C Commerce Cloud can even make it possible for businesses to give special offers on customers’ birthdays.
Nurture a brand community
One of the most engaging ways in which a company can retain its customers is to cultivate a sense of community in which all of its relevant stakeholders can interact with one another, sharing product information, reviews, and a place to find answers to customer questions.
“Brands and businesses should be aiming to build a tribe-like community,” suggested Matthew Hayes, managing director of the agency Champions. “As much as it’s about a brand’s product or service, it is just as much about the experience of the entire process, personalization and a human-to-human approach. Whilst we’re living in an era of immense digitalization, brands shouldn’t forget that they are targeting people, not robots, and to bear this in mind when communicating with consumers.”
Getting real people, real customers into brand spaces where you can grow helps to turn first-time customers into repeat customers.
Powerful digital solutions include Salesforce Commerce Cloud that comes with its own customer service function, the Customer Service Center, which is a central hub that processes customer info, finds orders, and updates accounts among other things. Take for example this scenario: a person enters your site for the first time to check out a particular type of product. They see something they like so they decide to go to the store to buy it. Yet when they get there, they discover that that particular product is out of stock.
The store associate, who is equipped with the right information, can speak with this person and either recommend alternative products that they have in store or can help order the particular product online so that the individual can either get it sent to their home or retrieve it from curbside.
The longer repeat customers remain with you the more insight you’re able to get into the ways in which they interact with your brand, and how they respond to specific reward programs and incentives, which in turn helps to tweak and fine-tune the customer experience journey.
“Knowing how much and how often a customer spends with a brand provides them with the opportunity to offer rewards, discounts, and other incentives, which will also lead to repurchases,” added Matthew.
In addition to this, Matthew added that “sending a valued customer a handwritten note or message can also go a long way – whether it’s a simple thank you, giving them early access to a new launch, or offering them a referral incentive.”
Once a customer has bought something from you, their interaction with you has not ended. How is the product? Are there any incentives for leaving a review? How easy is it to return a product if necessary?
“Brands need to understand that the sale is only halfway through the customer experience,” pointed out Matthew. “They must spend the same amount of effort and attention on the after-sales experience as they do on new customer acquisition.”
These are avenues that help to boost repeat orders as well as brand reputation.
Perhaps one of the most-used words that we use here at ArganoUV when talking about fitting the needs of the digital revolution is personalization. It is the company ingredient that is the most sought-after by consumers yet one that is scarcely applied correctly.
“In an increasingly complex and socially-distant world,” said Matthew, “humans need more personalized communication from their digital product providers, not less. It is about using automation, digitalization and data insights to deliver a personalized and tailored service to customers, anticipating and meeting their needs instantaneously and in ways that feel unique to them.
“One thing that I urge brands and businesses to focus on is the needs of consumers. If you constantly provide a product or service that meets the ever-changing needs of consumers, you can’t go too far wrong.”