Every company’s goal is to retain clients year to year. Depending on what you read, existing customers deliver 4 to 1, 10 to 1 or 20 to 1 (I am pretty sure that any ratio will do!) ROI over new customers. “The Leading Cause of Customer Churn, and How to Avoid It” looks at what exactly is lost when a customer walks out the door and does not come back as well as some different strategies to reduce churn. It is an important topic, because reducing churn even by a small percentage can increase your profits exponentially.
One item that was identified that I had not read before was overconfidence that once a customer makes an initial purchase, they will be back soon to make another and another… While that may be true, it certainly would increase one’s odds by giving that new customer a specific reason to come back. These can range from promotions to surveys to a phone call just to see how they are doing with their purchase. Makes sense, but how many companies have a specific strategy? Once customers have made their second purchase, their profitability increases 4 times, 10 times, 20 times, you get the idea.
Personalization is another area where new customers can be encouraged to become repeat customers. General information about your new products can be helpful, but a personalized message to your customers recommending a new widget based on their last purchase is better.
OK. Here comes the plug. All of these areas mentioned from promotions and new product introductions to personalization and surveys are all excellent areas for a points-based loyalty program. “Hey, (insert customer name), we value your business and have provided you with 5,000 points in Our Company Rocks Loyalty Program as a way of saying thank you” or once the program has been established an offer for double points on a new product introduction or for completion of a customer survey.
So, do you have a customer retention strategy? Let us show you how a loyalty program can make it stronger.