In this the third of our four-part series focusing on the customer lifecycle, we explore retention strategies that utilize insights from customer data to keep your best customers happy and improve the profitability of those relationships. It's a well-known and often-quoted marketing tenet: It costs five times more to acquire a new customer than it does to retain an existing customer. Obviously keeping those you already have is a cost-effective strategy. However, beyond simply keeping customers, the best potential rewards lie in developing relationships for long-term growth and profitability. Understanding the insights available in your existing customer data can help by making your marketing messages more compelling and relevant to customers at every stage of the customer lifecycle.     Reducing customer attrition by just 5 percent could boost your company’s profits by 25 percent or more. Source: Harvard Business Review   Show them you're still the right choice Ongoing communication and engagement reinforces the customer's choice of your company and your products or services. Communication makes customers feel informed, involved and appreciated, but only if your communications are highly relevant with personalized messages that are unique to their needs and interests. When consumers were surveyed about their personalization preferences for direct mail and e-mail messages, 69 percent said they preferred highly personalized direct mail with offers that are unique to their individual needs or interests over non-personalized mail with offers everyone receives. For e-mail messages, 78 percent preferred the highly personalized communications.* Nobody knows them better No one knows your customers as well as you. Because you have a gold mine of information available in your database, it's easier to communicate with the level of personalization customers want today. With today's sophisticated data analytics, it's possible to target customers at an individual level predicting next purchase behavior and customizing offers based on that knowledge. Knowing more about your customers lets you reach them with maximum relevance and communicate the right message to the right customer at just the right time. Stay in touch with personalized communications tools Newsletters — both print and e-newsletters — are effective, easily personalized tools for keeping customers feeling involved and appreciated. In one case, a leading telecommunications company uses a dynamic e-newsletter to reduce churn and cross-sell its cable, Internet and digital voice service products. Customers receive an introductory e-mail inviting them to choose from seven areas of interest, including games, technology, movies, sports, lifestyle, music and personal finances. Then each customer's e-newsletter is populated with content based on the individual's preferences. It also includes offers and sales messages based on current product usage and predicted future usage. Early results indicate that the personalized e-newsletters produce higher open and click-through rates, as well as a higher return on investment than non-personalized communications. Trigger-based communications provide sales and service messages that are prompted by events in the customer relationship, such as a rate change or anniversary. Individual life events, such as the birth of a child or new home purchase, could also trigger specific, customized cross-sell or upsell offers, which at this stage of the relationship can be even more precisely targeted based on your growing body of customer information. Other ongoing customer communications could be as simple as a thank-you note or birthday card. Make breaking up hard to do Making it easier for customers to stay makes it harder for them to leave. Automating bill payments and other interactions, holding trusted personal and financial information, and offering products as bundles with integrated statements are some ways to make it more difficult for customers to switch. In addition, retention rates increase with each additional purchase. Customers who purchase two or more of your products or services are much less likely to defect. This is partly because more effort is required to switch to a competitor, but also because customers who have made multiple purchases have a relationship with your company and may be reluctant to "start over" with someone else. Find out if there's more to learn To effectively use your customer data to retain your most profitable customers, you need to understand all the dimensions of your customer relationships. First Marketing's Relationship Dimension Study is a proprietary research tool that goes beyond customer satisfaction to accurately define your customer relationships in six different, multifaceted dimensions. In addition to pinpointing potential problems, the Relationship Dimension Study provides insights that help identify your best sales opportunities and concrete direction for strategies to increase repeat sales and long-term customer profitability. First Marketing combines customer communications expertise with the latest technology and business insight tools, such as our Relationship Dimension Study, to provide marketing solutions for every stage of the customer lifecycle. For more information, please contact marketing@first-marketing.com or call 800.736.0145. *Source: Cap Ventures Personalization Study
In the next issue of First Perspective, we'll focus on reconciliation, discussing strategies for identifying and repairing relationships with "at-risk" customers, as well as "win-back" solutions for those who defect. For copies of previous articles in this Customer Lifecycle series, contact marketing@first-marketing.com or call 800.736.0145.