It’s the same old story every month: the fixed rate for the smartphone is debited from the account – and otherwise, customers rarely hear or read anything from their mobile phone operator, to which they have been loyal for years. Same silence among banks, insurance companies, and other service providers. While a few years ago at least one birthday card with a discount code or a small gift for the “loyal customer” was in the mailbox, even today this is the exception rather than the rule.
New customers, on the other hand, wave special promotions and attractive extras at the conclusion of the contract. This is a matter for many loyal customers. They are right to ask why they should be loyal to a provider when a regular change of provider promises many benefits. So, thinks the customer, why remain frustrated? Switching nowadays is a simple as clicking – and the customer is gone.
It seems obvious: Few service providers actively take care of loyal customers. Many indulge in the hunt for new customers and attract them with special conditions. However, it is the regular customers who guarantee entrepreneurial success because they bring long-term money. Sustainably-thinking entrepreneurs, therefore, deal with the important topic of customer care. If you are shrugging your shoulders in a questioning way, you should diligently read our posts, because we point out what existing customers are, how to take care of them properly, and what mistakes should be avoided.
Existing Customers, Regular Customers, Loyal Customers – How Can You Tell them Apart?
Before dealing with the maintenance of existing customers, one must first define them. In principle, this definition depends on several factors.
Because of industry-specific differences, there is no general definition. For example, you buy new cars much less often than new clothes. Therefore, entrepreneurs should first decide on his or her own definition of existing or regular customers in their field, for example, anyone who has shopped with us three times is a regular customer. Or: anyone who buys something every six months is a regular customer. Here you can clearly see: when defining regular customers, the frequency of purchases, and the time period are important.
Regular clientele can then be differentiated even further:
- Customers who order frequently but don’t spend large sums
- Customers who have ordered a lot for a while but are now inactive
- Customers who order a lot and frequently
Depending on the industry, service, and company philosophy, individual classifications make sense in order to show specific care for regular customers. Such classifications result in personalized advertising messages with individual discounts. This is the definition – but why should you value regular customers?
The Value of Regular Customers
If you have already dealt with customer management, you will certainly know the following rule of thumb: It is about five times more expensive to attract a new customer than to keep an existing customer. The reasons for this are obvious. A new customer has many questions and must first gain confidence – and is therefore rather reluctant with their purchases. The purchase cancellation rate is also relatively high for new customers due to this shyness.
Not quite convinced yet? Adobe Digital Index examined data from 33 billion visits to 180 online stores in Europe and the US between April 2011 and June 2012 and published the results in the ROI study of marketing activities for existing online customers. The results are astonishing, as the RPV (Revenue Per Visit) for re-purchasers is three times higher than for first-time buyers. The study concludes that a first-time buyer’s subsequent visit can generate an average of three times higher sales. Reason enough to advise traders to invest in re-purchasers.
Bain and Company’s figures also speak for themselves: If you can keep five percent more existing customers, you can double your company’s profits. By now at the latest, every entrepreneur should have recognized the value of both regular customers and Customer Care and should immediately put them high up on the agenda. What does existing Customer Care look like?
Existing Customer Care as a Success Factor: What’s Behind It?
Many companies put the acquisition of customers, i.e. the internal strategy with the aim of attracting new buyers, high up on the agenda. The acquisition of new customers is called cold acquisition, whereas that of existing customers is called warm acquisition. The acquisition covers all the processes related to obtaining customers. However, some companies make a cut after their warm acquisition and thus give away important potential. Successful entrepreneurs, on the other hand, start with the maintenance of existing customers at this point.
On-going care is vital for keeping regular customers: the company must actively take care of the relationship with its loyal customers. If you approach customer care wisely, you will be able to strengthen customer loyalty. In this way, the customer is able to bind to the company, to certain products, and to the brand. This close customer loyalty is the goal of customer care because customers who feel neglected change providers more often.
On the other hand, customers prefer to purchase products from their respective companies or brands with which they have a close, emotional bond. In addition, they often advertise the products consciously or unconsciously; they become brand ambassadors or even fans – authentic advertising that you can never buy!
Customer Care: 4 things to avoid
If you still think that you only need to care for new customers, there is an urgent need for re-alignment. Because nothing annoys loyal customers as much as promotions that are exclusively aimed at new customers. On the other hand, new customers are also attracted by promotions that are addressed to regular customers.
This is the first point to avoid: promoting heavily and exclusively to new customers. On the other hand, it is much better to aggressively woo one’s regular clientele. This pleases your existing customers and attracts interested parties.
What if someone renews their contract, but only hears cricket chirps? This is an absolute no-go! The second point is, therefore: any renewal of a contract, subscription, or the like is a reason for a heartfelt thank you. For example, this can take the form of discounts or gifts tailored to the customer. In this way, one gains customer appreciation and increases their satisfaction; all basic emotions that increase Customer Loyalty.
If a customer has a question and is shooed away or treated unkindly by the service staff, this gives him or her a good reason to try the competition. Of course, this must not happen, so the third point is: All employees who deal directly with customers must be trained and instructed to represent the values of the company. In addition, in the best case, the staff should have access to the personal data so that they can react and communicate correctly in the conversation. All of this, of course, taking into account the provisions on data protection.
Mistakes also happen to the best of us – just don’t cover anything up. The fourth point is, therefore: To have the courage to make mistakes. Because mistakes also mean exposing yourself as human. A good culture of error in the company again appeals to emotions. So if you’ve screwed something up, there’s only one thing to do: stand by it, apologize, and make amends. In this way, the damage to your image can be kept to a minimum and the error may even be used for positive PR.
Avoiding these four points is a good start. This is because you can then concentrate on taking good and effective measures for active Customer Care. The following section explains how such concepts work.
Customer Care: 3 Tips to Retain Existing Customers over the Long-term
There are four well-known pillars of active customer care. Once you have implemented these tips, you can build on this foundation to individually maintain your customers well into the future.
- Discounts, promotions, and advertising appeal to all Customers; so far that’s clear. Those who then regularly announce discounts and special promotions in their advertising activities attract customers to the provider. Experience has shown that they buy more than just the discounted products.
- Customer card: A customer card is a valuable tool for collecting data about the purchasing behavior of customers. Depending on the industry, this can provide the company with important information, stored digitally on the customer file, and made usable. A customer card is then the perfect tool to prepare other promotions such as personal advertising.
- Newsletters, customer magazines, sweepstakes, surveys; any and all company-owned media, such as e-mails, newsletters or magazines, are a good channel for announcements as well as implementing current advertising measures and promotions. In addition, competitions and surveys providing additional incentives for customers can be perfectly integrated on these platforms. In addition to advertising, the media should contain relevant information in order to provide customers with a reason for reading. These include interesting tips, DIY suggestions, and current topics. This guarantees that content, such as newsletters, are actually read and that the advertising measures are sent out.
The ultimate discipline and basic requirement of customer care is certainly psychological. Whoever manages to appeal to emotions has won. Positive customer experiences play a major role here. These can be won on the entire customer journey. Emotions influence the entire purchasing behavior. If you take a well-thought-out strategy here, you can maximize your success.
Customer Care in Marketing
Does all that sound both good and actionable? Welcome to Customer Relationship Management (CRM), which focuses on Customer Care. This makes CRM an essential part of the modern corporate culture.
But this is far from the only part of marketing that is fundamental to good Customer Care. Inbound marketing also makes a big contribution to tying customers to a provider. Typical tools of inbound marketing include blogs, social media channels, YouTube, and other platforms frequented by customers. Here, interesting information linked to the company is shared in order to attract customers to the value-added provided in the shop.
Through this relevant and well-prepared information, know-how can be demonstrated and the customer gets an excellent service with added value. With a good marketing strategy, you don’t leave your customers out in the cold. This also includes direct contact, such as online chat or e-mail, so that the customer can be looked after from all sides. These channels can also provide information during communication, all of which refer to the company.
Inbound marketing thus focuses on relevant content for the target group, while outbound marketing actively fights for attention. Outbound marketing, therefore, includes all types of distribution of advertising messages. Some jokingly call this type of old marketing, suggesting that this is a dusty version of marketing. Customers in 2019 are less vulnerable to commercials and ads, preferring to look for their own information.
However, both marketing strategies have their sense in Customer Care, as personalized advertising messages are well received by the customer – such as discount vouchers or special deals on their favorite products. The main thing is to respond individually to the respective customer so that they feel valued and important. Here it helps to keep in mind: Buying is an emotional experience. If you grab the customer with your positive emotions, you have a good chance of success.
Now we know which measures are well suited for Customer Care and what marketing can do. But what about the information that is needed about the respective customers in order to apply these approaches in a targeted manner?
Prerequisite for Customer Care: Data, Data, Data
One thing is fundamental in all measures relating to Customer Care: Data. Information about regular customers must be captured and stored with all relevant information. Of course, all in compliance with data protection and GDPR. In addition, this data must be networked with each other and with other important information.
If this system is well organized, all employees will have access to the relevant data and can quickly find any information desired. The volume and up-to-dateness of data guarantees that all employees can have their personal customer wishes in mind at all times. This makes the service more practical, personal, and individual from the customer’s point of view.
Sounds a bit complicated, but examples illustrate this well: Marie is deaf and therefore communicates exclusively in writing with the company. Understandably, she reacts indignantly to requests for calls. Therefore, it is important that all employees with direct customer contact have this important information available, so as not to annoy this regular customer and to be able to respond perfectly to her personal requirements.
This customer-focused service is only possible thanks to the perfect organization and meticulous data maintenance. With such actions, one reaches the customer, shows him an emotional added value, and gains their trust – all the foundations required for Customer Loyalty with a future.
Companies have established many various approaches to active Customer Care and these are being used extensively. But how can the business determine whether and how well Customer Care is working? This is where sophisticated software is used, the Net Promoter ScoreⓇ.
Customer Care with the Net Promoter Score
As explained in the previous sections, Customer Loyalty is the goal of Customer Care. This customer’s commitment to a company can be measured quickly and easily, for example with the Net Promoter Score. The NPS is an ideal way to measure customer satisfaction – and also to create a workable survey that shows customers that their opinion matters.
The principle is simple: NPS works using by asking a question that is answered on a scale of 1-10. The values of the response then give the key figure, the Net Promoter Score. This metric makes it easy to measure customer satisfaction. In addition, there is an input field for customers to leave their own comments – perfect prerequisites for determining individual wishes.
Once you have defined your regular customers as a company, you can send the survey to this group and thus query the satisfaction of existing customers. Our post “Net Promoter Score: Calculation and interpretation” describes exactly how to calculate the figure from the feedback received.
Regular Customer Care – the Key to Success
This flood of helpful information is intended to show one thing in particular: The care of existing customers has great potential if it is properly prepared: Collect data, develop a good marketing strategy to use it, and then implement measures tailored to your target customers.
When a company looks after its regular customers, cares for them, touches them emotionally, and maintains the customer relationship, then it lays the foundation for successful customer loyalty. This is the goal of well-thought-out customer care. There are many strategies and tools that help entrepreneurs to approach existing customer care in a well-structured manner. Satisfied regular customers attract new customers, all of whom are aiming for one goal: to buy from this company.
After all, no company should just shoot into the blue yonder. It is much wiser to consider, together with management and marketing, how to make extensive use of customer data in order to provide intensive support to regular customers. Because usually, only one thing stands in the way of successful customer maintenance: the company itself.
Tags: Customer Retention