Having customers in focus means recognizing and fulfilling their wishes and needs. This also includes solving customer problems and taking complaints seriously. But only those who know their customers can understand them. Strengthening customer retention is a cross-departmental task, where marketing, sales, IT, and support have to work together.
When developing a sustainable corporate strategy, a marketing rethink is necessary – away from aggressive but arbitrary courting, and towards sincerely focusing on one's customers and their needs. A distinction must be made between the following terms:
Whosoever strategically and holistically aligns themselves to the customer and fulfills their unspoken needs is rewarded with a large number of loyal customers who keep buying from a company and recommending it to others. Sustainable growth is only possible with such regular customers. It is therefore worthwhile to look at the buyers and learn to understand them as well as possible.
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Attracting customers is the main goal of any and all marketing efforts. Once you know your target group, you can deduce from them where they are and which platforms, media, and channels they use. Through individual sales and marketing strategies, companies win new customers through a targeted approach that motivates them to buy. These can be advertisements, referral marketing, discount campaigns, events, or classic acquisitions. It is important to always keep an eye on the market and new customer acquisition activities to continuously advance.
It is possible to encourage new customers to make purchases without spending large amounts on advertising. In particular, this works in such a way that the product and its properties (USPs) are not the focus of the activities as usual, but an image or emotional benefit (UAP). The spirit which stands behind it could communicate that it makes life easier, meaning there is more time for other beautiful things like hobbies. Or the buyer is promised more success. Depending on the product and target group (B2C or B2B) emotional aspects play a greater or lesser role in the purchase decision. Companies should therefore deliberately emphasize this and use it to acquire new customers.
Anyone who has already bought something from a shop more than once is considered a regular customer. The goal must be to turn existing buyers into regular customers, as caring for existing customers is known to be a lot cheaper than acquiring new customers. This should give it a firm place in corporate strategy. What is needed here are customer retention measures which strengthen customer loyalty.
The so-called impact chain of customer retention details the different phases that a customer goes through until they reliably and sustainably increase the company’s turnover. The chain consists of the following links:
The customer should be convinced of the company in each of these phases. For this, the company/customer relationship must be fostered.
Unlike customer loyalty, which emanates from the customer, companies can actively influence customer retention. These efforts have a direct impact on customer satisfaction. Goals and measures for customer retention can be derived from corporate strategy and should be seen as ongoing processes in customer relationship management (CRM). In addition to marketing, IT and the service department should also be involved. The customer must have a positive experience at every point of contact so that they buy again and develop a long-term relationship with the company.
There are several different types of customer retention:
Since the first three items listed are involuntary customer bindings, marketing and service should focus on the last two types of customer retention, which create customer loyalty. Economic ties are the goal of discount campaigns and loyalty programs, emotional ties are the goal of product, service, and image campaigns.
But be aware – customer retention is not the same as customer loyalty. While customer retention can be involuntary through the first three points mentioned above, customer loyalty is based entirely on positive experiences. The customer is loyal to the company or brand and plans further purchases in the future – or considers them possible and, given the circumstances, likely. Brand loyalty can also be supported by targeted marketing activities. A brand must be distinctive and easy to grasp, with its products having a rational or emotional benefit.
Depending on the business model, a bond based on monopoly or contractual obligations can also be part of the strategy. However, these types of attachment do not release you from the need for emotional attachment. When a contract expires or economic circumstances change, the question if you have managed to convince the customer of your company’s offerings in all the essential points suddenly becomes relevant.
Loyal customers are the best brand ambassadors. There are many ways to bind customers to the company, for example with one-time actions or customer loyalty programs. A bonus program based on a points system can even be set up, for example, if you do not yet know the customers well. However, getting to know each other is essential for individual approaches to customer retention. For this purpose, the buyers are divided into customer groups, for example with regard to certain properties or usage channels. The decisive factors here may include usage behavior, buying behavior, expectations, or their demographic background.
The following proven measures can be used as cornerstones for individual activities:
Of greatest appeal to members of most target groups are discounts and promotions. Special conditions or graduated loyalty discounts flatter the customer and they develop a certain loyalty to the brand. He feels valued and the discount is also an objective advantage for him compared to buying from competitors.
Loyalty cards or bonus programs companies grant customers a discount, a free addition or a free product for a certain number of purchases. With this instrument for customer retention, companies can simultaneously collect valuable data on purchasing behavior and prepare particularly personalized offers.
Newsletters, customer magazines, or competitions keep customers happy and offer scope for incentives. The content is about the products and services of a company - so for example, tips and tricks or explanatory videos can be offered. The announcement of competitions and special sales also has its place. The advantage of these channels is that the customer has already been in contact with the company and can be addressed directly.
Clubs are like a closed society and hold exclusive magazine content and campaigns for their members. It is important to offer real advantages over non-members, otherwise the effect fizzles out and the initially awakened but then un-fulfilled customer expectations can even damage the company’s reputation.
Special events in “real life” can provide an interesting counterpoint to the online presence of a company and make the company personable and approachable. Customers who connect a face, a team or even an entire area with a company build a stronger emotional bond with the company. And here too, small gifts keep friendship alive.
Successful customer retention requires a holistic strategy in which the marketing department and others participate. A high level of customer satisfaction is essential for good customer retention. For this, the customer must have an all-round positive shopping experience. This starts with the first contact with the company, goes through the purchase decision and the purchase, and also affects complaint management. Close cooperation between marketing, sales, customer support, and IT is needed here.
Controlling is essential for the successful implementation of customer loyalty programs. This is the only way to ensure long-term success and to reinforce the most effective measures. The effect is often delayed and only seen long after measures have been implemented. A survey must, therefore, be carried out at appropriate intervals. In addition to „hard“ key figures such as an increase in sales or an increase in the number of subscribers, customer retention can be measured using different methods:
If you want to turn existing customers into regular customers, you can use retention marketing and set targeted impulses to increase customer purchases. The most profitable customers are determined on the basis of an internal ranking and especially „looked after“. That also includes being open to letting less interesting customers move if necessary in order to have more resources available for the really important customer group. Retention marketing is based on a well-maintained database with the relevant customer information and a strategically planned lead management. The goal is that of a lower churn rate.
The likelihood that an unsatisfied customer will buy again or recommend the company is almost zero. Therefore, a negative experience or better offer from a competitor is enough to lead to this. So-called churn management aims to win back customers who have already left.
It can be divided into the following five steps (Schüller, 2007):
An easy-to-recognize signal for a migrating customer would be, for example, their cancellation of a service (such as a subscription). There are a few more signals that can also be picked up in e-commerce. A prerequisite for the early detection of emigration is constant data collection and analysis.
These warning signals announce customer churn:
Successful churn management is based on a meaningful churn analysis. All contact points and customer actions are recorded in a central database. This survey is complemented by methods to determine customer satisfaction, for example, the Net Promoter Score. If the number of critics increases or the number of promoters falls in favor of the indifferent, it is high time to get to the bottom of the reasons for the growing dissatisfaction.
Customer retention can only be successful in the long term with the help of comprehensive measures and knowledge of your own customers. In today’s fast-paced world, it is important that companies do not stand still, but constantly develop and improve - also and especially in relation to the customer, who has more options than ever before.