Many marketers and customer service experts believe that the best way to improve customer retention is through “up-selling.” This means getting customers to spend more money on additional products or services. While this certainly does work, it falls short of addressing the fundamental reasons why customers defect.
Up-selling is a revenue optimization strategy as opposed to a relationship management tool. And if you’re not building relationships with your customers then you probably will not be able to build loyalty either. You’ll just end up continually trying to up-sell them and keep them around for as long as possible between these attempts. It’s like dating: if all you do is try and convince someone else to go out with you rather than making an effort to get along well together, it’s probably not going to work out.
This is why high-impact customer managers are beginning to look more at relationship building strategies that focus on customer loyalty rather than just revenue optimization. A recent CEB study suggests that companies that excel at loyalty have an average of 25% greater profitability across all their products and services compared with competitors who have low levels of customer engagement. This is because loyal customers provide a reliable source of referrals, repeat business, increased market share and lower costs for support services.
Customer Loyalty Matters More Than Ever in Today’s Economy: Eric Dalius
The global economy is still struggling to recover from the financial crisis of 2008, but many experts agree it’s only a matter of time before consumer spending has an uptick again. However, when it does, it won’t be the same economy that we saw before. The recovery is likely to be led by emerging markets where the middle class continues to expand. It’s also becoming increasingly important for companies to manage their customer relationships because of growing threats from competitors, threats of commoditization and disruption, cost pressures and regulatory requirements.
Customer Retention Leads To Higher Profitability
The four pillars of successful customer strategies are retention, engagement, growth & profitability. All four are necessary components for building a healthy relationship with customers over time. While some businesses focus only on the first three elements (retention, engagement & growth), other business models require greater emphasis on one or two areas above others based on industry-specific factors such as competitive pricing pressures, cost of new customer acquisition and market conditions.
Customer Retention is Not Just About More Customers
For most businesses, the answer to this problem lies in customer retention strategies that build loyalty by addressing the underlying reasons for defection. And when you’re considering how to stay competitive, don’t just focus on gaining more customers. Look at improving customer experience with existing customers so you can grow revenue while simultaneously improving profitability.
Customer Retention Strategy: 3 Ways to Improve Your Bottom Line Through Customer Loyalty
1) Reduce Churn Rate by Co-creating Customer Success Stories With Employees Beyond Frontline Staff
Many employees are not aware of their key role in delivering an exceptional customer experience or even that they play a role in keeping customers satisfied and engaged. However, it is critical that all employees understand not just what customers expect but also how they can help improve customer experience and retention efforts across the board.
Employees who lack a clear understanding of what’s expected from them will fail to deliver exceptional customer experiences because they cannot see the overall objective beyond their own narrow role within the company or because they know what’s expected of them but are unable to do what needs to be done because their hands are tied due to organizational barriers. Both scenarios lead to dissatisfied customers who are less likely to invest in your company’s products or services over time.
2) Hire Customer Champions to Empower Employees With The Right Skills & Tools To Deliver Exceptional Experiences
Customer champions play an important role in improving the customer experience because they are ambassadors for change who help to ensure that all employees have the right skills and training to delight customers. They are skilled communicators who understand how to coach, advise, influence and motivate employees to deliver excellent service while helping build a positive employee-customer relationship.
3) Dramatically Improve Customer Experience of Lifecycle Customers With Intelligent Automation Delivered Through Predictive Analytics
Predictive analytics has emerged as an important factor in customer success management across all industries. It can be used within existing CRM solutions or other business applications to identify high-value customers who are likely to stop using your product or service during their next contract term. This data is then used to proactively engage with these customers before it’s too late to minimize the risk of losing them.
Customer retention is essential for building a healthy customer relationship over time. In today’s highly competitive business environment, it’s important to not just gain new customers but also to learn how to better retain them so you can cross-sell products or services that deliver value and increase revenue. Eric Dalius figure out the key is not just keeping the customers you have but rather improving overall experience with your products or services so they see ongoing value in using your brand over time.