Customer Retention & Advocacy
Customer Retention and Advocacy.
Let’s start with some obvious statements: your customers are your businesses’ most valuable assets. Your business cannot exist without keeping hold of those customers. So far, so good. The importance of each and every customer is even greater for smaller organisations: keeping customers out of the clutches of bigger competitors is never an easy task – I know, I know – in this economy.
It’s not just about ensuring renewable revenue; Gartner research suggests that “the cost of attracting a new customer is anywhere from five to 12 times greater than the cost of keeping an existing customer. Other studies show that a 5% increase in retention can positively impact profitability from 25% to 100% — and that a 2% increase in retention is the equivalent of cutting costs by 10%”. But it’s not just about keeping costs down either: these days, everything is connected – the whole world is connected; the power of word of mouth is amplified through the echo chamber of the internet. The contribution existing customers can make in attracting new customers is more valuable than ever.
So, how can you keep these customers? Retention is predicated on the premise that you are meeting their needs, and that means delivering on the things that matter to them. Understanding those needs means talking to them; it means inviting complaints so that you know how you can improve their experience, and how you can go that extra mile. It also means reminding them that you are there, keeping contact via newsletters, social media, and – I say, with a knowing wink – blog posts.
You also need to understand your larger market, and be able to recommend products that will help them; even if your product can’t help with a specific need, you can. In return, your customers are bound to share this experience with others. This has spawned what some call participatory or collaborative marketing — others call it conversational marketing. When the experience is good, we have opportunities for advocacy marketing. The simple thing that is often overlooked is that 50% of customers will agree to be brand advocates – you just need to ask them.
“Customers want to talk to each other,” says Gartner Analyst Richard Fouts, “They extend the provider-customer relationship into a community, where peers support each other, including acting as brand advocates.” Of course, loyal customers also want to be recognized for their advocacy. This doesn’t always mean financial incentives. Research shows that the No. 1 reason that advocates share their positive experience is to help others like them. Still, it can never hurt to make certain services available to loyal customers – such a practice provides another way to try and retain customers and turn them into advocates. Gamification – something I will be talking about next week – also offers a method of incentivising these advocates.
One of the most important things we have learned here at GMS is the need to always be honest with your customers – not just those who stay loyal, but also those that leave. Never underestimate the simple effectiveness of being able to say “We know you are unhappy because…” as long as that is the beginning of the process of recognising and correcting those failings. We, like many smaller organisations, rely on building strong, lasting relationships with customers. Resilience is hard won, but is just as hard to damage. Yes, we have had customers waiting on bug fixes, having problems with IMAP, seeing an increase of spam, etc. We know that there are some issues that cannot be resolved immediately. But these relationships are built on trust – on honesty – and are not quick to break, especially when we are truthful with our customers. We always look to respond to criticism – to be better – but we can always do more.
Are you a GMS customer? Get in touch. Let us know about your experience. Let us know what else you might need; what else we can do better. We are always available.