Consumer Connection - Retention Is the New Acquisition
Heinrich Marketing
Acknowledgment, Conversation, Advocate - Retention Is the New Acquisition
Last month we covered consumer changes and delivered some new strategies to empower your reach and embolden your message, setting the stage for communicating with the changing consumer. This month, we’re digging deeper. As the economy improves, and consumers start spending again, marketers are keenly interested in new customer growth. Traditionally, marketers have looked to prospecting to fuel new growth, despite the well-known fact that it’s five to ten times costlier than retaining an existing customer. We understand. There’s something invigorating about mining new data, targeting new offers and acquiring fresh faces. Prospecting will always have its place. But customer retention — we like to call it preservation — is the new acquisition.
In fact, chief marketers report that their top three marketing mandates for 2010 include growing or retaining market share, lowering costs and improving customer insight and retention, according to Ad-ology’s “Attitudes on Agencys” study of 326 CMOs.
So what’s the savviest strategy with today’s consumer?
For retail, hospitality — and even financial services — loyalty programs and retention are a natural fit. The right approach (not a generic data-base solution), centers on observation and segmentation, linking reward-status opportunity with frequency and spending. To incentivize purchase frequency, Macy’s offers upgrades, access and rewards based on a customer’s Macy’s Visa® purchase behavior. Marriot has a similar program for guests.
“In essence, it’s an opportunity for preferred treatment — in the form of recognition and rewards — in exchange for brand loyalty. It’s done in a honest way, rather than promises and hype,” says Sandi McCann, senior vice president at Heinrich. “But it’s also about relationships — they’re building an emotional bond by personally recognizing and thanking the customer for their business and providing value in return.”
That’s exactly what COUNTRY Financial is creating with their Farm and Ranch Loyalty Program, now in its third year. Popular with Midwest corn and soybean farmers, as well as Pacific Northwest orchard owners, this strategy includes several customer touchpoints through the year, including newsletters, personally addressed postcards and other soft-power correspondence from their agents. The content provides plenty of upsell opportunity, while offering tailored and relevant industry news.
Clients feel affirmed about COUNTRY’S commitment to their farm’s success, which indirectly empowers them to pass on their experience to family, friends and neighbors. Particularly in this demographic, someone’s word goes a long way.
And words are more powerful than ever. In an age of choice where customers, regardless of the medium, are passing on opinions through blogs, social media and online forums — often in real time — consumer advocacy provides both value and leverage. “We must reward and empower our customers to talk about us,” says Joseph Jaffe, keynote speaker, thought leader and author of Flip the Funnel.
This is basically the referral, but remastered. It’s cheaper, more credible and takes less effort and maintenance. According to Jaffe, the idea is to engage a few customers with a superior customer experience and have them spread the word to many, which explains the funnel-flipping visual.
But the sweet spot for true customer growth is both purchase frequency and customer advocacy. Although Jaffe reminds brands that “superior customer experience” is paramount for customer retention, the new role of marketing encourages and engages dialogue with our customers, to promote frequent purchase behavior and an opportunity for them to refer others. Today’s social media marketing can play a powerful role in your customer growth plans and overall efficacy.