This is the third article in our series focusing on the importance of customer loyalty and retention during an economic crisis. Our first article spoke about enhancing your tactics to increase your customer retention rates, which you can read here. Our second post addressed the need for ongoing customer communication and interaction.
One of the challenges facing companies during a recession (unemployment claims are skyrocketing, employers freeze hiring, planned capital investments are put on hold, etc.) is managing budget allocation during a period of significant market uncertainty. We certainly understand a first reaction to put everything “on hold” or to “delay” any planned investments when everything changes and the world we are used to has been suddenly turned upside down.
However, this is also a wonderful opportunity for brands and retailers to be laser focused on retaining their most valuable and profitable customers. Brands and retailers should continue to reward desired buying behavior but also look to reward for brand advocacy, engagement, referrals, reviews, user generated content (UGC), etc. These are just a few examples to help retain your most loyal and profitable customers.
Make your Loyalty Program Nurturing to Retain Key Customers
Refer-A-Friend is a great way to reward your customers for referring friends, family members, colleagues, co-workers, etc. By referring friends, you are able to get new customers at little to no customer acquisition cost and reward a loyal customer for recommending your products or services.
Now, normally, that particular reward is tied to some kind of purchase made by the new customer. In a recession, however, this may not be possible. The good news is that there are other ways to learn more about this potential new customer.
Instead of a purchase, ask the new potential customer to register his or her profile and reward them with an offer to do so. As part of this process you can have them add items to their wishlist or opt-in to receive your emails.
So what’s the benefit? Loyalty programs contain a tremendous amount of data that can be used for segmentation and very targeted rewards based on information customers are willing to share and actual buying behavior.
Second, by asking them to add items to their Wishlist, you have completed 2-3 amazing things. This new customer has now given you data on what they are interested in, which in turn continues to complete their profile. It also has them browsing your site, which provides very useful information for building a relationship with them. You want these customers to have a great experience and it also gives you another angle to email them later to remind them of products they browsed or actually put them in their shopping cart but did not checkout.
Third, you can periodically email these customers who have opted-in. This helps to reinforce the emotional loyalty we find is key to building customer trust and maintaining high customer retention rates. Once you have a customer, it’s very important to retain them. According to Bain, a 5% increase in customer retention will capture a 25%-95% increase in gross margins. While you may not be able to capitalize on that now, you will be able to later. The economy will soon recover and you will now be in a wonderful position to capitalize on it.