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Market Movers Discussion on the Importance of Customer Retention while Transitioning Business to Digital Marketplace

In this episode of Market Movers, Al Lalani, Co-Founder of Annex Cloud, and Rak Singh, VP of Growth and Optimization at SMITH, identify the importance of customer retention while transitioning business to a digital marketplace. Additionally, they discuss how to build great loyalty programs that not only support the customer, but also generate ROI.

Transcript

Al Lalani:

Welcome to another discussion of Annex Cloud Market Movers, where we bring in experts and luminaries to help us with the current times, and also discuss the importance of loyalty and retention for 2020, 2021 and beyond. Today, I'm extremely excited to welcome Rak Singh. Rak is the VP of growth and optimization at an experiential e-commerce agency named Smith. I'm very very excited to have you here Rak, welcome.

Rak Singh:

Yeah. Thank you, Al. I'm looking forward to the conversation for sure.

Al Lalani:

Wonderful, great. Rak, we've been discussing sort of the importance of retention in the upcoming times. We've all been through a pretty interesting time over the last five to six months, as we're battling work from home, and as we're battling this pandemic. And what's come to par that's very, very important is the importance of going digital. So digital exploration is a key term, and within that, sort of making sure you go direct to commerce, use e-commerce as your engine to drive growth, it has become very important as well.

So I'm sure you guys are very, very busy. But at the same time, retention and loyalty has sort of had a renewed resurgence around the importance of keeping your customers happy, as the economic times change. So I wanted to have that discussion with you and what you're seeing as you discuss with your prospects and customers around this topic, I guess the first one around customer retention as a whole. What are some of the strategies that you are discussing with your customers and prospects around customer retention in terms of A, what tactics to do, B, how does that become part of the global CX processes that are rethinking commerce and rethinking CX?

Rak Singh:

Sure. I mean, as you said, it's a very interesting time right now in the market with a lot of disruption going on, especially with COVID. With a lot of the clients that we are working with, their first and primary objective is cashflow, especially in bringing their market back to stability. So a lot of focus is in my 30, 60, 90 days, how do I make sure as a business I stay viable, and how do I draw out my cashflow? And with that, obviously, it comes to focus on how do I actually keep my customers that I already have? So we are looking at customer acquisition, very much the focus is on, okay, I have built this customer base. How do I keep them whole, right? Which, obviously, from a loyalty perspective, really drives through focus here, is one focus here is retention. The other focus here is customer engagement. Which is why I think, as you say, customer retention has had a renewed focus.

For the most part, I guess a few years ago, really was driven by customer acquisition. How do I go and get a new customer? And the focus wasn't so much in, how do I retain it. But if you look at the business stats, now this is usually a year we lose about 10 to 15% of the customers through this customer churn that's one aspect. Second aspect is just the ability to convert a sale. You're likely to convert a sale with an existing customer at least two to three times more than for a net new customer. So, obviously, in this given market, it makes a lot of sense. It's prudent to focus on the customer retention strategy, right? And I think from the clients we work with, there are really two main buckets. There's the B2B bucket, and there is a B2C bucket. I think the B2C bucket is pretty well established and well known.

There are very different kinds of loyalty programs out there. There are the points programs, the tier programs and the VIP programs, right? So I think that's well established. All the times that we talk to our B2B clients, what they ask us is, what does loyalty mean to me in the B2B world? And have always had this very interesting condition. The Cloud answers, let's remove the shawl from the equation for a minute. If you look at traditional B2B businesses, they're very much relationship and loyalty based. Oftentimes the relationship between the buyer and seller has been a long standing relationship and we are living in the same communities. Kids may be going to the same school. So the concept of loyalty actually isn't even you in the B2B world. The challenge is how do you actually replicate a human to human relationship in the digital world, and what does that mean from a loyalty perspective? Right?

So when we talk to our clients we always, especially at B2B where your clients are really a captive audience, you know them really well. And because you know them really well, you can actually look at a very personalized strategy in terms of height. How do you drive retention? If you know your customer value, your customer lifetime value, you can then say, okay, my top tier highest revenue generating customers... from a how do I retain them perspective, is how do I make sure I'm continuing to buy the right value for them? How do I partner with them, but also how do I reward them for their loyalty? Right? So far our highest revenue generating customers, you can take a look at maybe a referral program where you can say, help me go out there and build my, grow my business. And it's by the loyalty program so I'll give you a referral back. Or I can look at it now, VIP services or per a personalized experiences. Right?

So I think that's one aspect from a B2C perspective is because your... The buying journey is a lot more of an emotional journey. And the practical journey from a B2B perspective is very much how do I give you the instant reward. And I think that's why when we started the highest level, we focus on what are we trying to achieve. And then from a business perspective, what is your unique value proposition and how do you achieve it?

Al Lalani:

That's great. And I think you touched on so many different points that I have kind of want to dive deeper and just so we can kind of dissect it for our audiences, but let's start with broadly customer loyalty programs itself. If it's a company, whether it's B2B or B2C, that is embarking on this journey, there are two parts of this, the two major questions that need to answer. The first one is around ROI and say, how are we going to generate and make this a monetarily impactful tactic for us? Because to me, customer attention is the goal, customer loyalty programs is the tactic to get to that goal potentially. And so, in this sort of paradigm, how do I look at ROI and how do I measure that ROI? That's one. And then the second part of it is, you know, how do I manage sort of change with my organization to make this happen? I mean, what do I need to do to execute a great loyalty program? I think if you can touch on those two pieces on the ROI and the change management aspect of loyalty programs, that would be wonderful.

Rak Singh:

All right. So let's start with B2B first, right? When you look at ROI for B2B it's very much driven by customer lifetime value, CLV. Longer, I can retain my customer and, and if I can influence my customer to purchase more, the more profitable the customer will be. So there's a very direct and simple correlation between a customer retention program for B2B, and also the ROI. CLV sometimes can be tough because it can be complex, but it can also be very simple. And father challenge a lot of companies have is the fact that your customer data is fragmented, right? So, which is why they can't really get to the CLV easy. But if you can, especially for some B2B companies, when they have pre negotiated contracts, you can understand, at least from a customer perspective, what my customer value is, how do I then drive the ROI for that particular customer?

And what I always tell my clients is start with what you want, start with what you know, right? So it's... Which is why I think when you look at B2B loyalty, sometimes it freezes people. Because they think it's a very long, complicated journey and they have to do so many things up front, whereas isn't the case. So for some of the clients that we work with, we look at different programs to grow a better referral program. We've looked at a first time service program. For example, if you're a high revenue generating customer, for me, as an added service, I may create a lock box at your site. So I can give you extra shipping, or if an order comes in, I prioritize the order higher up. So again, all this goes back to the point of how do I continue to stay engaged with you. So to answer your question on the matter of why I think of B2B very much tied to CRV, you can also replicate it on a V from a B to C perspective as well too.

But again, B to C, because it's more of an emotional journey, is immediate. The immediate response satisfaction of me having purchased, right? So what can you do from a promotional perspective, from a followup perspective after the sale... What can you do to continue to drive in their experience with your brand and the customer, and how do you continue to engage a customer to want to come back to you as well, too? That then drives... Now, you've already acquired the customer, so your cap costs are already kind of fixed. How do you then continue to drive continued revenue from the customer? So then you look at other metrics in terms of these repeat purchases, the average order volume for the customer. Again, CCLB as well too, but then drop it on a wide cap collection.

Al Lalani:

Makes sense. And then when we think about as a business and we're trying to create this sort of change, one of the things I believe, and we've talked to our customers about, is to execute a great loyalty and retention strategy, you need to sort of get a different components of your business together. One is across customer experience, right? If I'm a loyal customer, I need to have a consistent experience on commerce, versus call center, versus stores, versus other channels that I operate in. And so you have to get sort of consistency, both in messaging and data, if you will, but that's just one aspect. I'm sure there's other aspects of change management that you feel like might be needed to ensure a launch of a great program for retention and loyalty.

Rak Singh:

Yeah. So I think you've touched on a very important point. So customer loyalty has two components. It has the customer retention, it has the customer engagement. Right? So customer engagement is something that has to be consistent across all your channels. So when you take a look at it as, "how am I engaging with my customer, and am I engaging with my customer consistently across channels?" is obviously one question you need to answer, but informing change management... Change management perspective is really about people, processes and technology, right? So from a people perspective is, you have the right culture as an organization to keep your customer at the core. Now you're serving your customer the right way, whether it be your front end sales folks, your back office folks, your call center folks... Right? You all really have to pivot around how do I serve the needs of my customer? What culture and skill sets do I need to have?

My process perspective again, is, how do I leverage my customer data to drive my right decisions? And from again, sales and service perspective, too, is again now, how am I using my data to tailor and pro slash my services to treat my customer the way they want to be treated. This is very much akin to looking at, how do I drive consistency across my organization? And from a technology perspective it's from a data and you start again with what you have, and then you take a look at first party, second party, third party data. And then you bring in loyalty, you know, a lot of the solutions like what you have as well, doing Annex Cloud, can really help you really decipher your customer and build the right profile, and understand how to engage them in the right way. Be it again, a loyalty engineer drives points, or a bit more of a complex structure.

The way G is structured, where you provide services, added value, added content, added services to again, track our loyalty, right? So it's, it's a bit of a generic concept because the real unique asset boils down to the customer and the business area, and then the unique value proposition. At a generic level, I think that's kind of where you would focus on from a bucket perspective.

Al Lalani:

Makes sense. Wonderful. You know, one of the things I was thinking about is, we've been talking about this concept of experiential loyalty for a while, which is... loyalty is not just about earn and burn transactions, or points when you buy and then you use them when you buy again, and so on and so forth. It's about the entire customer experience. It's about making it about the experiential journey of the customer. So if I buy something, I share about this on a social network, that's part of the experience. If I call a call center, that's part of the experience. If I get an email it's part of the experience. If I go to a store or go... Whatever else, where I interact with the brand and any other sort of methodology, that's part of my experience with the brand. And that could start even before the purchase, it continues between those purchases, and it certainly continues for the life of me until I become an advocate. You mentioned referral programs with a key impact there. When you think of experiential commerce, because that's sort of where, you're focused on... How do you think of experiential commerce, and then maybe how do you tie in experiential loyalty to that commerce engine, if you will?

Rak Singh:

Yeah, that's a great question. All right. So, commerce isn't only about the transaction, right? It's the entire kind of customer journey from awareness all the way to retention. So, how and what are you doing across all the various channels that you can engage with the customer, be it social media, be it third party websites, to drive that brand awareness? All the way to then drive from tracking that awareness all the way to driving to consideration, and then driving to conversion. Right? So, what does that journey look like? And how you measure customer engagement throughout the journey is going to be critical. Right? And then, obviously, the last part of it, which is where a lot of loyalty programs focus on, which is just the retention aspect of it. But to your point, it's loyalty begins, really, from the very first interaction that you have with the brand.

So from an execution perspective it's really having that mindset of, how is my brand being perceived by my consumers across every touch point, and is that consistent? And how do I measure that? Right? One of the great things a lot of brands do right these days is they actually have abilities across different social channels. So if I go to your Facebook page, if I go to your Instagram page, I'm engaging with you. I have maybe a second party, I took all the data collected for you already. And then when you come to my website, you come to my channel and you create a profile. And if I link those two, I start building a holistic profile of who you are across all the different data points that I can get. Then based on that, based on if you are referring my brand to others, and if you have a high net promoter score, right, maybe there's an earned reward I'd give you as a result for that too. So it goes back to the behaviors that I want to influence, not just the sales that I want to really drive, but the behaviors I want to influence to tell you to navigate. And I think having data across channels is a key component of that.

Al Lalani:

Wonderful. Rack, We can definitely keep going on this one, but I think I've learned a lot of things that our audience will learn through this process. One, I think you had an amazing description of B2B considerations versus B2C considerations around change management and customer data, as well as the sort of the entire experience of loyalty and commerce sort of put together through the entire customer experience journey, not just specifically the purchase aspects. Rak,really, thank you for spending the time with us today. If people want to reach you, I'm sure they can find you on LinkedIn, or your team on LinkedIn if they want to kind of get some help around their commerce strategies or their customer retention strategies. And for everyone else, if you want to view such videos and learn more, go to annexcloud.com/marketmovers. Rak, thank you so much for taking the time today.

Rak Singh:

Yeah, I had a great time as well too. Have a good day.

Al Lalani:

Okay, bye. For now.

Featured Speakers

Al Lalani

Al Lalani

Co-Founder, Annex Cloud

Rak-Singh-profile

Rak Singh

VP of Growth and Optimization, Smith

Annexcloud Logo

Since 2010, Annex Cloud has provided industry leading loyalty solutions to more than 250 leading brands and retailers, including Jenni Kayne, Hewlett-Packard, Bed Bath & Beyond, e.l.f. Cosmetics, Olympus, Sugarfina, Mizuno, MacKenzie-Childs, VF Corp., with the ability to engage tens of millions of their customers one-to-one at scale.

The Annex Cloud platform provides fully integrated Customer Loyalty, Referral Marketing, and User Generated Content (UGC) solutions that seamlessly work together to optimize the customer journey and deliver a unified customer experience that is designed to accelerate revenue growth, retain valuable customers, increase average order values (AOV) and drive repeat order frequency.

smith logo

The next big thing isn’t what you’ll buy, it’s how you’ll buy it. SMITH, is a values-driven digital transformation agency with one mission: to make buying and selling awesome. For more than 20 years, SMITH has worked in partnership with the world's most respected B2B and B2C brands to deliver better business outcomes with design thinking and technology enablement that puts customers at the center.

To learn more about SMITH , visit www.smith.co