THE IMPORTANCE OF CUSTOMER RETENTION FOR BUSINESS GROWTH
The noise in the market place is far too high and the subject of customer retention cannot be left for chance. There are a lot of me-too brands that create stiff competition thus making the process of making a purchase decision tedious for a customer resulting to low customer loyalty. Therefore, businesses should exert deliberate effort in retaining existing clients. This is critical because the cost of acquiring new customers is much higher than that of retaining existing customers. Moreover, existing customers are likely to engage in word of mouth marketing and become valuable brand ambassadors that will push up sales.
We at ISBI held a workshop on this topic at Strathmore Business School that brought together entrepreneurs from diverse sectors. In this article, I will be highlighting some of the key points that were mentioned in the workshop. Despite coming from different business backgrounds, one thing that stood out was the unanimous consensus that we should maximise the opportunity to retain existing customers.
Don’t ignore your existing customers as much as you’re looking for new ones — Thrity Engineer-Mbuthia
Sales and marketing is the engine of any organisation and nothing moves forward unless it does. In our over communicated society, the incongruity is that nothing is more supreme than communication. Therefore, brand communication should be sincere, accurate and consistent to earn customer loyalty consequently resulting to customer retention. Customer retention is the ability of a business having an existing client as a return buyer. Below is an illustration of a customer journey.
A customer journey is the entire experience a client has while interacting with a brand. It’s a complete framework of the relationship a customer has with a brand. The journey is more relationship based and less of a transaction one. Unfortunately, most brands misplace their priorities once a purchase is done and don’t get to retain a lot of their existing customers.
What makes a customer want to leave?
· Poor Communication
Messages prepared in the old, traditional ways have no hope of being successful in today’s over communicated market place. A customer might leave if he doesn’t understand the value proposition of a product/service.
· False Advertising
Untrue and misleading information especially on packaging might repel customers away. Moreover, this is illegal and a brand found guilty of false advertising might be charges and forced to pay fines.
· Wide range of similar offerings in the marketplace
According to Harvard psychologist Dr. George A. Miller, the average human mind cannot deal with more than seven units at a time. In a market place with a lot of copycat products, a customer might not be loyal to one product.
· Being Rigid
This is a one size fits all mentality especially in the service industry. The lack of no customisation might push a customer to leave and seek value elsewhere. Brands should get creative with customisation not only to acquire new customers but also to retain existing clients.
· No Follow Up
A follow-up isn’t about trying to sell more. Instead, it should be used to check in and ensure customer satisfaction. Following up and showing continued interest informs the customer that the purchase was in his or her best interest. Trust is built and customer is likely to come back again. Unfortunately, most brands do not follow up and end up making a customer want to leave.
· Being Forced to Buy
A customer should be allowed to make an informed decision to make a purchase. However, some brands hire salespeople to try and push prospects to buy. In the long run, this can do more harm than good.
Being bombarded by messages is a poor positioning trait since a customer might find you irritation. Despite being a key component in customer retention, brands should tailor their communication to prevent a customer from wanting to leave.
· Speed of Delivery
In today’s fast moving digital economy, the speed of delivery is paramount. Slow or untimely delivery might force a customer to move to a competitor.
· Unreliable Customer Service
Customer is king. You might have heard of this mantra before and that is true because a customer’s perception is their reality. Unreliable and inconsistent customer service will drastically reduce a customer’s motivation to stay with your brand.
· High Prices
Inflation might push some brands to increase their prices. High cost living might cut off existing customer who might not be able to afford the product anymore.
Now that we’ve highlighted what makes a customer want to leave, here are some key points that were mentioned on customer retention.
What makes a customer stay?
· Brand Association/Love
Some brands offer social mileage thus a customer might desire to stay associated with the brand. For instance, Apple has a loyal customer base and its customers tend to think highly of the manufacturer. What is the level of emotional connect with the target consumers?
Uniformity of value and service delivery creates a higher chance of customer retention. Wider visibility than that of competitors might propel the urge for a customer to stay.
A customer might choose to stay because of the ease of using a certain product or service. I will use the example of Safaricom again because it is a popular brand. The ease of mobile money transaction with the presence of uncountable Mpesa shops motivate its customers to stay loyal.
· Value Add-on
The price is the financial reward for providing a product/service while the value is what your customer believes the product or service is worth to them. Different aspects of value add on include providing expert advice, bundling & packaging, dedicated personnel, speed of delivery and insider information.
· Problem Solving
Customer loyalty is likely to gain momentum if the product offers solution to the needs of the customer. However, brands should consistently improve their products and services to rise above the expectations of the marketplace.
· Endorsed Brand
An endorsed brand is likely to create more credibility especially if the brand is new to the market place. Nevertheless, existing brands sponsor influencers for the purpose of creating more awareness to drive more sales that might result to customer loyalty of the existing customer base.
· Customer Experience
The interactions and experiences your customer has with your business throughout the entire customer journey, from first contact to becoming a loyal customer is the customer experience. The more pleasant the journey, the higher the probability the customer will stay.
Systems are attractive and simplify the process of doing business. For instance, a lot of Kenyan frequent shopping malls because the aesthetics of shopping there are fulfilling.
· Feeling Appreciated
A customer is more likely to stay if they feel valued and appreciated. A few ways of appreciating customers include, being genuine, sending gifts, writing cards, teaching and celebrating customer’s success etc.
· Value for Money
Lastly, a client should feel that the product offered is worth the money spent. Therefore, the price should match the perceived value of the product/service. Are the prices of the product competitive or is it overpriced as compared to others?
· Your customer experience has to be excellent — Phyllis Mwangi (Gynlink Ltd)
· Be consistent. What you put in is what you get out — Eric Mwangi (Wakamunya Investments)
· Your customer can be your advocate for your product/service — Dr. Maureen Charagu (Kenyatta University Hospital)
· Follow up and take care of your customer — Martin Wachira (Elegante Bespoke)