Customer service: Poor customer service is why 82% of U.S customers leave a business, so perhaps looking at customer service scores might be where you start?
Include an open-ended exit survey to understand why your customers are leaving.
A/B test your messaging to see which performs best. For example, changing Why did you cancel? to What made you cancel? provided a near 19% response rate for Groove.
Create customer feedback forums and in-line customer support to collect customer feedback.
For instance, HubSpot Ideas is a forum for feature requests where users can submit and upvote ideas, helping HubSpot understand which development projects may have the highest existing demand.
Develop the product, site, and offers based on customer feedback.
Evaluate whether a loyalty or rewards program will drive repeat business.
Survey users to see if there is an interest. Create a small proof-of-concept project with limited scope, for example, geographic areas or audience group. When you introduce the program more widely, start by targeting your most frequent buyers first. Listen to their feedback and develop the program based on their feedback.
Appeal to your customers’ emotions and make every customer feel like they truly matter.
Focus your retention efforts on your communications with existing customers around how they would like to be viewed. For example, Urban Outfitters uses typography and design to communicate a real hipster vibe. Its newsletter doesn’t just deliver sales and promotions, but also videos and music from obscure bands.
I favor offering rewards for long-term customers. We tend to give the best deals to new customers, but that makes existing customers feel underappreciated. Instead, keep your best offers to customers who have shown loyalty.
Also, financial rewards are not the only way of showing you appreciate customers. Small gifts and even handwritten notes can make a huge difference.
These tokens of appreciation are particularly powerful if they come unexpectedly. If you offer an incentive of a gift, people factor this into the transaction. But if the gift comes as a surprise it creates a desire in people to return the favor through continued custom or even recommendation.
I love the idea of offering rewards to existing customers to keep them for as long as you can - however, this can also be an open invitation for abuse. Not mentioning brand names but years’ back, we’ve had that issue with ‘smart’ customers for this subscription-based vehicle safety and security system in the U.S. Back then, those who are threatening to cancel their accounts would be given anytime between 30-100 free calling minutes for their hands-free calls. Some customers would pretend to be irate with the call agents just so they can get those minutes.
My question is: How do you strike a balance to avoid scenarios like this?
A lot will depend on context and also technical feasibility in the product itself that would leave itself open to abuse. In a lot of cases these things are done by one-off vouchers and etc so it is simple.
Setting some conditions can also protect you from repeat abusers, capping the number of offers or to help you identify authentic cases.
We where discussing this recently about a situation where there was no technical solution and it was clear we had to monitor the situation and learn more. Perhaps giving the opportunity to yourself to kill the offer without long-term consequences.
I would suggest in that example they were rewarding complaints, not customer loyalty. The kind of rewards I think work well is rewards based on trigger points in the customer experience. Things like:
You have been with us for 10 years and to celebrate we want to send you a free gift.
This is your 5th purchase which makes you eligible for these exclusive discounts.
Loyalty programs like British Airways Frequent Flyers is a great example of this in action.
I agree with @boagworld – rewarding loyalty and rewarding complaints are different things.
However, loyal customers who feel unappreciated – or see new or complaining customers given lavish gifts that they’re not eligible for because they aren’t disloyal yet – will often become unhappy customers.
In Australia, mobile phone service companies are infamous for only coming up with great deals for new customers. If you want good prices and free stuff, you pretty much have to become disloyal and regularly switch.
On the other hand, companies like IKEA and Myer send out $10 vouchers to anyone in their loyalty club who spent over a fairly low amount in the last quarter – $100 or something, I don’t remember the exact figure. Another company gives 1% of all purchases back as store credit.
My point is: where possible, try to set up your rewards system to pre-empt the unhappiness that will cause customers to try to game the system. If fewer people become unhappy in the first place, you don’t have to worry as much about applying your customer retention policy near the end of the customer relationship, where it takes more work or money to fix things.
It’s a bit like that story about a local who lived beneath a sharp bend on a mountain road, and put a lot of time and energy into rescuing tourists who took the bend too fast and drove over the cliff, crashing their car. One month, he noticed that the need for his services had dried up, so he hiked up to the road to find out what was going on. He discovered that the council had installed concrete baffle fencing to keep cars from going over the cliff in the first place. They intervened earlier to stop the problem progressing.
