Let's talk about rewarding retention vs acquisition, shall we?
[Lily's Disneyland Surprise….Again!] Scene: Stunned look
The other day, I was ordering groceries online and a pop up told me that pickup was now free
with a specific code.
Fantastic, I thought, and copied it for checkout.
I went through and added all of my items and went to check out, then put the code into
the form and then... I got a message saying,
"Sorry, this coupon code is only for first time pick up customers."
WT[bleeeeeeeeeeeeep?!]
The Thing, "Well [bleep] you, too!"
So, what you are saying to me in that message
is that your NEW customers are more important than your REGULAR, loyal customers.
Diff'rent Strokes, Arnold: "What'cha talkin' bout, Willis?"
In this week's episode, I'm going to talk
about the importance of retention AS WELL AS acquisition and how to reward loyalty.
My name is Tara and this is …Truly Social.
Let's start with the fact that your existing,
loyal customers are worth more than the people out there who could give a flying snake about
your business.
Yes, you still want to attract them and grow your customer base, but here is why ignoring
your existing base is a bad, bad, terrible bad idea:
Wonder Woman, Steve Trevor: 'This is a terrible idea'
#1.
Selling to an existing customer is MUCH easier than a new one.
Your existing customers are 51% more likely to try new products and spend 31% more on
your business than new customers.
The likeliness of selling to an existing customer is 60-70%, versus new prospects: only 5-20%.
Selling to existing customers is much easier, because, well, even if you aren't perfect,
switching costs are a BIG consideration.
As the saying goes, "Better the devil you know than the devil you don't."
So, in essence, you just need to remain competitive because
once the benefits of switching outweigh the costs, you'll lose them, and forever.
Titanic, Rose DeWitt: "Come Back! Come Back!"
#2.
Existing customers are less expensive to sell to.
It costs 5x as much to bring in a new customer
than to upsell your existing ones.
Think of all of the tools you have available to you to deepen your relationships with your
existing customers: email, social media, content, loyalty programs, customer service, + more
They are quite a bit less expensive than acquisition tools like ads, paid search, direct mail, etc
It's also much simpler to sell to the converted.
Jerry Macguire, Dorothy Boyd: "You had me at hello"
#3.
Loyal customers drive sales through Word of Mouth.
If I am a loyal customer and enjoy my experience,
I will tell others.
And that is worth more than any ad.
In another video, I talked about how word of mouth accounts for 13% of consumer sales
(or $6 trillion in annual consumer spending), which is 5x more than paid advertising.
That word of mouth comes from your current customers.
NOT influencers, which are more and more considered paid shills.
Wayne's World, Garth, "It's like people only do things because they get paid.
And that's just really sad."
Overall, according to a study by Bain & Company,
increasing customer retention rates by 5% increases profits by 25-95%.
And most importantly, if you don't treat your existing customers right, you will have
to spend more to replace them.
As well as to acquire new ones! (that's double the expense fyi ;P)
So, focusing as much, if not more, is incredibly important.
But then how? How do you retain customers?
Well, I'm glad you asked.
Here are just a few ideas:
Now back to my
grocer who offers free pickup for new customers spending at least $100 in a coupon form...
Well, they could also offer the same to existing customers who spend $100.
Amazon, who is hot on the trails of any grocery chain offering grocery delivery, is sure to
be DELIVERING for FREE with Prime in the very near future pretty much everywhere.
Don't see the coupon as a cost centre.
See it as a loyalty benefit.
BTW, It'll also encourage me - and others - to add a few extra things to the cart
that we may not need to meet the minimum threshold.
Prize Winner of Defiance Ohio, Evelyn Ryan: "I think we should split up. I'll take the frozen section,
you two take the European food aisle."
#2. Reward loyalty with special inside offers,
trials, content and personalized service.
The more I shop with you, the more you know about me anyway.
Why not increase my switching costs by customizing my experience?
#3. Another idea is to gamify the experience and allow me to level up.
Sephora does an amazing job with this.
Now, I have VIB Rouge Status, which is pretty high.
And I don't want to lose it, so I tend to splurge a little more - and a little more often on items
to keep up my minimum spend.
I get invited to exclusive events, launches, and get a special fancy card to show my status
because of it and it really does incentivize me.
...and that doesn't really cost Sephora much of anything.
Up in the Air, Alex Goran: "Hilton offers better value and better food, but the Maplewood
gives out more cookies at check-in." Ryan Bingham: "They got you with the cookies, did they?
Alex Goran: "I'm a sucker for simulated hospitality."
#4. And finally...LISTEN.
This is the easiest thing in the world.
Listening will give you edge over the competition and make your customers really, really happy.
And happy equals loyal.
Those are just a few ideas and I'm sure
many of you watching have more.
Please leave them in the comments and let me know yours!
And speaking of loyalty...
If you enjoy my videos, please subscribe and click the bell to get notified when I
post more.
My name is Tara and this has been …Truly Social
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