I remember sitting in the brand-new conference room of an emerging consumer brand client who had just retained me to help the organization break through a growth plateau.
Identifying the Challenge: High Customer Churn
As I listened to the management team discuss marketing budgets and the high cost of acquiring new customers, I quickly identified one of their major challenges: high customer churn. I asked about the churn rate and whether there was a plan focused on building loyalty and retention with their current customers.
The response I received was fascinating: “We just have a discount bucket that we use to email our current customers. We spend most of our budget on new customer acquisition, and email is free.” This perspective is surprisingly common, but it’s always a mistake.
I soon discovered that the current sales plan called for 40% of sales to be generated from repeat customers, yet only 5% of the marketing budget was allocated to loyalty and retention.
Probing further, I asked, “Why do customers stop buying from you, and what incentive is there for them to keep their business with you instead of switching to your competition?” Needless to say, I was met with several blank stares.
Their growth plan was missing foundational elements: serious investment, focus, and action to build customer loyalty and retention, which are key drivers of repeat sales and increased referrals.
Lessons from Apple: Building Unmatched Loyalty
One of my favorite examples of a brand with massive loyalty is Apple. Apple fans go to extraordinary lengths to demonstrate their love for the company, such as spending hours camped out in line for new product releases, passionately defending its products, and even getting tattoos of the Apple logo.
Apple understands how to captivate its customers by turning product reveals, sales, and launches into exclusive events and delivering outstanding omni-channel engagement throughout the customer journey. While it appears effortless and natural, don’t be fooled – Apple invests heavily in building loyalty, both financially and with significant resource allocation.
The Importance of Customer Experience
It is critical to understand and focus on your customers’ experience with your brand, products, and services. Do you know how your customers feel when interacting with your business? If not, it’s time to start asking and listening. This understanding is extremely important. The more positive your customers’ sentiments are, the more loyal they will become.
Repeat Customers and Referrals
Loyal customers are repeat customers, and they also refer new customers to you.
Make interacting with your business and purchasing your products or services a delightfully memorable experience. Your customers will keep coming back for more.
