As retailers forge ahead with their holiday marketing and sales strategies, it’s critical to remember the importance of customer loyalty and its impact on business performance.
Research has repeatedly found that customer experience has a significant impact on customer loyalty. In fact, it takes five customers recommending a business to others for a company to land just one new customer, according to an article in the Financial Post.
However, it only takes two disgruntled customers speaking negatively about a business for that company to lose one customer.
Additionally, customers rarely patronize a company because it delivers over-the-top experiences, according to the provocative article, titled “Stop Trying to Delight Your Customers,” published in the Harvard Business Review.
However, customers frequently cut ties with companies because of lousy experiences.
The research in the article supports the point that “loyalty has a lot more to do with how well companies deliver on their basic, even plain-vanilla promises than on how dazzling the service experience might be.”
These are important considerations for retailers, both now during the height of the holiday shopping frenzy and going forward. Retailers that make it easy for customers to shop with them, including those that offer straightforward return policies, stand to strengthen the loyalty of existing customers and attract new ones through word-of-mouth recommendations.
Retailers and other companies can further strengthen customer loyalty by using data analysis and data discovery tools and techniques to better understand their customers’ likes, dislikes, preferences, needs, and interests.
Business leaders can use this information to determine what matters most to specific customers or customer segments. Then they can tailor offers and messaging to them in a way that leads customers to appreciate that the company knows who they are and what their needs are, helping to strengthen customer satisfaction and loyalty.
Another proven technique to strengthen loyalty is making the overall shopping experience easy for customers. This includes making it relatively simple and painless for customers to return items, which is a critical aspect of the holiday shopping experience.
“Focusing efforts to improve and manage customer returns actually increased overall profits, even during tough economic times,” notes UPS’ David Winzelberg in a recent Forbes blog post.
Of course, it’s also important for retailers to use data discovery, data analysis and predictive analytics tools and techniques to predict which previously “loyal” customers are likely to churn and why.
Marketers and other retail executives can take this a step further and determine which customers are worth trying to retain (and at what cost). They can also determine the types of offers or actions that will likely convince them to remain in the fold based on historical results and other information.
In addition, data analysis, data discovery and predictive analytics can also be used to predict whether certain types of offers made by a company’s competitors might lead some of its customers to jump ship. Applied further, these techniques can help identify approaches retailers can take to get in front of customer defection before it occurs.
