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Brands blasted for prioritising new customers over existing ones

10th Jul 2014
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There’s nothing like asking your customers what they think of you. Except when they come back with a damning verdict.

What’s worse is when customers come back with a damning verdict about businesses as a collective, something The Grass Roots Group has managed to achieve by surveying 2,500 UK consumers about their broader opinion of brand loyalty and customer retention.

As it turns out, customers don’t think brands care too much about keeping hold of them. In fact nine out of ten survey stated they felt brands put more effort into attracting new business as opposed to focus on retaining loyalty, will 49% said they often switched providers because of the lack of incentives dished up to them once tying into a business or product.

55% cited loyalty rewards as an important factor in deciding whether to stay with a provider, yet despite this, too often brands are failing to even consider implementing a customer retention plan:

“Brands are becoming complacent when it comes to customer retention,” says Ian Horsham divisional director, promotions and incentives at The Grass Roots Group.

“They concentrate too much on securing new customers, leaving others to feel undervalued. With the cost of customer acquisition five times greater than keeping existing customers happy, this strategy could have a huge impact on revenues and future business success. A loyalty scheme should go hand in hand with a new customer programme, as a key part of retaining them once they have made the decision to switch.”

With this in mind, Horsham suggests there are five key principles for executing an effective customer retention strategy:

1. Ease of redemption

Rewards must be quick and easy to redeem, without any high level of effort on behalf of the customer. Vodafone Freebee Rewardz is a prime example. By offering customers lifestyle rewards and point based loyalty schemes, it is making the incentive easy to redeem, with the financial benefits instantly available for customers to see.

2. Reward choice

There is no optimal number of rewards that should be offered, as this varies on a programme by programme basis and is driven by factors including the spread of customer demographics, budget and programme objectives. New rewards can be trialled on a tactical basis to assess impact on customer behaviour and the most important thing is to remember they must be relevant to the audience and something they really do want.

3. Maintain excitement

Customers tend to get used to loyalty programmes quickly, so it is important that a reward scheme does not become too familiar. Customers can also, over time, begin to view loyalty rewards as an entitlement rather than a gift.  This can be avoided by regularly refreshing or enhancing a programme so that there is always something new to please and engage the customer.

4. Surprise and delight

Providing a reward that a customer isn’t expecting can be a very powerful tool. By giving customers an incentive to win as they spend, the perceived value and memorability of the brand is amplified. With Lloyds Everyday Offers, current account customers have the chance to earn up to 15 per cent cashback from places they already regularly shop at.

5. Communication and engagement

Effective communication is the key to the success of any loyalty programme. It is important to ensure customers understand the initiative and value of what they are being offered. Points statements, reward reminder emails and programme enhancement updates are simple and effective ways to drive customer engagement and cement the ongoing bond with the brand.


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