Home » Industry » Sing, Eat, Drink Customer Retention [column]

I was pleasantly surprised – who can still do that in this environment. I actually do not remember the day I filled in information of my preferences, I only remember putting down my name and contact details for a donation I had made to their shop. Ok, disregard how they got some of these finer details, just-in-case they hired their mafias to track me. And that is it for me ladies and gentlemen, they have won me over, their shop will be my first port of call for my dog food needs.

And guess what, I will recommend them to the ladies in my circle, even to our crocheting club that has ladies that seem to have so much time on their hands.

With the way things are going, I have put customer retention on my top list. I sing, eat, drink customer retention. I cannot afford to have any one of my customers move to the next competitor.

There is a direct relationship between my company’s profitability and retaining our customers. Each company differs from the other, I would not recommend a one size fits all approach.

Who would ever forget the British Airways debacle in which the European Commission recently found BA guilty of illegal sales practices and fined them pound4,5 million. BA was found to have abused its dominant position in the market by offering fidelity bonuses to travel agents who converted the large numbers of passengers to their flights. Yes, it was a way of retaining customers but according to British standards, that is unethical.

In this country where we are talking about business ethics, this rule does not apply promotions are even being done in support of such kind of practices.

Remember its not every customer that deserves to be retained. So you need to put them in categories. In our industry, the proven fact is that only one-third of buyers account for at least two thirds of the volume of our sales and this high profit segment delivers six to ten times as much as the low-profit segment.

I am no longer running after my brand having the biggest market share, its not always the case that if you have a bigger market share you are more profitable. We have discovered that running after profit pays more than running after a huge market share.

In this age, instead of focusing on new products, we have set up a department that is sorely responsible for giving attention to the existing customer.

It is no coincidence that these suppliers of my dog food found out about my coffee preference. We have heard the gospel that it is cheaper to retain an existing customer than a new one – its still holds true. Retaining a customer should be a deliberate strategy it should never be a result of a good marketing management.

How then do you pursue retention? Can we pursue a strategy that looks at the number of customers for a particular product or the value or volumes the customers make?

If you are a firm that sells standardised services such as Digital Satellite Television services which has a predictable and uniform pattern of usage or consumption and large numbers of users, you can then place customers into categories that share similar expected switching behaviour, spending levels and customer profiles.

Customers generally have different spending powers and behaviours. It is not unusual to have a small proportion of customers to account for a large proportion of company revenue.

Try it, its not difficult to measure the rate at which we retain customers- just take the chunk of the customers that have stayed with you and make it a percentage of the original number over a specific period, for example within a year.

How do we determine a period ? Some products, such as cars, clearly have longer purchasing cycles than others, for example tyres.

It becomes a different ball game for example with companies that have multiple suppliers. If for instance The Herald, needs to purchase newsprint, they may buy 70 percent from a main supplier and the remaining 30 percent from three separate suppliers.

Create value added benefits to retain your customers instead of divorcing them when you give them a receipt, make follow-ups and find ways of still having relevancy within their lives.

Know your customer loyalties, while some customers will defect for a 2 percent discount in price, others will not move for a 20 percent discount.

Remember that the customers who glide and get enticed by your minimal price discount are the same customers who dance away with someone else at the slightest enticement.

Did you know that retaining a customer that purchases luxury vehicles from you is easier than one that purchases cosmetics?

Bear in mind that there are some services that you don’t need a strategy for. For instance funeral services, its most unlikely that one customer can purchase that service repeatedly.

Till next week, may God richly bless you.

Shelter Chieza is an Aisor in management issues. She can be contacted at shelter.chieza@gmail.com

Source : The Herald