Building A Loyal Customer Base In The Digital World

The search for winning growth strategies has become an obsession amongst entrepreneurs and managers alike. We’re obsessed with seeing our number of users, customers and followers grow and celebrate each time we hit a new milestone. Our strategy meetings are dominated by discussions around how we can capture and convert even more leads.

While gaining new customers is important, equating growth solely to acquisition won’t translate into a successful long term strategy.

Acquiring new customers is easy, building a loyal user base is much harder and has become even more challenging in the digital age. While growing a loyal customer base was once focused on building special relationships with your top customers, today we’re missing the high touch details that can come from face to face relationships with customers. Or are we?

What people really want today actually hasn’t changed much. They want great products and devices, convenience and value. What has changed is our ability to provide what they want. Although we may not have a personal relationship with our customers, with the help of data we have the power to drive customer loyalty.

Every time a customer churns stops using a certain feature or, on the flip side, recommends your product to others, they’re sending you signals which could help you improve your product or service. The next step is to pick up and decode these signals.

Just because you can’t wine and dine your top clients, doesn’t mean you can’t drive loyalty online. Here’s how:

Spend equal time focusing on retention and acquisition. (Yes, you read that correctly.)

While the acquisition may seem like the be all and end all goal, retention is actually much more important in the long run. Your retention metrics, including retention rate, NPS and churn, give you deeper insights into how many loyal customers your product is generating and how you could improve these numbers.

For example, if you have a high number of user sign-ups but also a high churn rate, it’s a sign that something’s wrong. If you’re only concerned with driving acquisition, you could miss this important warning sign.

Not only does focusing on retention help you improve your product or service, but it also improves your bottom line. Consider these findings:

• Acquiring a new customer can cost five times more than retaining an existing customer.
• Upselling to an existing customer has a 60-70% success rate, meanwhile selling to a new customer has a 5-20% success rate.
• Research shows that, just by raising retention rates by 5%, the average business can increase profits by 25-95%

A good way to help your team focus more on retention is to implement a weekly 60-minute feedback session where your entire team gets feedback on your product’s churn challenges. Get customer success to share updates about your current clients’ use cases and the challenges/successes they’ve faced when using your product.

Simply by setting aside this time every week, you can help your team focus on the actions that will drive the most impact on your bottom line – not just your user numbers.

Activate Your Users

Every product has a ‘magic moment’. It’s that moment when your customer truly feels the value your product or service is bringing to their lives.

If you’re an eCommerce store like Etsy, this could be every time someone finds that special handmade item they couldn’t find in a normal store. Or, if you’re a seller, this could be every time someone purchases something from your online store, signaling that you’ve finally found the right audience for your products.

According to Alex Shultz, VP of growth at Facebook,

“You can go from 60% retention to 70% retention easily if you can connect people with what makes them stick on your site.”

But not all of your customers may be reaching that magic moment. Sometimes you need to guide them in the right direction to help them get the best value out of your product.

To do this you need to dive deeper into your historical data to find out what actions your most successful customers have taken and guide new customers towards the same actions.

Start by asking yourself:

• Which customers are more likely to stay?
• What actions did they take?
• Which features do they use most?
• In which context are they using your product?

For example, we found our customers were most successful when they connected at least four data points to our platform. Now during the onboarding process, we encourage each new client to select their 4 key metrics to be highlighted at the top of each report.

Evolve Your Monetization Strategy

Your product’s pricing strategy should evolve based on shifts in the market, your target audience and the insights you gain from your customers. Achieving customer loyalty while also finding the right monetization strategy is a delicate balancing act that requires testing and iteration.

This doesn’t necessarily mean you have to offer the most competitive prices if your business can’t afford it. Walker predicts that by 2020 customer experience will overtake product and pricing as the key brand differentiator. Currently, 86% of consumers are willing to pay up to 25% more for better customer experience.

Ultimately you need to pursue strategies that help your business grow, without compromising your customer experience. There are two keys to effective monetization:

Make Sure It Doesn’t Block Users From Experiencing Your ‘Magic Moment’

Taking the Etsy example, imagine a paywall existed which meant shoppers would have to pay to search for items on the site. While they may have seen great reviews and pictures of some of the items paying users have bought on the site, not seeing that special item they’re looking for will make them much less likely to take the next step.

Know What Your Brand Stands For & Deliver On This Promise

Zappos is known for its mission to provide top customer service. It does this by offering free shipping, free returns and highlighting stories about its customer service reps going above and beyond for customers in its marketing messaging. Now 75% of purchases on the site come from returning customers.

Apple is known for its beautifully designed products. Yes, you could buy a cheaper laptop or smartphone that could meet your needs, but sometimes great design makes all the difference.

Think Long Term

It’s not just about ‘engaging with users’ long term, it’s about thinking how your users can keep engaging with you long term.

Many products are built to serve an intent or need right now – so it’s important to think how often the user has that need, and how often you can offer them a solution. There are two great ways you can do this:

Generate Long-Term Value

Often the more a user uses your product and builds up data, the more valuable it becomes. You can then use this data to provide even better value to loyal customers.

For example, Spotify leverages its customer data to create personalized “Discover Weekly” playlists. The more you use Spotify, the better its algorithms get at picking up your music preferences and using that to recommend new songs. This feature keeps bringing music enthusiasts back to their Spotify account week after week.

Show Your Appreciation

Introducing a rewards program can be a great way to do this. Whether it’s ‘buy 9 coffees and get the 10th free’, or providing discounts to customers who share photos with your product on social media, your users will feel a moment of delight after a long stretch of time and fall in love with your brand again.

If you’re worried this will hurt your monetization strategy, think about it this way:

• Loyalty programs make 77% of customers more likely to continue using a brand
• 70% are more likely to recommend brands with great loyalty programs to others

In the end, whether it’s through higher retention rates or increased referrals, building a loyal customer base will have a much bigger impact on your company’s long term growth than acquisition alone.

 

__________

Sharing is caring!