Loyalty was a brand’s best asset for surviving the economic downturn in 2009. And for good reason: loyal customers cost less than acquiring new ones.
We are now facing a similar economic downturn with speculation of a recession. Only this time, we have a new generation of marketers who haven’t lived through an economic crisis. Rather, it’s been a couple of years of unprecedented growth. But now, we are seeing it all in reverse. Inflation and interest rates are going up, and discretionary spending is going down—which leaves you wondering: “What’s going to happen? How will this affect me? What are our priorities?”
The concept of CRM has become a hot topic again too. This makes sense, given that a CRM in itself is a low-cost ability to mine, manage, and monetise your database.
But there are two sides to a CRM you must consider—the technology and the practice.
- Technology provides the storage of your customer data and automation capabilities to activate against it.
- Practice is what drives the relationship through sales, service, and marketing strategy.
This article speaks to the practice side of CRM, and the levers you should manage to help push you into a better position than most—particularly important in times of economic uncertainty.
#1 Implement RFM Segmentation
Within your CRM practice, you are building relationships with customers. The key advantage of a Recency, Frequency, and Monetary Value (RFM) analysis is, it guides you on how to build value-based relationships effectively, based on the customer’s engagement and intent. You’ll be able to understand who is engaging with your brand, how often they are purchasing from you, and how much they are spending. Understanding this data helps you determine your most valuable customers (i.e. the customers you should prioritise in your marketing efforts).
Blending your RFM segmentation with core customer measures such as CSAT, NPS and other qualitative indicators will provide you with the ability to not only understand who is the most valuable for the company, but who are the biggest advocates.
#2 Define a Customer Contact Strategy
You can still have a loyalty strategy without a membership program. Loyalty is an outcome of how you choose to contact and engage with your customers. To this point, defining a contact strategy for how you manage the frequency and connectedness of all your customer communications is essential.
What channels are you using? What’s the message? And what was the latest touchpoint? Having a good understanding of how, what, and when you contact a customer is the key to knowing what the next offer or personalised product will make sense for them.
#3 Identify & Patch the “Leaky Bucket”
The leaky bucket theory is simple: you can lose customers just as quickly as you acquire them. Data suggests it takes more than 5 purchases (37%) for a consumer to consider themselves loyal to a brand. This is where brands often tip the balance between acquisition versus retention efforts. Typically, it’s favouring the former. Considering increasing acquisition costs, identifying where your customers are churning is essential for improving your brand's customer lifetime value.
Becoming more data-driven in their method of contacting supporters played a key role in Movember reducing churn. The Lumery worked with Movember to address key retention and loyalty problems with a new customer journey framework. This uncovered a more transparent understanding of the multiple stages of the fundraising lifecycle. This ultimately helped Movember identify the right touchpoints to unify their experience and encouraged supporters to act.
#4 Refine the ‘Moments’ That Matter
Let’s take an onboarding experience as an example. We all know that first impressions count, so how is your brand working to refine their onboarding experience?
This is where brands often walk the dangerous line of taking their customers for granted. A great customer retention program needs to focus on being human. Ensure your follow-ups are meaningful but also remember, your retention efforts shouldn’t stop at a genuine thank-you.
The same applies at any stage of your customer's lifecycle. Further refining those key interactions a customer has with your brand and ensuring the value exchange is equitable for that moment in time will help fuel your customer retention.
#5 Build Experimentation as a Business Function
Optimising your communications and touchpoints can be a game changer when it comes to gaining a deeper understanding of the customer and how you can best serve them. This is why being able to scale up your optimisation efforts is crucial. Of course, this is easier said than done.
To build experimentation as a business function within your organisation, The Lumery focuses on these five pillars:
- Mindset and culture: being able to foster an environment where it’s not about providing opinions or changing another coworker’s design or strategy. It’s about enabling others with the knowledge, tools, and process to take educated risks.
- Connected technology: connecting your data with technology removes experimentation barriers. Teams can test algorithms, offers, search results, and business models.
- Scale via process: it’s not about building bigger teams and doing more things. Instead, it’s tweaking the methodology of how you deliver, enable, and educate the teams for scale.
- Insight led experiences: removing biased opinions, every decision should be insight-led and grounded by data.
- Framework-based strategy: it’s about creating repeatable strategic patterns that others can adopt. Cue: frameworks.
While an experimentation culture isn’t built overnight, the consistent practice of it within your organistion is essential to helping you improve your customer experience across all channels and journeys.
You’ve got the technology. So instead of going in and investing in more things— marketers must push what they have to the absolute limit. Look at what is working and see how you can maximise that.
Value retention over acquisition. Look at every single return on investment. And deliver on your brand’s promise.