customer retention

Fixing the Customer Retention Problem

Customer retention is intrinsic to the success of any business, whether it’s a startup or an established brand. Retained customers reflect how well a company provides a product, service or experience and a customer’s commitment to continue patronizing that business.

by Rick Kelly

For a brand to have longevity, keeping existing customers is even more vital than acquiring new ones since they spend 67% more.

The Decline of Brand Loyalty 

A key element of customer retention is how loyal customers remain to a brand. As the last stage in the customer journey — the steps consumers take to make a purchase — loyalty is the stage all brands aspire to reach because it shows a consumer identifies with a company enough to continue choosing it over its competitors. For example, Apple loyalists: Despite myriad cell phone manufacturers on the market, some consumers choose to only buy iPhones, regardless of price, convenience or features. 

But this level of loyalty is waning with today’s consumers, much to the dismay of brands everywhere. According to McKinsey’s 2022 Consumer Pulse survey, more US consumers reported switching to different brands and retailers in 2022 than at any time since the beginning of the pandemic — and about 90% say they intend to continue doing so. Factors like rising inflation and novelty (shoppers wanting to try something different) now influence customer buying decisions. And with more options readily available, thanks to online shopping, customers are exercising their right to choose, seemingly abandoning brand loyalty. 

To avoid losing customers, brands need to know exactly what their customers want in a product, service or experience and provide that for them. And that’s where market research comes in. 

With market research, brands have a direct line to their customer bases, which results in actionable insights they can leverage to make better business decisions right when needed.

Brands must conduct market research through surveys to understand and retain their customers.  

Use Surveys to Understand Target Customers

When brands need to get to the bottom of what their customers want, surveys can be their greatest asset. Surveys allow brands to find out from the source (their customers) what constitutes a satisfying experience for them.

A range of available surveys can assist brands in gaining in-depth knowledge of a customer, such as customer satisfaction surveys (CSAT) or net promoter scores (NPS). CSAT surveys measure how happy customers are with a product or service by asking questions that gauge their satisfaction from “highly satisfied” to “highly unsatisfied.” NPS surveys use a scale from 1-10 to determine how likely a customer will recommend (or promote) a brand to their family or friends. These surveys can help brands uncover vital information about their customers’ preferences, where and how they shop and how much they’re willing to spend.

With this data in their arsenal, brands can start developing marketing, product, sales and customer service strategies that fit customer preferences.

Use the Survey Data to Create Customer Segments

After collecting survey data, it’s time to segment customers. Although every customer has individualized wants, needs and behaviors, these characteristics can still be grouped with other customers based on their similarities. 

Some segments include psychographic segmentation based on a customer’s intrinsic traits,  beliefs, values and interests, and behavioral segmentation, which involves learning what customers do during the buying process, the attitudes they hold toward a brand and their knowledge base. 

Effective customer segmentation makes it easier to personalize content, optimize marketing efforts and boost sales. With customer segmentation, brands can prioritize key audiences because they can pinpoint who their most loyal customers are and who rarely engages with their brand, focusing marketing efforts where they matter most.  

Use Customer Segments to Construct Personalized Experiences

Finally, with customers segmented, brands can construct personalized experiences — a must-have for the modern shopping landscape. Today’s consumers want shopping experiences, marketing messages and their overall customer journey tailored to their unique needs. In fact, 71% of consumers expect companies to deliver personalized interactions, and 76% get frustrated when this doesn’t happen.

Customer segmentation lays the groundwork for reaching the right audiences at the right time. For example, after a customer has purchased a product, brands can send marketing emails and related product suggestions based on what they’ve bought to entice them to buy something similar. Personalized emails can also be sent to customer segments based on gender or age, creating a relevant experience.

Retaining customers is essential for a brand to remain in business, but it’s even more critical now that consumers have a surplus of shopping options available. Customer retention goes hand-in-hand with brand loyalty, and inspiring customers to remain loyal requires brands to know exactly what their key audiences want. With market research methods, like surveys, brands can get the actionable insights they need in order to understand their customers and continuously provide them with a product, service or experience that resonates with them, retaining them for years to come. 

Rick Kelly is the Chief Product Officer at Fuel Cycle. Rick has been with the company since May 2014 and headed multiple departments in both its NYC and LA offices. His passion lies in positioning Fuel Cycle as a leader in the insight platforms space through innovative products. Prior to his tenure at Fuel Cycle, he held roles at First Opinion, a medical technology company, taught political science at BYU-Idaho, and worked at Survey Sampling International. Rick holds an MS in Political Science from Utah State University and an MBA from The University of North Carolina-Chapel Hill.

Photo by Rahul Lal on Unsplash

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