Customer Retention Strategies: How to Get Uncommonly Loyal Customers
Working with the customer file for a client in the for-profit education category, our agency did some audience profiling using carrier route, census and other appended data that revealed "best" customer definitions and sources. This data was easily ranked in a .zip file (ostensibly dropping the bottom performing segments), in turn enabling a geo-targeting test. While it doesn't happen every day, we were able to halve circulation and double response.
That's a good start. But in most businesses customer loyalty isn't even a possibility until after the second purchase. That's the second job — the beginning of a true relationship and the potential for loyalty. Most companies struggle to increase their number of repeat customers. They focus on acquisition to the detriment of customer development and loyalty building. Did you know that customer loyalty poster boy Zappos.com enjoys over 75 percent of purchases from returning customers?
Zappos has very loyal customers and extraordinary word-of-mouth (WOM), yet no official loyalty program. Remember that recency is the most powerful variable in the basic recency-frequency-monetary (RFM) formula for segmenting customers and customer retargeting. Zappos delivers on the power of recency even before its first customer retargeting effort.
Millions of Zappos' customers know that there's no added cost for ordering several sizes of several styles of shoes and returning the ones that don't fit. That's standard for all customers. What earns Zappos stellar reviews and WOM (not to mention one of the highest Net Promoter scores in the industry) is the way it consistently delights customers with free shipping upgrades so their shoes arrive sooner than expected. Zappos is delivering on recency by delivering the order faster. Of course the shoe has to fit (i.e., the product or service has to be good), but great service extends to every touchpoint, including one of the most overlooked: not just free shipping, but free and fast shipping.
Zappos' success is due to its emphasis on repeat customers and customer service. Zappos calls its salespeople customer loyalty reps because they're dedicated to serving customers first, and are encouraged to make emotional connections with customers on the phone.
It's interesting to note that while other companies are trying to reduce time on the phone, move telemarketing services offshore, shift customer communications to automated email, etc., Zappos displays its 1-800 number at the top of each of its web pages. Zappos wants to have conversations with its customers!
As Tony Hsieh, CEO of Zappos, said at a Net Promoter conference, "as low-tech as it sounds, the telephone is one of the best branding devices out there. You have the consumer's undivided attention for 5 [minutes] to 10 minutes. If you wow them during that interaction, that's something they're going to remember for a very long time and tell their friends about."
It's this emphasis on communicating with and wowing its customer, more than anything else, that defines Zappos.