Customer Retention: How to Get It Right
Customer-centricity, a unique value proposition, and loyalty programs - strategies to ensure customer retention
Customer-centricity, a unique value proposition, and loyalty programs - strategies to ensure customer retention
Moderator: So we hear this a lot, consumer insights, customer insights, but really what do we mean by consumer insights? And how do they impact or influence customer retention and business growth?
Nicola Fox: The reason the insight has become more and more important to me, certainly over the last 10 to 15 years is because we’ve really got to understand our customers better. If we talk about growth, what do we need for growth? We need more people spending more money or using what we do more, more of the time. And in order to be able to do that, we can’t continually chase ourselves to the bottom on price or quality or service.
We have to find what we do for our customers, what it is that makes us special and insight is the key to that for me. Data leads to insight and insight tells stories and stories are the things that bring that to life and help different areas of your business understand what they can do to make a difference to your customers.
So that for me is what insight means and why it’s really important to have it.
Nick Bottai: It’s not an easy question for me to answer because customer insights for me means a lot of things. First of all, I do marketing and branding, and I understand the customer insights for quantitative data, how many open rates, how many engage etc. But then what I really want to focus on when I look on the customer retention is, what perception does the customer have of my brand?
This is what I’m really focused on because customer retention, I think we can explore it better later. And loyalty for me comes from one thing that is branding and how the brand is perceived. So my customer insight when they want to do customer retention is really looking into that. Data is great, we see lots of data today, but are we able to treat them in the right way and to get the proper meaning?
This is the biggest challenge for me and this is the biggest challenge I think for my team. And if you have a solution or if any of you have something better to teach me, I’m really open to that. What we are trying to do is trying our best, because understanding the customer behavior is not so easy.
Data doesn’t provide us with everything. I think actually they’re a little bit overrated. We need to go back to the basic and understand the psychology of our customers, data can’t give us that.
David Kohn: My first job was as a management consultant and I wrote this beautifully crafted report. I was fresh out of university, writing essay after essay. And I wrote this report and I handed it to my manager and it came back about three hours later, red ink everywhere. And he just said, ‘so what?’ in about 50 different places. And he put on the end of it and in capital letters it says, ‘Make sure this passes the ‘so what’ test, it doesn’t right now.’
And that is my view of a lot of customer insight. It’s one of the most unfocused areas in most organizations is people think they’re getting insight, but they’re not getting actionable insight. I’ll try and identify three areas where I think insight is valuable and where when you’re looking for insight, these are things you should be thinking of.
The first thing is prioritization. It’s very interesting what Louisa said, ignoring the shiny things and focusing on the big things. Use insight to help you prioritize. For example, if you’ve got a website, see where the people actually are, see where they’re dropping out. Try and understand why they’re dropping out.
Don’t focus on the little things. There are so many things that your boss, or your peers, or even yourself will want to focus on. The first thing to use insights for is to prioritize on the things that are important. The second thing I’d say about insight, slightly different point of view here, and particularly to when it relates to customer retention, is there’s a massive focus on CRM and imagining that you know each individual customer. My view is that it’s massively overestimated, but what’s underestimated is developing insight into where the customer is in their journey right now.
The fact that once upon a time I bought a really expensive sofa from Heels, it’s irrelevant right now. If I’ve gone online and I’ve searched for a dining table, that’s extremely relevant. And if I’ve gone onto the website or I’ve gone into the store and have engaged in an interaction that’s incredibly relevant, so I’d say maybe underestimate CRM a little bit and this sort of understanding the customer, but overestimate understanding where the customer is in their journey.
And the final thing I’d say, which accords with what Nick said is the best way to get insight is to do stuff. If you are sure about something or if you are relatively certain, my advice is get on and do it and see what happens.
If you are unsure, still do something. Because by doing nothing, by trying to dot the I’s and cross the T’s, you will waste time and you’ll learn an awful lot more. You’ll get an awful lot more insight if you do something and see what happens than if you do nothing.
Chris Emerson: I agree with that completely. I think a lot of companies in the traditional retail space panic when they see new startups and go ‘oh my God, we’ve got no idea.’ Get some systems in, bring some analysts in – brilliant, we know our customer. And it never becomes actionable. It’s not linked to any business purpose or strategy. At Revoola, we are tiny.
We’ve been going a few months. We’re a handful of people. But we’re aiming at a market that has never been pitched at before, which is the 85% of people that don’t use, never want to use a health and fitness and a wellness and mental health app. So we don’t know our customers at all. So we have to find out a little bit about them and retention for us is two things.
We can’t retain them if they don’t use the product, their employer has bought this for them. We have to then reintroduce ourselves to their employees, our users. So retention starts with engagement. Why are we different? Why would you use our product? And then it’s learning about how they use our products.
And in the tech business, particularly health and fitness, there are an awful lot of founders’ products, for the founders and their mates who like running and cycling. And they’ve got customer engagement departments who are ignored and they’re shouted down in the office by the highest paid person in the room.
So we are not like that. Our product is built around the consumer and every development and enhancement will come from what we learn from those customers, but you have to keep it simple.
Moderator: Amazing, thank you. Now let’s move on to customer centricity. We all know that customer understanding is the cornerstone really for customer centricity. A lot of brands talk about being customer centric, but um, there’s one talking about it and another being actually it. So I want to ask you guys, what does it take for a brand to be truly customer centric? I’ll start with you, Chris.
Chris Emerson: I touched a little bit before I think. Our product development will come from what we learned from our customers who are school children at 13, and adults at 75-80. That’s a very broad and different market, but we certainly can’t dictate what they need.
We have to listen to them and learn, but in a simple way. If we get reams and reams of data that comes back, we can’t do anything with it. And to your point, we’re gonna try a lot of stuff. We’re gonna get a lot of stuff wrong, but at least. We’ll learn and it’ll become iterative. But the customer is at the heart of that, not somebody’s very loud opinion of ‘I know what works best here.’
Nick Bottai: For me it’s not about customer centricity, it’s about people centricity. Customer centric is not a strategy, it is a mindset. And a lot of companies run the strategy of being customer centric. Sorry, it’s not a strategy and you can spot that immediately when you have a sales pitch. When we speak with the company, if it is a strategy or a mindset, you can spot it and immediately you know that they’re trying to sell me something that is not true.
By saying so, it means customer centric as a mission or as a mindset is really difficult to achieve. It must be brought to the company, educate your team, educate the board and do everything around that. If your mindset is that there are no silos in customer service, operation, marketing, you realize that everything runs around the customer.
It’s easy to speak about, but not so easy to make, to implement it. It’s a never ending implementing mindset. So why say that people are not customer? Because the company is made from people. Every company must be people centric, starting from the employees going to the customers, and then the customers appreciate what they do and the employees benefit from it.
And then employees are more happy and provide more value to the customer. This is my circle of people centric mindset.
Moderator: Interesting, thank you. So it has to come almost like within the company. Nicola?
Nicola Fox: I couldn’t agree more. I think what I feel, and the part of the reason that I do what I do now is because it is cultural. It is about whether businesses are not only interested and keen to do what their customers want, but actually organize themselves and strategize and deliver for what their customers want and what their customers demand from them.
And so, it kind of comes back to the first question of ‘what does it take?’ Well, the reason that that data, that deep understanding is important, is because you can’t do stuff for your customers if you don’t know what it is that you need to do. And that will come from lots of different places, not just sales, not just digital marketing, but actually speaking to those customers and actually observing what they do when they interact with your brand.
But most importantly, and I think it touches on what you were saying, Nick, it’s got to be cultural, it’s got to be embedded within the business. The people that you are employing are really excited and keen to understand how your customers live their lives, what your customers do, how much your customers love you, the part that you play in their lives, then you can’t really start to deliver for that.
So I think customer centricity is about just loving people and what they do, even when they’re the things that you think ‘well, that’s really inconvenient, because I didn’t actually want to have to do that with my business.’ So it’s not just about kind of thinking, oh, well, maybe we’ll make this offer available in store as well as online or maybe we’ll make it available on the app.
It’s actually about thinking, how do I make the lives of my people and my customers easier so that they choose me every time?
David Kohn: I’m guessing that none of my fellow panelists have ever run a customer services department. Customers are horrible, and they want everything and they prefer if it was free. So being totally customer-centric is not a profitable strategy. And in fact, it was interesting in, in Louise’s presentation, the six examples, I’m pretty certain, with the exception of Amazon, none of them make any money.
But on a more serious note, for me there are two questions you’ve got to ask yourself in order to be customer centric. It’s a term I hate. It’s very cliched, but it is important. The first thing is, as most people have said, is what are you doing as a brand, as a business with your products and services to enhance the lives of your customers?
It may sound a bit trite, but there’s a value exchange. They’re paying you something and you’ve got to be giving them value, whether it’s a product that does something for them, whether it’s happiness, whether it’s fulfillment, whether it’s simply feeding them and making them feel good. So you’ve got to be sure that your brand is delivering something of genuine value to people’s lives, and preferably something that isn’t exactly the same as somebody else is doing.
That’s the substance. The other thing, which I think is almost equally important, and particularly when looking at a digital audience, is think about the process and it’s how easy are you making it for people to access and extract that value. You may have an incredible product, but if the process of buying it is difficult, if the process of selecting it particularly, I mean, if anybody here has bought anything complicated recently, it’s almost impossible to buy any product that is complicated.
The easier you are making the process, therefore enabling the customer to get the value of your product and service the better. So think about the substance, think about the value you’re adding, but also think about the way in which you’re enabling your customers to access it and extract that value.
Moderator: Thank you, David. So I’d like to pivot the conversation towards consumer shopping trends now that we’re approaching the holiday season and obviously everyone’s thinking about how they can make sure that they acquire and retain customers.
But before that, we want to understand and we’d like to get your thoughts on this guys – do you think there will be a big change in how consumers shop this coming holiday season and into the new year? And if so, what do you think are the biggest changes in how they purchase that brands and companies need to be ready for?
David Kohn: In a word, no, there’d be no great difference, it’ll just be tougher. I don’t think there’s any fundamental change in the way people are shopping. People all went online through Covid. They’ve gone a bit back to stores or other channels in the meantime. I think what I do see happening is, is there will be a squeeze on the the middle or a squeeze on the ordinary.
Value will do well, it always does in a recession and premium, super premium will probably do well as well because people will still treat themselves. But if you are sitting in the middle and you are ordinary, you’re really going to struggle. The other thing which may be a slight nuance to the way in which things will happen, it plays back to Louise’s point about being helpful. As I said, for me the biggest problem we have is choice paralysis. You are faced with thousands of retailers, tens of thousands of products. I searched for a 52 inch TV recently, or that there are 5 billion records on Amazon. If you try and narrow it down to 52 inch TV reviews, there’s about 500 million.
It doesn’t really help that much, so I think helping customers make the right choices, whatever business you’re in, if you are able to genuinely help your customers and give them the impression that you’re helping them, I think they will appreciate that more in the environment that we are already in, but won’t get any easier for the next 12 to 18 months.
Chris Emerson: I think that’s true. There’s a lot of media overhype that you think. London, for example, is dead. Well, anyone who’s walked through, or the West end, I mean it’s just not true. Things will come off and get a little bit tougher as they have before and they will again. And the companies that come through that are those, as you say, provide value at the other end.
For us, we’re a B2B business. So similar challenges, discretionary spend down, we’re a wellness business, so we hope that, it’s particularly relevant, but it’s no different. Companies are still spending money, they’re just cheerier about it. So it has to be something that makes theirs or their staff’s life better.
A lot of the fluff gets cleared away, you’ve just got to be even better at what you do.
Nicola Fox: I think empathy for me is the key word. That’s probably helpfulness, but stay in your lane, do what you do well and show empathy.
And I think people will still buy, but cut the noise. There’s way too much noise. Everyone’s doing the same thing, so you’ve just got to do what you do really well and demonstrate real understanding, real empathy with what your customers need. And sometimes that’s just delivery fulfillment, things like that. It’s not always about price.
Nick Bottai: Well first of all, I’d like to ask what are your opinions on the customer behavior for the end of this year, next year? Because I don’t have an answer. I’d like to have one, but I don’t. Also, it depends a lot from the country we are speaking about, because I can tell you the UK or European or Italian or the US countries, they will have a lot of different customer behavior or customer traits.
Also reconnecting to what David was saying, I prefer to say that we should care about our customer and not help the customers. It’s slightly different, but for me that tiny difference makes a lot more sense. So I prefer to care about our customers. It’s tough and I think probably, again, like David was saying, and I agree, if you look at the Maslow’s pyramid, we can see top level people will still be buying, but then they don’t care.
They will make choices, harder choices probably. And what we can do is, we have the responsibilities as businesses to help them, is to care about them, see how can we support them properly during this, but I don’t have an answer about the customer behavior now. It’s really tricky.
Moderator: We could ask other people’s opinions as well from the audience a bit later on, but interesting on what you touched about care versus help. Could you elaborate more? Maybe give us an example of care and not necessarily help all the time.
Nick Bottai: From what I see, help is just one action. Someone has a need, I help this person, job done, that’s it. Caring is not only intervening help in that case, but also have a follow up and build a journey with this person. This is the difference for me from helping and caring.
David Kohn: If I can add to that, I think one of the things that in retail is almost entirely forgotten about and very little talked about is the after sales. Retailers traditionally walk into a shop, you walk out with something and that’s it. Online you might get somebody saying, thank you for your order, but really the retailers only really interested in trying to sell you something else.
They’re not actually that bothered about whether you enjoyed the product, whether you got something out of it, really anything to do with the after sales. And I do think it’s an area that’s massively neglected by almost every retailer, is genuine care. Did you get what you wanted out of this product?
You know, they’ll ask for a review, but that’s only so they can have a few stars on the product page. Once they’ve sold you something, they’re just not that bothered. And I think for customer retention, the more care you can show after the event that the stronger your bond will be with that customer.
Moderator: Right thank you. So in addition to customer acquisition, many brands will also be doubling down their efforts on customer retention. So I’d like to hear your thoughts on the importance of customer loyalty programs. Do brands need to have customer loyalty programs? Is it essential?
Nick Bottai: No, I’ll explain why. My background is not retail. I’ve worked in a lot of industries. I never worked in finance, but worked for services, manufacturing, food industry, hospitality, almost all over the world. And loyalty programs are a short solution, probably not even a solution.
Loyalty programs were invented probably in the 19th century by retailers because the competition was growing and so they had to retain their customers. So the company was paying the customers to stay loyal. This is the first scenario, then we have a second scenario where I think all of us or a lot of us have Apple iPhones, and you bought it one after the other and I never heard about Apple running a loyalty program, but we are loyal.
This is a second stage where the company is not paying anyone to stay loyal. And then we have the third end, from my opinion, best one, Amazon – where we pay to stay loyal. That is completely different, and we’d never imagined, I never imagined when I started doing marketing in the 90s that someone paid some company to stay loyal, completely mind-blowing.
So what is the loyalty program? I call it just branding. The value perceived from your brand, that is loyal. You want to your customer to stay loyal? Work on that. Share the value, leverage the value, and be sure that your customers, with the customer insights, perceive the value of your brand.
For me, this is a key. This is why for me, loyalty program is not just the program. Again, it’s a mission. Build your brand, make it valuable. People will stay with you, that is a natural outcome.
Chris Emerson: We started Revoola because in the tech business, particularly in the fitness space, retention levels are appalling.
Companies worth billions and celebrated as industry leaders have 3%, 4% retention levels. A loyalty card isn’t goning to fix that. It might be a loyalty program, might be one of ten or a dozen tools that you have to retention’s complex. So for us, yes, but really not the most interesting thing in terms of retention.
It’s our product starting off to be better, it’s that product then iteratively improving for what customers want. It’s all the other tricks you might use. It’s communication, both digital and physical, Louise was talking about earlier. It’s a whole bunch of things, but it’s incredible to me that really big companies celebrated a year ago, no accident, they’re failing now.
We’re just happy as Larry with a 2/3/4% retention rate and a loyalty card won’t fix that.
Nicola Fox: Yep. I agree. I’m somebody who at my time at Boots, I worked on Boots Advantage card and at Holland and Barrett I introduced a loyalty program. But the reason for that loyalty program was because we had no other way of getting any data from our retailer estate.
So I think in answer to your question, do we need them? No, not necessarily. It kind of depends on the business and the reason for putting it in place. If you’ve got no other method of gathering data, then they can actually provide you with a way to fill that hole. But I think we’ve come such a long way in terms of being able to pick up that same insight and data that we would’ve got from those 10, 20, 30 years ago.
So I suppose what I see now is a bit what you were saying in terms of it just being one part of you being able to use that to inform your loyalty or retention strategy. It’s not just about keeping customers shopping with you, but it’s about giving them that experience that makes them want to come back time and time again and that’s across the whole business.
That’s not just one department, one group of people who used to send emails and now have expanded out into CRM and loyalty. It’s about this kind of DNA that runs through the business that says we’re here to solve for them. So they can still provide an insight in areas that you might not have depending on what your business is.
But would I back 10 years on putting all of that money into producing some plastic cards and giving out points and coupons every quarter. No, I wouldn’t. But as a result, I think you need to then focus on where are you going to get that insight from? Because for marketers to be able to do stuff, they need people to target, they need technology to be able to send it out and make it happen.
And they need that instinct and insight that comes from the business. So you’ve got to kind of consider it and consider what it does for your business, but not necessarily invest in the operations and the cost involved in running it.
Moderator: I have got just one last question here. So if you could give businesses just one piece of advice on customer retention, something that they can implement immediately, what would it be?
Nicola Fox: What I would say is, this isn’t a silver bullet or a single solution/result. You need to start doing some stuff. I hesitate to say, just get on with it because of course you need to get on with the right stuff.
But at the same time, not taking action, not doing things because you’re just not sure that it’s the right thing, can equally hold you back. So start with what you’ve got. You didn’t get bad overnight. So start with what you’ve got and just evolve, evolve, evolve and do something better every day that you didn’t do the day before. I hope that’s not too cliche. It’s just kind of getting stuck in and getting some things changed and making that difference.
David Kohn: So for me it’s obviously in any business, most of you are going to be pretty resource constrained. You haven’t got enough time to do the things you need to do. Never mind the things you’d like to do. So you’ve obviously got a focus on the big things.
You’ve got to focus on delivery, you’ve got to focus on product quality. Focus on website transaction, for example. But one thing I would say that is surprisingly productive is the little things that make a difference to your customer and that get noticed. What you’ll often find when you research things that become obsessions within your own organizations, when you put them in front of customers, customers couldn’t give two hoots about it, but it’s the little things sometimes that you do that become memorable.
And a good example, I don’t know if ever you’ve shopped at Wiggle, they always used to put a little pack of Haribos in every package. It must have cost them five pence to do this. But it was something they became known for. If their underlying proposition had been shit, it wouldn’t have made any difference.
But because their underlying proposition was good, that little extra thing became memorable. It heals if you spent over a certain threshold. The Chief Exec. would personally write a letter to you thanking you for your order. Again, it’s not a big thing, it didn’t take a whole lot of time, but it introduced a bit of human to human contact easily.
And so, if you’ve got one little idea, try and find some little things that cut through and make a difference and that gets noticed by your customer.
Chris Emerson: I would say ditch the jargon. What do I mean by that? We said at the start, companies panic. They know nothing about consumer insight, customer attention. They go set something up, it becomes a silo. Everyone talks in a new language they don’t understand, aren’t we good at this? And it’s bad. Well, nothing actually happens.
This has to be relatable. It has to be deliverable, it has to be at the hearts of your business. The only way you can do that is if everyone talks the same language, understands it, and keeps it simple. You’ve hear so much jargon around this and it’s in companies and people are going, well, I think this is important, but I’ve got no clue what’s going on and nothing ever happened.
Nick Bottai: I prefer to share a story. A story that by the time I experienced it, I was too young, but now I see the value. In Italy, we have a lot of street markets and when I was really young, we are speaking about 40 years ago, we used to do shopping with my grandmother and a lot of Italian people they shout and it’s like that.
In a street market, everybody shouts to grab the new client. So there’s a lot of noise. However, my grandmother always went to a single shop, never changed. When we entered the shop, this person remembered my grandmother’s name. My grandmother had four nephews, every nephew’s name, how are you, how are your nephews, how was the school?
And this guy remembered I was doing a swimming competition and he would ask about my competition. My cousin was in a football competition and then about him. So now I understand why my grandmother never changed the shop, and now I understand why I am obsessed with customer centric and then with the value of it. Now take everything you want from it.