The Challenge of Retaining Customers
Customer loyalty can be a moving target, one that cannot be captured by a single strategy. So say the results of survey conducted by SAS Institute in the United Kingdom in late June to evaluate the depth of customer loyalty in three major industry segments: telecommunications, retail, and financial services.
Unsurprisingly, in an era when choice is taken for granted, less than one in every five consumers identified themselves as unfailingly loyal to a single vendor in any sector. However, their propensity to choose a particular provider was influenced by different factors in different industries. While roughly two thirds of consumers identified price as the key to their loyalty to telecom providers and retailers, more than 60 percent said that customer service was their primary concern from a financial services firm.
The study took a close look at the use of loyalty cards to retain customer interest. "The loyalty card itself doesn't generate loyalty," says Jason Goodwin, head of the customer intelligence solutions group for SAS UK. Just over one quarter of respondents said it was a factor encouraging their loyalty--ranking number three on the list of choices.
They are instead a means to an end. "Loyalty cards provide a data platform to identify which customers will be loyal, which will be loyal with some encouragement, and which will be fickle--there will always be someone who can beat your price or be a little more convenient on a given day," Goodwin says.
The study indicated a relatively small degree of pushback for data-driven loyalty programs. "Twenty percent of people don't own a loyalty card, because they find the data collection intrusive, yet 27 percent believe the benefits from loyalty cards outweigh the downside of the information being collected," Goodwin says. More than one third said they did not mind the data collection at all.
Todd Beck, senior product manager with CRM training specialists AchieveGlobal, says that companies must be able to answer precise questions about customer loyalty to have any hope of understanding what motivates customer behavior. Simply knowing how a client rates "customer service" won't do. "Does that mean [customers value] efficiency, speed, or just 'They call me back when they tell me they will'?" he says.
More important, satisfaction and loyalty are not necessarily correlated. "I have seen statistics that talk about the percentage of customers that were satisfied before they switched, and they were huge numbers, around 80 percent. If you know people are satisfied, it doesn't tell you that those 80 percent are at risk," Beck says.
Improving loyalty means asking hard questions about how the customer views the relationship. "How do you as a service provider dazzle somebody to keep them loyal? It's a much richer conversation that needs to occur, [not simply] 'Are you happy, or not?'" Beck says. "Then you can start to increase the number of people who come out of [transactions] dazzled, and come out with something higher than a 'C' on their report cards."
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