One of the Best Customer Retention Programs

One of my favorite customer retention programs is Southwest Airlines’ Rapid Rewards program.

I already love Southwest because of their great customer service and they are a family-friendly way to travel. However, their customer loyalty program stands out of the crowd.

Most airlines have a fairly standard (and boring) frequent flyer program. Southwest, in contrast, has some rather game-like tiers and rewards that encourage flying frequently.

At each new level in their Rapid Rewards program, you are entitled to more benefits and incentives. This tops out with a free “companion pass” where a friend can fly with you on any flight at no cost to you.

Here are some tips when you are looking at customer retention programs for your business.

Encourage Frequent Use of Your Service

Southwest has time limits on when you must fly the required number of flights to achieve the next level in their program. This encourages frequent reuse of their service.

How can you encourage your customers to purchase from you regularly?

Pile on the Rewards

With each level in their Rapid Rewards program, Southwest stacks on the extra benefits and rewards. To make a tiered loyalty program work, you’ll need to make sure each level really does have significantly more benefits than the previous one. Otherwise, customers will see no point in climbing the reward ladder.

Make it Fun

Southwest understands that most frequent travelers are likely business travelers. The premium reward at the top of the program is a companion pass. Southwest presents this in an non-business light and focuses on the benefits of travelling with a friend or family member. Surely after so much business travel, you look forward to a fun getaway to relax.

Your customers may be repeat buyers because of non-fun reasons: business, maintenance, routine, etc. Consider how your retention program can give rewards that reward the person in an exciting way.

Honor the Best

Your most loyal customers deserve to be treated specially. For example, let them go to the front of the line or have direct access to support.

Craft Your Customer Retention Program

Take the principles above and look for what best fits your customers. By offering one of the most attractive customer retention programs to your customers, you’ll continue to drive loyal, repeat business.

The old adage “the customer is always right” is still valid and important to consider in this new world where people could just as easily buy online as they could in your store. If you offer them the best experience possible, they will continue coming back to your store and promote your company by word of mouth. Serving your customers well in the here-and-now moment will draw in more revenue and customers for you in the future; it’s a win-win situation. Here are a few ways to show the customer that you care about who their individual needs and issues:

Have a conversation with them

Although this sounds like second nature to anyone working in retail, it is incredibly important to actually be able to converse with your customers on a personal level.

Rather than talking about the individual products you are trying to sell, ask your customer how their day is going, or did they enjoy their weekend? Asking these personalized questions will enable you to learn more about your customer and subsequently provide them with a better solution, but will also let them know that you care about them.

Make sure you ask their permission before offering your opinion

Many customers enter retail stores over shopping online because they want to ask questions of the sales representatives. Often, they will acknowledge that they do not know much about a certain product while talking to you about it.

If you begin to offer your personal opinion on what product you think would fit them and why, make sure you ask permission before you do so. For example, you could say “Well, do you mind if I tell you what I think the most important differences between Television A and Television B will be for you?” If you ask this, it shows them that you care about how they are feeling, value their opinion, and also that you have been listening to what they have been saying.

Treat them as an equally intelligent individual

Everyone who works in retail knows that sometimes you can come across a customer that is really clueless about what they need or want. Even if they seem incredibly unintelligent, and the interaction with them frustrates you, it is important for you to remember that they came into the store asking for help because you are the expert on the topic. Although this does mean that you are in a place of power, you should not make that known to your customer.

Make sure that you treat their questions with respect. Even if you’ve heard “What does this button do?” a million times, you should still act like it is the first time you have ever heard it. Customers will appreciate your patience and understanding.

Educate them

Make sure that your customer leaves knowing all of the information that they came in looking for, but also make sure that you educate them on other services or products your company offers that might be good or even better for them than the product they were looking at.

By educating your customer, you set up the expectation that your company cares about their customers and wants them to know about all of the different configurations that might be good for them. It also means that they are more likely to come back in and purchase more of your products as time lapses, because now they know that more of them exist. By educating your customers, you are also eliminating some of the clueless customers that were mentioned above.

Thank them, and invite them to return

After your customer has found the correct solution for their needs and has their product in hand and is walking out the door, thank them for interacting with you and let them know that you are there frequently if they ever need any help.

Inviting them back encourages them to return to the store, but also makes them feel as though they have a personal advocate in you. This is also very important even if they haven’t purchased anything. You should thank all of your customers for coming in as they leave. It seems like a small thing, but after you’ve walked out of an establishment without having anyone say anything to you, it can make a very big deal. It also personalizes interactions with your customers, and lets them know you are committed to customer service.

About the Author
This guest post was written by the team at Connect Your Home, an authorized retailer of home communication, security, and entertainment services; including home phone, satellite TV, Internet, cable, and many more. Connectyourhome.com is a one-stop shop for all home entertainment needs. You can compare cable companies and get a list of some of the top home phone service providers out there.

Unfortunately, your customer isn’t completely focused on the choices you’ve placed before them. They have some mental baggage that impacts their ability to make a purchase decision.

Quick and Easy

Customers assume that choices should be quick and easy.

Why? Perhaps all the choices that they made today were quick and easy. Maybe the choices and decisions they made with your competition were quick and easy.

However, then when they come to your website or store, the choices before them are neither quick nor easy.

Perfect Choice

Customers are looking for and assume there is a perfect choice.

Why? They are constantly bombarded with marketing messages telling them that there is a perfect choice.

You’ve heard these messages too. “Here’s the perfect vacation for your family.” “This is the perfect pair of pants for you.”

You can even find a perfect match on that online dating site.

Customers are looking for the perfect choice that unfortunately isn’t apparent when they first glance at your offering.

Environmental Factors

Combine the preexisting mindsets above with some of the environmental factors and your customers are truly overloaded. They’ve got deadlines at work, boss’ expectations, and stresses from life that are interfering with their ability to focus on your offering and the choice before them.

History

When a customer has dealt with you before, they come into today’s interaction with preset expectations. Their history with you and your company taints their perspective of how this transaction will go. If your history with them has been rocky, today’s decision will be that much more difficult.

Plan for Confusion

If you take the totality of the mental baggage, environmental factors, and history with the customer, it is a surprise any decision or purchase is ever made.

To get your customer to choose you and make the purchase, keep in mind what is happening in their mind. Adjust your messaging and communication to compensate and offset their expectations. When you do this, your customers will have an easier time choosing you.

The reality, of course, is very different. The Internet is a tremendously competitive marketplace. To be successful, you need to be able to connect with prospects faster and more efficiently than your competition.

It’s easy to make mistakes along the way. Here are some of the most common small business Internet marketing blunders we’ve seen:

1. Creating a static site

Some small business owners get excited about creating their website. They spend weeks tweaking and designing, just to get everything in place. Then, once the site is launched, it sits unchanged. This is a big mistake, for several reasons. First of all, the search engines like fresh content. If you’re not regularly publishing something to your site (for example through a weekly blog post) your rankings will fall. In addition, there tends to always be at least some timely information on your site. If a potential customer visits your site and sees a listing of monthly specials for six months ago, she’s not coming back to the site again anytime soon.

2. Testing too little

Just because you think a site looks good, is easy to navigate, and will increase sales or leads doesn’t mean that’s the case. You need to be smart about testing out your site’s various elements. The same holds true for a given marketing tactic. Simply purchasing pay-per-click ads for some random keywords isn’t nearly as effective as testing out various keywords to see which offer you the most positive results.

3. Keeping design and content creation in-house

Design and content creation can be expensive, there’s no doubt. However, the fact is that there are verifiable advantages to relying on experts to do what they do best. Just like you hire a reliable accountant to handle your books, you need to hire reliable developers to help frame your Internet presence. Fortunately, with outsourcing sites abounding, you have many options when it comes to finding talented individuals to hire on a contract basis.

4. Spreading social media marketing efforts too thin.

Social media is one of the hottest areas of Internet marketing right now. It’s easy, however, to just fire a barrage of ammunition at all of the various social media sites, such as Facebook, Twitter, and LinkedIn. A small business should have a presence at each of those sites, but you need to concentrate your efforts where they can do the most good. For example, some businesses will want to focus almost exclusively on LinkedIn, especially if you’re mostly a b2b endeavor. If your business has lots of products and images, you’ll probably want to utilize Facebook. Those who are in a service-related business might have the best luck with Twitter. You can experiment with the various sites, but ultimately you want to focus in and concentrate your efforts on one or two sites.

5. Paying for ads

Pay-per-click advertising isn’t always a bad thing. That said, there are so many other more effective and less expensive Internet marketing models. Ad campaigns can be a part of an overall Internet marketing strategy, but they should never be the centerpiece or the only piece.

6. Ignoring local search

More people looking for local businesses turn to Google today than turn to the phone book. Your small business needs to take advantage of that fact, and the best way to do so is via local search optimization. Even if you have a business that doesn’t rely primarily on business from a single geographic area, you can still benefit by targeting some larger geographic markets.

7. Forgetting to evaluate

You need to keep all of your marketing efforts (not just your Internet marketing efforts) under constant scrutiny. If you can’t demonstrate verifiably that your Internet marketing efforts are increasing your bottom line, then you probably need to change strategies. Internet marketing, just like offline marketing, should always keep ROI in mind.

The Internet offers all sorts of opportunities to businesses, and not just large corporations. Avoiding these common mistakes is the first step in putting the power of the Internet to work for your business.

About the Author
Benji Hyam is a Social Media Coordinator at Vistage International, an executive coaching organization that helps CEO members build better companies through unique business coaching and executive development opportunities.

The paper towel dispenser had a sticker that said:

Remember… These Come From Trees

The message was simple: Don’t waste paper towels.

The principle behind the simple message is much more powerful: When you help your customers see the consequences of their actions, it will change their behavior.

Instead of telling your customers what not to do, tell them what happens if they do something.

Instead of restricting customers to a certain limit, educate them what occurs when they exceed that limit.

Instead of leaving customers to experience the unknown, help them see the trade-offs their preferences require.

Subtle communication of meaningful messages will gently guide customers in the right direction without alienating them or offending them.

Think about how you can get your customers to see the downstream consequences of their actions.

As we go into the 8th year, what do you want to see here on ReturnCustomer.com? Please leave a comment and let me know.

I always find it interesting to review the data on how readers like you find their way to ReturnCustomer.com. Here are this past year’s highlights:

Top Post Written in the Last Year

5 Essential Customer Retention Strategies was the most read post that was written since Return Customer’s 6th birthday.

Top 5 Most Read Posts

Looking back at the archive here on Return Customer, these posts were the most visited this past year:

1. Top 5 Ways to Measure Customer Satisfaction
2. Four Customer Expectations
3. The 7 Most Common Customer Complaints and How to Respond
4. How to Convince Customers to Buy Today
5. 5 Effective Ways to Retain Customers in Good and Bad Times

Top 5 Referrers

These great sites have sent more people to Return Customer than any other sites (not including search and social sites) over the past year. Thank you!

1. Invesp’s Top 50 Customer Service blogs
2. The OpenView Labs blog has mentioned Return Customer several times over the past year
3. Service Untitled offers solid customer service articles. I’m honored to be listed in their blog roll.
4. Customer1.com has Return Customer featured in their blog roll.
5. The Aweber blog’s quality articles continue to send people to Return Customer.

Let’s Get Social

Thanks for sharing ReturnCustomer.com with your friends and followers! I’ve seen a noticeable increase in readers coming from Twitter, Facebook, and LinkedIn.

Follow me on Twitter: http://www.twitter.com/joerawlinson

Let’s connect on LinkedIn (just let me know you found me via Return Customer): http://www.linkedin.com/in/jrawlinson

Top 5 Searches

The following searches (linked to their respective posts) brought the most people to this site last year:

1. how to measure customer satisfaction
2. measuring customer satisfaction
3. customer expectations
4. customer retention strategies
5. returning customer

If you have any comments on things you like or that could be improved with Return Customer, please leave a comment, send me an email, or follow me on Twitter.

Birthday Present for You!

To help celebrate Return Customer’s birthday, I’m giving away a copy of Richard Shapiro’s fabulous book The Welcomer Edge. He was kind enough to send me a signed copy to give away and it can be yours.

To win the book, simply leave a comment on my review of The Welcomer Edge and you’ll be entered to win. I’ll pick a random winner May 1st. Good luck!

Update May 1, 2012: Katie is our winner of the birthday contest!

In baseball there are lots of stats to look at, and the Sabermetrics approach the A’s used combines these in clever ways to find win-correlated metrics. Similarly, you may run a system of KPIs in order to define success metrics in different parts of your business. Many online retailers already harness this information to optimize marketing efforts. Like the Oakland A’s, retailers with smaller budgets have “got to think differently” and make the most of their budget in order to compete against their Yankees counterparts.

Marketing certainly needs to increase ROI and optimize. “Moneyball” stresses the importance of relying on metrics to make decisions. The reason Beane (the general manager of the A’s) and Brand (the economist he hired to help him) were able to identify undervalued players and get more from their budget was that they used metrics to find these players rather than relying on gut instinct. In marketing you have click-through rates, conversion rates, retention rates, average purchase per customer, and other metrics that can help uncover areas for improvement.

Here are three ways you can apply a Moneyball approach to your online marketing:

1. Optimize Google Adwords

A few simple changes in keywords, landing pages, and ad content can give you a higher bang for your buck. Just like the Oakland A’s were in search for undervalued players, you can continually look for keywords that are highly searched but with little competition. This is very easy to do with Google’s or other keyword research tools.

Now that you’ve got the best keywords in place, the right location and partner site can determine the difference in the quality of the lead. You want your best prospects, those who are ready to buy, to click on your ads, rather than someone who’s looking for something else or window shopping.

Once your ads are running with various keywords, on different sites, and changing content, then you continue to make sure you’re getting the highest ROI. Continually check your click-through and most importantly your conversion rates to utilize the combination of keywords, ad placement, and content that maximizes sales. Brand says to Beane “Your goal shouldn’t be to buy players; your goal should be to buy wins.” Translated into your marketing campaign this would mean that your goal shouldn’t be to buy clicks, your goal should be to buy customers.

2. Find Up-Sell/Cross-Sell Opportunities

One of my favorite parts of the movie is when Beane is talking to David Justice about sucking the juice out of him. He explains it in a win-win approach to both Justice and the team. Your customers, just like the baseball players, are your most important asset. Without making them feel you are “sucking the juice out of them,” you can find ways to create a win-win situation and get more sales out of your current customers.

Based on your customers’ purchase history, you can find products they are likely to buy and when to best send an offering. For example, if a large percentage of customers bought a hat 60 days after buying a t-shirt, you can create a sting of increasingly aggressive campaigns offering a shirt before, at, and after the 60-day lapse. It’s been shown that recency, the date of last purchase, is the leading factor attributing to attrition. Use it to engage with customers at various levels of engagement and provide targeted offers that increase average number of purchases per customer and customer lifetime value.

3. A|B Test Campaigns

In “Moneyball,” Billy Beane waited no time to shoot the runt. When players were underperforming they got downgraded to the minors or traded quickly. They were aware that tweaks and adjustments would arise with new data about the players coming in every day. But they also didn’t judge too early, saying in the movie, “It’s day one of the first week. You can’t judge just yet.”

Your marketing campaigns also provide success data streamed continuously. Although you need sufficient data to change an email marketing or keyword campaign, there shouldn’t be any hesitation to kill any efforts that underperform. Unlike baseball, marketing does allow you to get creative and try different approaches to different customers. After trying new campaigns and A|B testing your efforts, you will end up with those campaigns with higher success rates and hence ROI.

About the Author
This is a guest post from Dr. Jaime Brugueras, CEO and Founder of Mineful. Mineful is a customer retention tool for online retailers specializing in triggered emails based on purchase history. For more information, follow us on Twitter @Mineful.

Richard Shapiro’s book The Welcomer Edge: Unlocking the Secrets to Repeat Business is an essential read for anyone who works directly with customers.

The Welcomer Edge is structured very similarly to many of my posts here on Return Customer. Shapiro shares personal stories of customer service interactions he has had as a customer at various businesses. He then extracts those principles that made the encounter a loyalty-building event or repeat business-killing encounter.

The book describes several types of employees that you might have directly working with customers, ranging from the Welcomer to the Hostile.

Welcomers

The Welcomers make people “feel important, appreciated, and valued as a customer and as a person.” Welcomers are those you want to have working for you and with your customers. They make personal connections with customers because they naturally want to help people.

Robots

Most sales associates are robotic in their interactions with customers. They repeat the same actions and words with every customer, regardless of circumstance. Fortunately, the Robots in your business can often be trained to be more welcoming with customers.

Indifferents

You’ve probably seen indifferent employees at many businesses. They simply ignore the customer or are not actively fullfilling their responsibilities. Be very careful not to hire indifferent employees.

Hostiles

Every so often you have a very hostile employee. These are the most dangerous type to have in your businesses. Not only do they fail to serve the customer but they alienate and offend so easily that it engenders disgust and disdain for you and your business. Avoid these types at all costs.

Creating Welcomers

You can create Welcomers and make existing ones even better by instilling in them the patterns outlined in this book. Shapiro details a three-step process (the greet, the assist, and the leave-behind) that outlines how exactly to interact with customers through each phase of the encounter such that the customer leaves with a positive impression of you and your company.

Recommendation: Read and Use this Book

If you run your own business or are on the front line with customers, The Welcomer Edge will help you better serve your customers and nurture those relationships that will drive repeat business.

Each chapter is structured with stories and illustrative examples of the principles discussed. At the end of every chapter, Shapiro offers very concise and actionable “power points” that you can practice and standardize at your company.

Pick up your copy of The Welcomer Edge: Unlocking the Secrets to Repeat Business today.

Win Your Copy of The Welcomer Edge

I’ve got a signed copy of The Welcomer Edge to give away to one of you, my loyal readers. Leave a comment on this post and you’ll automatically be entered to win. I’ll randomly draw a winner on May 1.

See the comments below: Katie is our winner. Congratulations!

The customers must decide if they will purchase from you.

Those who aren’t scared away because of the complexity of the choices before them fall into two camps: those who pick you and those who choose you.

Pick You

The act of picking is such a passive and fickle selection process. The customer can pick you just as easily as he can the guy next to you.

There is no real investment or commitment to you or your product when a customer merely picks you. Tomorrow he may simply go pick your competition.

Contrast a fleeting pick against when a customers chooses you, and you’ve got a very different situation.

Choose You

When customers choose you it implies more of a long-term commitment, a relationship, and investment in the future. Choices aren’t changed as easily as mere picks.

If a pick is like a first date, a choice is more like marriage.

You Want to be Chosen

You want (and need) your customers to choose you.

This is particularly true if your business is built on the premise that you’ll have repeat, return customers for a long time. Perhaps you are banking on the fact that they will be paying customers for months or years. Or that they will purchase your product again and convince their friends to do so as well.

Don’t settle for your customers merely picking you and your products. Get them to choose you. Get them to commit to you.

This starts with you committing to them and proving that you’ll stand by them and your product into the future.

So what is a small business owner to do?  Focus on customer retention programs that seek to keep its customer base strong, or investigate marketing campaigns to generate new business?  One thing is for sure, whichever you choose, you don’t want to lose your current customers or miss out on opportunities to expand.

At this point, most people would say you can’t have your cake and eat it too.

While it may be true that you will ultimately have to favor one over the other, why not devise a strategy that gives you the best of both worlds?

The Solution

In a word: Client referral incentives.  Any business owner, and especially any small business owner knows that the most powerful method of marketing is referral.  Customer referral is so effective because the pitch that one of your customers makes to one of her friends is unsolicited, candid, enthusiastic, and comes from a reliable source.  If a friend suggests you buy a pair of a certain kind of pants, you are much more likely to buy those pants than if a sales rep recommended them.

The challenge is getting your customers to talk about your products.  Sometimes, if a customer is impressed enough, she will make the product the focus of a conversation, but most often talk about your store comes up organically, and infrequently.

Your customers have access to the market and demographic that you appeal to, ie their friends will typically have similar tastes and values as they do, meaning that, properly incentivized, you have an army of covert marketers right under your nose.

How do I incentivize them?

It might seem overly simplistic, but the best way to get your existing customers to refer new business is to just ask them.  The next time one of your best customers is in the store, ask her to spread the word about the business.

Of course, there’s a little more to it than just that.  When you ask for your customers to refer new clients, tell them about the new reward structure you have in place for referrals.  Don’t have one? It’s simple: existing customers get half off their next purchase when they refer new customers.

And that’s just one way to put it.  The nature of the incentive will change depending on your business, but the idea is to give your current customers a reason to talk about your business.  Make them want to talk about it.  Maybe even set up a model that discounts a new customer’s first purchase from the next purchase of the customer who referred the new one.  (X refers Y, Y buys something for $Z, X gets $Z discounted from X’s next purchase.)

Exactly how you choose to set up your reward model is up to you.  Some other ideas are:

• Reward packages: chocolates, flowers, a comped meal at a restaurant, movie tickets, etc.
• Handwritten thank you note: never underestimate the power of a simple “thank you.”
• Travel discounts

Whatever you do, you will find that your current customers will want to keep shopping with you to get more rewards, and also that you will be bringing in a ton a new business based on the referrals of your old clients.

About the Author

This is a guest post by Eliza Morgan who is a full time blogger.  She specializes in writing about business credit cards. You can reach her at: elizamorgan856 at gmail dot com.