In the spirit of Valentine’s Day, it’s a good time to take stock of the value of attraction, affection and yes, brand love. Just like in our personal relationships, brands that are looking to build lasting and meaningful customer relationships need to invest time and energy into getting to know their customers’ needs, wants, and desires. Customer loyalty all starts with first impressions. Whether a consumer is researching your brand online or takes the time to join your loyalty program, what comes next are the make-or-break moments that often determine if you’ll get that highly sought after second transaction (or date if we’re sticking with the relationship analogy).
Making a Great First Impression
Based on recent data, most brands are not doing so hot when it comes to that second date. We consistently see, regardless of sector, that more than 60% of new customers typically drop out after the first transaction. Why is this? Perhaps the purchase was driven by impulse, convenience, or they were just giving the brand a try. Many of these customers will eventually make their way into a high decile and become a best customer, but most will never come back. It’s in this first interaction where we see a huge opportunity to make an impactful impression and turn a one-and-done customer into a loyal lifelong customer.
At Ansira, we strategically think through customized “onboarding” experiences and communications tailored to specific customer types or use cases to ensure our clients are leaving a positive first impression. We’ve all been there as consumers ourselves: purchased something online only to be inundated with emails reminding us that we just overpaid by 15% or 20%, not a great feeling.
There are some tried and true onboarding tactics that can decrease attrition. First and foremost – what do you want your new customer to know about you and more importantly, what will they get in return for establishing this relationship? Creating an onboarding communication sequence that is dedicated to educating the customer about the brand, its products, values, and mission can set the tone. You can do this over a period of time with small pieces of information so you do not overwhelm the customer with the goal of creating a connection through ongoing engagement. If you have a loyalty program, this onboarding education is especially critical. All too often brands offer up points as an incentive to come back, but if the member is new, perhaps they simply don’t understand or feel the value of points – yet. This is where educating customers about the program can be very valuable. American Airlines AAdvantage did this masterfully years ago where they turned program changes into a sweeps game. Answer the quiz correctly and get access to partner offers and entries into the grand prize. Of course, all the questions were related to the program rules which can often be complicated, but masking the education within a sweeps game was a great way to teach the value of the program.
Getting to Know Each Other
A meaningful relationship means both parties are participating and the best way to get the customers talking is to simply ask. Building a customer profile to help you deliver a more personalized experience is something customers can often get behind and are willing to provide. According to a study by Deloitte, 62% of consumers are willing to share their data with companies in exchange for better products, services, or prices.
It is important to think through the type of data you want to know about your customers, as well as how you plan to use it. When brands ignore the data customers willingly provide, they can feel like they’re not being heard and that could damage the relationship you are trying to build.
We also like simple polls or surveys to help increase retention. When we ask their opinion, consumers know they matter and that can help strengthen their love of the brand. According to a study by Google, 61% of customers are willing to participate in surveys when asked.
How about a Second Date?
There is not a general equation for the ideal time to secure that second transaction, given every business or brand has a different buying cycle. But you can use your transactional data to determine the optimal window for your customers. Start with taking a deeper dive into your best customers’ data, go back and see how long it took for them to make a second purchase. This analysis can give you a guideline on how and when to approach your new customers.
Use the data you have started to collect to personalize or segment your communication in a way that encourages that repeat visit. Take advantage of loyalty program tactics too. Securing that second transaction should be top priority. Statistics show that increasing customer retention rates by 5% increase profits by 25% to 95%.
Evaluating our Relationship
Consider creating goals and KPIs around your new customer segment to measure the impact of your onboarding and nurturing strategies. Here are a few best practices. Compare repeat rates for customers in their first year versus the rest of your database. Track the time from first to second purchase and trend it over time. Create a basic RFM model where each customer is given a recency, frequency and monetary score and see how your first-year customers compare. Analyze the customers who have only made 1 purchase to determine the likelihood to retain so you can prioritize your optimization efforts.
Is it a True Connection?
Taking the time to focus on your first impression, understanding your customer’s individual needs, and thoughtful and timely engagement to get them to come back will set you up for success. Of course, we’ll all go through our fair share of frogs, but if we stick to the first principles of being authentic to the brand, asking the right question in an effort to provide a more differentiated level of service, and being transparent all along the way – you’ll have a solid foundation that is sure to attract a brand loyalist, and hopefully some of your competitions’ best customers too.
How Can We Help?
Whether you’re looking to optimize your retention strategies, overhaul a program entirely, or are just beginning to ideate your strategy, we can partner together to design a program that will create brand fanatics for life. Contact us today if you’d like to continue the conversation.
