Customer Relationships: Keeping the love alive

April 05, 2013

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One of the hardest tasks for any brand is keeping a strong relationship with their customers. Most companies are excellent at acquiring customers – if they weren’t they wouldn’t stay in business for long.

Where companies consistently struggle is in building and nurturing the customers they have acquired. So how do great companies do this and what are some of the pitfalls to avoid?

It’s a Love thing

The right analogy for the link between a brand and its customers is a loving relationship. There are any number of logical reasons why we choose a particular brand and stay with it, but in most cases emotional reasons are paramount. With a great brand we feel a bond between ourselves and the brand that is hard to rationalize. The brand has a visceral appeal that is hard to articulate – just like a loving relationship.

Falling in love

Acquiring a customer is selling the future potential. The possibilities that will open up if you become a customer. How you will feel. The tangible benefits are important – my hair will be cleaner with this shampoo or I will be able to buy items with my new credit card – but that is secondary. What’s primary is how people will perceive me with my shiny new hair or shiny new credit card and how I will perceive myself.

So customer acquisition is about seduction and the promise of great things – and this sits at the heart of modern marketing. Most successful companies do this well – if they didn’t they wouldn’t remain successful for long. They can express the tangible and intangible benefits in ways that make customers want to buy the product.

Initial romance

For many companies, the relationship starts to fall apart after the first night. The customer is now acquired and no more effort is spent on the customer thereafter. This is a huge mistake – but what does a good initial romance look like?

In one of the teams I led we had a ‘First 100 Days’ programme. This was a set of activities that every new customer experienced after they were acquired. It started with a phone call welcoming them. This was followed up by a series of communications talking about the product they had purchased and how best to use it. We had rigorous tracking of the programme – 90% of all new customers went through it and the 10% who didn’t were the control group. Every month we measured the performance of the 90% compared to the 10%. How much did they spend, how often, in what categories, how many customers left us? We continued to track these customer cohorts over the life of their relationship. The result: consistently higher spend and consistently lower attrition.

In this example the product was a premium service brand and these methods won’t apply to every business – but the sentiment does. Treat new customers to an ‘initial romance’ period that strengthens their bond with the business.

Keeping the love alive

In business relationships and in human relationships the hardest part is keeping the love alive over time. People and businesses change and as a result we need to invest to keep the connection and ensure the relationship continues to be seen as relevant and beneficial.

So what does this feel like? It’s a combination of the regular connection and the surprise event. In a human relationship the regular connection is Tuesday night at the movies and the surprise event is the bunch of flowers or a text saying ‘I love you’. For businesses it is much the same. The regular weekly, monthly or quarterly message about new products and services that are relevant to the customer. And the surprise message thanking the customer for their business with a token of appreciation.

As an example, I am a customer of a property business that rents out my house when I am away. After each rental I receive a handwritten note and a bottle of wine. Is the business obliged to do this in my contract with them? No. How does it make me feel? Like a valued and appreciated customer.

When the relationship goes wrong

Large businesses need strong operational processes. If the customer does ‘x’ we do ‘y’. This is at the heart of a ‘repeatable model’ that the business can replicate in other locations and countries. The challenge is in building an operational model that is consistent with building strong customer relationships.

The property business I mentioned above made a classic mistake. I made an error in my communications with them. It was my first error and there were some mitigating circumstances however this company had its operational rules. In my case I was charged a fee for my mistake. The implications for my relationship with this company? I remain a customer of theirs but the application of the policies has extinguished the love. I am now not an advocate of their brand – I’ve become a ‘neutral’. One more bad experience and I’ll become a ‘detractor’ – actively telling my network to avoid the company.

So how should a company remediate in these cases? Firstly, it’s important to say that every company gets it wrong. In my experience, not just once – all the time. Good companies learn from their mistakes and change processes so they don’t repeat the same error over and over again however new issues always arise.

In a previous company we had a ‘Customer Save’ team. This team was responsible for speaking with customers who wanted to leave the business and try to save them. This was a good first step and the save rate was around 50% but we saw that too many great customers were still leaving us. I put in place a simple process. After a customer had been through the Customer Save team and still wanted to leave, I and my colleagues called them up and asked them what we were doing wrong. No offers, no explanations, just a single question and listening to what the customer said. Our save rate was over 90%. Customers sensed we were doing our best to rebuild the relationship and gave us another chance.

The power of love

The consequence of a strong link between a consumer and a brand drive material business results – and not just from existing customers.

In one of my previous teams we ran a regular ‘customer get customer’ programme – incentivizing existing customers to introduce their friends and colleagues to us. The activity was hugely successful – both in terms of the number of new customers we brought in as well as the quality of those new customers. The new customers had already been presold the benefits of the product by their friends.

Building strong customer relationships results in higher spend, lower attrition, and a lower cost to acquire new customers. That’s a relationship outcome all businesses would love.

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The intersection of business and technology.
Written by Charles Allen who lives and works in Hong Kong.

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