Originally published on Forbes
In theory, business leaders recognize the value of their current customers. But most fail to put this knowledge into practice. Customer acquisition budgets far outpace customer retention budgets, according to research from Forrester, even though it costs five times more to attract a new customer than to retain an existing one. Companies focused on short-term, transactional KPIs can lose sight of what their ultimate goal should be: creating meaningful, lasting relationships with their customersConsider, for example, the time and resources traditional cable companies pour into trying to entice new customers. If you have a cable contract with Brand X, you can almost guarantee that Brand Y will inundate you with a steady stream of special sign-up offers via email, phone and snail mail. But Brand X? Even though you’ve been a loyal customer for years, it doesn’t give you the time of day until you cancel your contract and jump ship for a competitor. Then Brand X cares deeply about your business and pulls out all the stops to get you back into a fixed long-term contract.
The challenge for brands is figuring out how to win and keep customers who are immersed in life online. Doing business at arm's length is no longer an option. Companies must close the gap between them and their consumers, aiming for zero degrees of separation, which is why we coined a new metric, Share of Life. The most powerful brands will measure how many minutes of each day they can meaningfully support in their customers' daily lives.
Examples of this customer-centered approach are streaming services like Netflix, Hulu and Amazon Prime. Their business models are based on building a deep understanding of their customers and strengthening these relationships over time.
Every time you watch a TV series or movie, streaming companies are gathering data on your preferences and applying these insights to personalize recommendations and develop new original content. As a faithful subscriber, you see continued value in maintaining your account indefinitely. You wouldn’t dream of canceling your subscription and missing the new season of Stranger Things, The Handmaid's Tale or The Marvelous Mrs. Maisel. You are entangled in their services, and you are willing to share more of your life with them.
Unlike traditional cable companies, streaming services are making decisions based on what their existing customers want. They use their knowledge of your interests and viewing habits to deliver exciting content that keeps you coming back for more. And you can unsubscribe at any time.
By prioritizing your current customers’ happiness, you’re making a worthwhile investment in their loyalty and the future of your business.
Tap into what is most important to your customers when they use your product or service. How does it make them feel? What does it empower them to do? How can you help them do more? Can you connect an immediate desire with a longer term goal?
For instance, some life insurance companies are introducing optional rewards programs for customers using activity trackers like the Apple Watch or Fitbit, according to a Bloomberg article. Participants get credit for daily activities, such as walking, running or meditating, earning points that they can redeem toward purchases on partner sites. They may also be able to save money on insurance premiums. Insurers ultimately benefit when they encourage policyholders to be healthier and more active (to put it bluntly, the longer their customers live, the less money they need to pay out). But for participants, these programs are primarily centered on theiraspirations: fostering healthy habits and boosting longevity.
Demonstrate your appreciation for your customers – and reinforce their commitment to your brand – in ways that build an emotional connection. Collect and analyze customer insights to provide customized offers, special surprises or rewarding experiences. Focus on the question, “What’s in it for them?” What do they get from deepening their relationship with your brand? What motivates them to stick around?
Don’t pester your customers with communications that serve your needs and not theirs. Move away from disruptive emails that push people toward another purchase or renewal. Instead, make sure every message you send is relevant to your customers. What do they care about? What content will help them solve a problem or move them toward their goals? Your relationship is only successful if it’s mutually beneficial.
Aim to establish your brand as an essential part of your customers’ lives – something they interact with every day, whether through a subscription service, an online community or a mobile app. Look beyond the single sale, and build a lifelong connection with your customers.
Smart marketers recognize that there will be a distinct “before” and “after” in consumer behavior as a result of the pandemic. You must start now to create the digital tools needed to embed your brand in the customer’s post-COVID life.
Take the time now to identify and understand the new expectations of your customers, and how have their habits and priorities shifted during this time