How Simply “Watching Your Buyers” Can Increase Retention Rates

One of our clients recently came to us with an issue that we immediately diagnosed as a friction problem. A product had been conceived and built which should have been selling well, but uptake was slow. There was nothing functionally wrong with the product; it did what it said it did, and it filled an unmet need in the market. However, the product and its associated distribution had a lot of rough edges. This wasn’t helped by the fact that the product was also a service like so many things are today. Not only did the customer need to purchase and configure the product, but they also had to continually interface with the company and its distribution partners to “refill” it.

The Challenge:

Complexities in the customer lifecycle from buying, using, upgrading and maintaining the product led to slow adoption.

First, the product telegraphed complexity. Features were touted on the front page that didn’t scream “problem-solving.” It was unclear how the product could be purchased. The product, copy, and imagery was totally boring. But perhaps most damningly, it was unclear exactly how I would use the product.

We recommended that instead of attempting to attack these prima facie problems one-by-one, they instead take another step back and watch the customers attempt to buy, use, upgrade, and maintain the product. At first, the client didn’t want to do “more research”—they’d already done lots of focus groups, quantitative surveys, market sizing, and the like. But I explained that what we were going to do was simply watch. The technical term for this kind of research is ethnography; it arises from ethnographic studies of cultures.

Anthropologists embed themselves for months or years with cultures, and do not ask questions or interfere. Their goal is not to pollute the research with questions. This can be hard for business people and marketers—they want to know the answer! However, by asking customers direct questions, too often acquiescence bias distorts the results. Acquiescence bias is well known to salespeople, and memorialized as the phrase “buyers are liars.” Human beings are nice, and they don’t want to make a researcher or a salesperson feel bad, so they will tell that person what they think they want to hear. They will tell you how they should or would like to use a product, or buy a product. They might not even know they aren’t presenting an accurate accounting of the issue.

I told the client that by going to our client (and prospect) offices, across a wide range of industries, and watching them do their jobs and attempt to purchase our product, the friction points would become clear. The skepticism was palpable; “not actionable,” “high risk,” “unclear what we’ll get out of this.” I made the point that several million dollars of sales and renewals had already been lost due to friction. We embarked on the research.

The Solution:

1) An ethnographic study uncovers friction points.

The most important thing we did in this project was selecting the companies for observation. We did thirty 2-hour observations over several weeks. We split these into 15 companies that had purchased the product, and 15 that had not. In each group, we recruited five different industries. All of the companies had between 25 and 250 employees—the target segment for the product. We recruited the companies directly using LinkedIn. We targeted three cities. So, in each city we had five industries, with one company in each that had the product, and five that hadn’t. The screener ensured that the company and the user were good fits—we wanted companies with a lively culture, a clear fit for the product, and a good primary research subject who was engaging and fairly outgoing. Yes, this biases the research a bit, but ethnographies don’t work with reticent introverts and dull companies.

In preparation for our visit, we asked that key users of this solution focus on this task for the two hours that we were there. This was the extent of our pre-visit meddling; we didn’t ask them to do anything else. We didn’t ask them to use a specific product or anything like that. We didn’t ask them to do any homework.

The day of the visit, we arrived with a team of three people, no more: one client representative, a facilitator, and a videographer. Upon arrival, we simply asked the individual to start doing the task that the product was meant to enable. Every once in a while, we’d ask a question. This went on for about an hour. We then asked the individuals who had the product to attempt a “refill,” and watched them. For those who did not have the product, we asked them to shop for the product. Other than that, we didn’t interfere. This can be hard for the client. All they want to do is ask questions, but this isn’t the point. The point is to observe, in the customer’s “native habitat.” Over the last 30 minutes, it was time to ask questions. Why did you do what you did? What else did we miss? Can we see something we didn’t see?

While at the company, we did a lot of looking at other things, too. How were the supplies that the product was meant to complement/replace stored? What applications did the customer and various influencers use? How was the business laid out? What catalogs were on the desk?

Between sessions, we worked together to outline the sources of go-to-market friction we noticed. Because we had many breaks between visits, our picture of the sources of the friction became very detailed. “Did you notice that she couldn’t remember that URL?” “It took him ten minutes to figure out how to scan that contract.” “She couldn’t find any of those emails.” Etc. Whatever the product or service is, no detail is too small.

At this point, we had the “voice of the customer,” but we had more than that; we had lived in the customers’ shoes for 60 hours. There is a huge difference. Steve Jobs famously said, “no one ever knew they needed an iPod.” However, Steve Jobs was a careful observer of people. He built a product no one knew they needed by observing people living their lives.

2) Friction points are prioritized, categorized and agily dissolved.

When we completed the research, we had a list of over 200 sources of friction between new customer acquisition and account retention (in this case, the ongoing replenishment of services required to operate the product.) We first synthesized this list down into around 100 mutually exclusive items. We then grouped the items by theme:

  • Learning / Research
  • Purchase Mechanics
  • Buyer / Influencer Mechanics
  • Competitors for Time
  • Payment
  • Logistics / Fulfillment

At this point, we transitioned to the mode of an agile product team. We now had roughly 100 rough edges that needed sanding down. Instead of throwing the go-to-market process out, we instead started hacking away at friction points in small sprints.

One of the most serious problems we identified was in finding the web page for product replenishment, and once getting there, remembering credentials. Several individuals we observed searched for the site for almost a minute, and did a “forgot password” reset every time they got there. This made them visibly irritated to go to the site and was clearly an emotional deterrent to continued usage. We hit that problem first.

Another key observation was a clear emotional attachment to a “competing” product (not really a product—just a way of doing things.) The client’s product caused the customer to have to abandon another process that they found rewarding. We needed to replace this sense of emotional reward. Harder, but doable. And so on, and so on.

 

The Result:

Increased annual retention rate by 5 points.

Nothing changes overnight, but some of the first changes enacted—after prioritizing friction points—led to startling results. Fixing the password and website memorability problem drove password resets down by over 50%, and logins up by 10%. This led to an increase in annual retention rate by around 5 points.

The emotional fix was harder to measure, but we heard good things from the sales force, and retention has steadily increased in the approximately one year since the research completed. The best part is, the changes keep coming, as the insights surfaced are still being hit by the go-to-market “agile product team.”

At the company, this has led to a new way to think about the role of marketing, sales, and product. Instead of working in silos, teams have started seeing things holistically from the eyes of the customer, and imagining “how this would feel,” vs. doing things to change a number.

 

Lessons Learned:

Watch your customers (and prospects).

At MarketBridge, we talk about “outside kids” and “inside kids.” “Inside kids” are content to sit at their desks and play with data. Data is great; I am a data scientist. However, there is no substitute for seeing things with your own eyes. Qualitative research is sometimes disparaged by arrogant direct marketers; I’ve heard many of these comments. And yet, Google spends tens of thousands of hours watching people interact with one screen. Do you think they might know something others don’t?

Download a PDF version of this case study:

Episode 3: How Are You Managing Revenue Risk?

The Killer Slide Series on Data-Driven Revenue Growth

In Episode 3, MarketBridge CEO, Tim Furey, addresses an unpopular but important topic for revenue growth – Are you paying attention to revenue risk signals? The right data-driven signals can remediate potential revenue misses before they happen. But why aren’t companies leveraging these signals more often? Could the structure of your organization be keeping you from detecting these signals?

Learn how product usage, customer service, social media signals and more could be crucial to identifying revenue risk. Find out which signals help prevent customer attrition, gain share-of-wallet and acquire new customers all while allowing you to identify areas of opportunity and innovation.

Which signals does your team pay most attention to? Which signals would you consider exploring greater?
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3 Reasons Customer Retention is Much More Than a Loyalty Program

Customer retention can be a financial game-changer in your company’s success. Harvard Business Review reports that increasing customer retention rates by 5% can increase profits by at least 25%[i]–with some companies able to nearly double their profits.

Most CEOs and marketers alike understand the importance of customer retention. But many mistake a loyalty program as the solitary means for improving retention rates. Here are three reasons effective customer retention is so much more than a loyalty program.

Reason #1: A loyalty program works great…to already loyal buyers. Everyone loves a good loyalty program and why not? A strong program improves retention rates to a very important segment of your database: loyal buyers. Just ask Amazon about the successful launch of its Prime business. Still, in today’s competitive marketplace, there’s a hard truth many companies are choosing to ignore: Less than half of enrolled U.S. households become active loyalty customers[ii]. Which means a strong loyalty program may keep loyal buyers buying, but do little else to engage, let alone retain, the rest of your customer base.

Reason #2: A loyalty program puts the focus on what your company needs – rather than on your customer’s needs. Discounts and rewards are popular loyalty program incentives. But let’s face it, these tactics have a very clear agenda: To drive sales. They work well when your product is something your customers purchase frequently. But if you’re not selling coffee, sandwiches, or even airline miles, are you taking the time to find out how to satisfy your customers’ needs? A staggering 60% of members feel that their loyalty programs do not actually target their needs. [iii] Ouch! Not meeting the needs of your customers is a sure sign you’re not likely to retain them.

Reason #3: A loyalty program tends to be a one-size-fits all approach. Today it’s all too common to see one specific loyalty offer mass-marketed to everyone on a loyalty list at the exact same time. This tactic may have legs say, during the holidays, but at any other time it’s hard to generate success that’s scalable from a one-size-fits-all loyalty program. Effective customer retention requires connecting with the right person at the right time with the right message. And that means using targeted segmentation, personalized offers, as well as contextual timing within a customer’s buying cycle. Does your loyalty program do that?

If you answered no, you’re not alone. So here are a few ways to start thinking about a more comprehensive customer retention strategy—one that extends beyond a loyalty program.

If you’re looking to get more traction from your current customers, begin by looking at your customer data in search of answers to questions such as: Who is most likely to buy additional goods/services from you? Who is most likely to churn out of your active buyer file and become inactive? Who is likely to keep purchasing regardless of a deep discount offer?

As the answers to these questions emerge, you will discover new ways to segment your list, such as grouping At-Risk versus Core versus High-Value customers. Once you’re able to segment to this level, you can begin to develop a messaging and offer strategy personalized to each segment.

For instance, when targeting At-Risk—a group “at-risk” of no longer doing future business with your company—you may offer deeper discount incentives and aim to increase overall engagement through highly interactive communications.

Approaching customer retention this way, it’s easy to see how a loyalty program is simply one-part of a larger, more comprehensive strategy to retain your customers—one that when executed well could drive game-changing revenue for your business. [iv]


[i] https://hbr.org/2000/07/e-loyalty-your-secret-weapon-on-the-web

[ii] https://www.bigcommerce.com/ecommerce-answers/how-market-loyalty-program-and-get-people-sign/

[iii] https://www.bigcommerce.com/ecommerce-answers/how-market-loyalty-program-and-get-people-sign/

[iv] http://www.inc.com/guides/2010/08/get-more-sales-from-existing-customers.html

What is Loyalty? A Feeling, Expressing Strong Support for Someone or Something

It’s a term that has redefined the way we do business. More and more organizations are discovering that the key to long term business success isn’t rooted in what you are selling but rather who you are selling to. Developing loyal relationships with customers keeps businesses thriving year after year. Just think about what keeps you going back to some of the same retailers or service providers. It’s easy to see why loyalty and customer relationships are an essential component of business today. In fact, 70% of buying experiences are based on how the customer feels they are being treated.

A former director of a telecommunications firm captured the concept of customer loyalty quite well: “Today’s competitive markets require that we not only sell and service more customers than ever before but that we stay closer to each one.” And organizations have been getting a lot closer to customers. In fact, loyalty program membership grew 26.7% from 2010 to 2013 and the average consumer is a member of 7.4 loyalty programs!

However, your loyalty experience as an everyday Starbucks consumer is a lot different than your experience purchasing marketing automation software for your small business. Why is that? What makes B2B loyalty programs different from B2C programs? What can B2B marketers learn from B2C marketers and vice versa? Join us on this 4 part loyalty series as we dive into customer loyalty with a focus on B2B organizations:

Part One –Why Loyalty? : The Importance of Loyalty Programs for B2B Organizations

Part Two – Rewards, Rewards, Rewards: How to Pick the Right Customer Reward for a B2B Loyalty Program

Part Three – The Perfect Package: How to Deliver a B2B Loyalty Program to Customers

Part Four – Loyalty Lessons: What B2B Organizations Can Learn from B2C Loyalty Programs

Stay tuned over the coming days for each new part!

References:

  1. Customer Loyalty: How to Earn It How to Keep It, Jill Griffin

Want Loyal Customers? Humanize Your Digital Marketing Programs

One of the most significant business metrics you can track is customer loyalty. Digital marketing loyalty programs are a necessary activity to take the pulse of your brand and your customers. Forecasting your future growth is also easier when you know how loyal your customers are.

Building brand loyalty through your digital marketing programs has huge impact on your bottom line, but to ensure success it’s important to focus on personalization. To start building loyalty, let’s look at the top tips to use in your digital programs.

Loyalty Requires a Human Touch

Brands that focus on humanizing their communications will see stronger returns when building customer loyalty.

One easy way to inject some personality into your communications is to use a human voice to alter your social media interactions and any videos you create. Allow your social channels to engage with a persona as opposed to just a brand. This means using personal pronouns, adding in a touch of humor, and avoiding the third person. It is critical to document this persona so that your brand stays consistent across all channels.

For your sales team and customer service representatives, allow them to sign their names at the end of notes, tweets, posts and more. Try having your marketing campaigns come from an account representative rather than the generic marketing department. Attaching a persona to your communications is an instant reminder that there are people working at your company to keep the customer happy, and that personal touch is key to loyalty.

 

Where should your brand interject? Read this blog to learn how to mine digital and social conversations. Know what’s really happening and where to focus your communications.

Advanced marketing organizations are using content as an opportunity to personalize the customer experience. Personalized communications yield higher retention rates and prevent customer churn. Using customer data to predict which offer or message to send your existing customer segments is a surefire way to keep customers engaged. Your existing customers should not be getting the same offers as your prospects. You will realize a significant increase in customer retention if you set up different programs informed by customer data with the objective of driving loyalty.

Loyalty Tips: Content Marketing Programs for Loyalty

Loyal customers consistently use your products or services. You can increase their loyalty by providing tips and tricks that improve the functionality of what you offer.

Tweak your content strategy so that you’re constantly creating and distributing special educational content for your existing customer base. Provide your repeat customers with education, tips and information that relate specifically to them. This personalization ensures subscription renewals, repeat purchases and more. Consider building a customer success team dedicated to driving loyalty, cross-sell and upsell.

After providing your central customers with tips, start to work on education programs for new customers acquisition. The goal in this education is to make it easier to understand your offerings and how people benefit from using your product or services. Have your customer success team manage customer testimonials and case studies to build a library of triumphs and stories for your sales team to leverage. Be sure to map your content to actionable personas and buyer journey stage. The best way to get started with matching your content is to look to your existing customer base to understand their path to purchase. Again, the demand generation team should work closely with the customer success team to ensure alignment and happy customers!

When building brand loyalty, keep your content mix exciting. Repurpose written content to easily turn around videos, guides, articles and infographics so you reach a diverse customer set with content in the format they want to consume.

What is content personalization? Let alone knowing what it is, 60% of marketers report it’s a challenge to execute. Read what it is and how to execute >

Celebrate Customers

Do your customers have success stories related to your brand? How often do you share their story with the world? Celebrating your customers can be a significant digital marketing loyalty tool, especially when you downplay your role in the initial announcement. Have a strategy for creating customer success stories. Don’t limit this to wins that you are involved in. If a client shares great news online, especially on social media, provide shares and retweets to build rapport.

Ensure Success

Building brand loyalty involves taking care of your customers. For example, if a new customer signs up for a service or product you offer, create information materials to assist them in getting comfortable with your brand. Digital marketing is the lifeblood of customer loyalty. These tips can help you build a smarter, stronger program and turn new customers into customers for life.

By 2020, >80 percent of the buying process will occur online without any direct human-to-human interaction. Download the Ultimate Guide to the New Buyer’s Journey for step by step strategies on how best-in-class organizations approach this challenge:

Why Your Loyalty Program is Missing the Mark, and How to Change That

Loyal customers are the Holy Grail for any business. That’s why marketers, account executives, sales representatives and customer support teams all have a shared goal of positive interactions that increase loyalty.

One of the best customer retention strategies your business can adopt is a loyalty program. Loyalty programs can help you build a strong customer base with low turnover, and it’s typically not expensive. Loyalty programs also improve customer retention because they provide a feedback loop to help you continually meet changing customer demands.

Unfortunately, some of the best customer retention practices overlook loyalty programs and miss the benefits that come with them. Here’s why you should capitalize on loyalty programs, especially if your competition doesn’t have a comparable offering.

Most organizations have loyalty programs, only those doing it right can call it customer retention

According to Marketing Metrics, the probability of converting an existing customer is 60-70 percent (vs. 5 to 20 percent of new prospects). However, most companies fail to manage customer retention because they either don’t engage through the customer journey, they don’t personalize offers or they haven’t implemented loyalty programs when many of their competitors have.

Loyalty programs are a proven way to grow business. Depending on the study, average growth will range from roughly 8% to 12%, with just the basics. A few online retailers have seen growth rates increase by more than 100% in incremental shares.

Loyalty programs have become a proven model to not only increase return visitors and sales, but also to grow new sales. It’s a platform that provides lead conversion with a message you don’t have to adjust for most viewers.

Loyalty programs for customer retention have also become a hit with millennials, as nearly half say they are willing to go out of their way to use a website or shop at a store where they receive benefits from a frequent-buyer program. The great part about targeting millennials is that they have little distinction between online brands and traditional brick-and-mortar retail stores.

This means you can implement loyalty program best practices and capture the millennial market. Millennials continue to play an important role in B2B decision making, and their influence is only expected to increase. By implementing a loyalty program today, you’re providing your business with a future strategy that’s already proven to work.

What great customer retention looks like

Now that you know why loyalty programs are proven to work, let’s look at customer engagement and retention tips to help you engage with existing customers as if they could be big buyers again:

  • Segmenting your existing customer base and creating personalized digital engagement programs based on predictive pathways is key to breeding loyalty. Identifying influential customers to develop as evangelists and enabling them to promote products is a great way to do this.
  • Executing Omni-channel campaigns is the best way to capture online and offline data of your best customers and predict the next logical offer to keep customers coming for more of your product or service.
  • Routing to Account Management Teams when the time is right is important. Package the data insights you’ve collected and the content recommendations you’ve gathered and pass to your Account Executives to up-sell, cross-sell, and delight your customers.

Make Yourself Discoverable

A key customer retention technique that’s often overlooked is search engine optimization. At first glance, SEO doesn’t seem like it would have a large role in loyalty programs and customer retention. After all, what do your keywords mean for securing customers you already have?

Keywords actually improve discoverability, helping your potential and existing customers find your business and your loyalty programs. Customer retention is also about driving customers back to your site, and you need to show up in their search queries in order to draw them back.

Matching your most popular keywords to your loyalty programs improves the likelihood that someone will sign up to start getting a reward. It works if you’re a restaurant and you build an SEO strategy around the name of your business and the word “coupon” — or even a software vendor who ties a product name to a key problem-solving feature. The best customer retention strategies include a loyalty program that you can offer to your customers and can be found by potential customers, giving you leverage over your competition.

Make sure your SEO and customer retention strategies promote loyalty among your customers. Contact us today to learn more about how MarketBridge can help.