Customer service is becoming increasingly more important than product and pricing. Organizations realize that they need customer loyalty for repeat business and the acquisition of new clientele. Harris Interactive Research indicates it is 6-7 times more expensive to bring in a new customer and 86% of people will pay more for better service. Companies are keenly aware of these statistics and yet they continue to focus on acquiring new customers rather than fostering relationships with existing ones. It is a lack of organization, technology and the ignorance of tried and true methods that keep loyal customers at a distance and companies struggling to keep them interested. Companies should focus on a customer for life strategy.
Customer Lifetime Value (CLV)
A major flaw of many companies is their ignorance to the Customer Lifetime Value or CLV. CLV metrics are useful tools for acquiring and retaining loyal customers. These people ultimately balance the costs of acquisition, retention and future spending. CLV metrics accurately determine customers who represent the highest future value and therefore, the model for future marketing efforts. Transactional metrics aid in further defining average individual transactions and purchases. Companies recognize the importance of using CLV metrics in their planning and yet few actually accomplish this task. According to Forbes Insights and Sitecore, currently only 58% use CLV, 18% plan to use it and a staggering 24% have no plans to use it or they simply don’t know. These tools are highly underutilized and as a result, few businesses have insight into their customer return rate and customers who generate the most value. Businesses are left with no marketing direction and the focus remains on acquiring new customers.
Data Failure and Company Disorganization
Perhaps a major reason why CLV metrics are never utilized is a direct result of company disorganization. Attracting and keeping customers is a focus for the whole organization, not just for marketing or consumer-facing departments. The problem lies in a total miscommunication among high level executives. It appears the CEO is usually informed of strategies regarding customer loyalty planning, however the Chief Information Officers (CIOs) and the Chief Marketing Officers (CMOs) are left in the dark. Forbes Insights and Sitecore reveal that only 27% of companies feel they are fully integrated, 58% feel partially integrated and 11% feel not integrated at all. The elimination of stakeholders creates confusion and disorganization within the company and results in a loss of customer retention strategies.
It is clearly not surprising that if human ignorance and disorganization is at the heart of shabby customer loyalty, the technology they use will fail, as well. The general goal is to gain a customer centric viewpoint by using various technologies. This seems like such a simple task and yet the overuse and inappropriate implementation of technology is staggering. Data gathering systems are fragmented and disorganized. There are far too many different means to acquire data and nowhere to systematically organize and store the data once it is collected. Forbes Insights and Sitecore claims that some organizations are using 36 different systems, while others are using up to 100. Companies’ complaints include duplicate data, loss of data or siloed data. It is a train wreck of information heralded by mismanaged and outdated technology.
The improper use of technology and data storage lends to the idea that customer personalization is impossible. And yet, businesses try to skip the aforementioned steps and go straight to creating a personal experience for each customer. This is an impossible feat with a lack of metrics, communication and badly used technology. Those three elements must be running smoothly before a company can implement a personal touch. However, this should be the number one goal of customer loyalty. Personalization is everything. Friendly call center representatives, customer emails and positive in store experiences are the face of a successful company who keeps loyal customers coming back for more. Happy and satisfied customers are the only reflection a business needs to know they are succeeding.
The Solution
The solutions to turning ideal customer service into a reality are simple. Practice and preach Customer Lifetime Value metrics every day. Use CLV to hone in on loyal customers who in turn will reduce the cost of acquiring new customers, retaining existing customers and future spending. The metrics reveal a “type” of customer with specific characteristics that can be the basis of a marketing strategy. Instead of shooting in the dark trying to appeal to everyone, acquire a specific personality that will enjoy your approach and frequently invest in your business.
The Implementation
While implementing CLV metrics into your company’s planning, be sure that all members of the company are informed of such changes. Reporting only to CEOs and then skipping your team often results in mass confusion and frustration. According to Forbes Insights and Sitecore, when CIOs or CMOs are involved in customer loyalty planning, integration between teams rises significantly. Clear communication within all levels of a company generates improved company performance.
Collaboration
A team that works cohesively can avoid the data catastrophe when departments are implementing new technologies and not informing anyone of the changes. The goal should be to have a central database collecting data with only a few methods of acquisition picked carefully by a team of employees from all levels in the company. The unit must be uniform, consistent and easily interpreted.
Cohesive data collection methods reveal consistent and accurate results which then allow companies to focus on personalizing customer service. If loyal customers are well established, it is easy to pinpoint the details necessary for producing personalized emails, store coupons and loyalty cards. The customer is already in favor of the store and will be impressed with the attention to making their shopping experience pleasant and genuine.
Conclusion
In a world where anonymity reigns supreme, people are desperate for human contact and validation. Life behind a computer screen is lonely and human interaction is in high demand. People want to be acknowledged and treated like they matter. Using CLV metrics, collaboration and communication throughout the company, a centralized database and customer specific messaging will keep customers coming back for more and turn a one time buyer, into a customer for life.
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