To succeed in post-pandemic contexts, marketers will need to have a holistic understanding of what drives retention and accurately estimate customer value, argues WARC’s Asia Editor, Gabey Goh.
Attendees at the upcoming NGCX Summit Asia will be focused on how customer experience can and must adapt to a landscape defined by seismic shifts in consumer motivations and habits. Many marketers are once again prioritising loyalty or retention strategies, thanks to the disruptions wrought by the COVID-19 pandemic. A recent Gartner survey found that two-fifths (39%) of CMOs said they plan to increase sales of existing products to existing customers.
But the pursuit of customer loyalty and retention is no longer a simple one. Brands must invest in and reinvent ways to maintain relationships with customers post-purchase and nudge them towards repurchase.
And central to this rethink of retention strategies is the role that customer experience plays in convincing consumers that a brand is worth their continued time, attention and money.
Our recent WARC Guide to Customer Retention took a deeper look at this trend, with insights from across the world.
Taking a systematic approach to CX management
It’s only by understanding what really matters to customers (not just their opinions on what you produce) that you can design an experience that will repeatedly earn those decisions. However, being customer-led is easy to say but hard to do, writes John Sills, consultant at The Foundation.
He notes that many organisations find themselves taking a transactional approach to customer experience, pursuing a single score and reacting to issues as they arise. But good customer experience management relies on taking a systematic approach, prioritising those experiences that create value for both customers and the business, and assessing them from a functional, emotional, and commercial perspective.
It starts with the big picture of what genuinely matters to the customer and to the business,” he adds. “Then it works in a way that continually assesses performance through a customer and commercial lens, designing in line with the outcomes customers are trying to achieve and the organisation’s strategic ambition.”
Focusing on the most valuable customers for growth
Treating all customers as equals is tempting for brands, and usually enables marketers to take an inside-out focus, which puts the emphasis on their products first, and their customers second. A granular understanding of the most-valuable shoppers, however, can present deeper opportunities by targeting valuable segments and seeking to directly meet their needs, according to research done by Peter Fader, professor of marketing at The Wharton School of the University of Pennsylvania.
While conventional wisdom sees marketers focus on differentiation and/or scale, building strategies around the most-valuable customer segments can be a potent approach. Not treating all customers in the same way can seem counterintuitive, but many brands – such as banks – have successfully pursued this type of tiered approach.
Achieving that goal, he conceded, requires having the “chutzpah” to admit some customers are more “special” than others – an almost sacrilegious claim for many marketers – and then identifying buyers with similar traits.
“We're talking about long-term growth. We really care about not just having the best customers today, but who is going to be the best customers three, five, ten years from now,” he said.
CLV takes on renewed importance amidst new challenges
A customer lifetime value (CLV) programme can help companies not only accurately score high value customers, but also find ways to increase the value they provide to customers from their product and services ecosystem. While the crucial role of CLV modelling isn’t news to marketers in financial services or utilities, it is now becoming more established for product marketers as they experiment with direct-to-consumer models and prioritise first-party data.
And today’s data ecosystem presents new challenges, which require new skills such as Data Engineering and Machine Learning to successfully execute a CLV programme.
“However, customers are more likely to embrace companies’ use of behavioural data if they can see tangible benefits to their user experience,” argue Kantar’s Elizabeth Thomas and Moises Cohen. “CLV plays an important role in a brand’s path toward customer-centricity not only because it enables a 360 view of the customer, but because it can serve as a tool to personalise and optimise the brand experience. Organisations should look at CLV as their North Star because, when it is properly designed and managed, it can unify customer measurement across the entire company.”
Great brand experience, customer service and brand values will be more important than ever to retention. To succeed in post-pandemic contexts, marketers will need to have a holistic understanding of what drives retention and accurately estimate customer value.