While acquiring new customers is a priority for many businesses, it’s certainly not cheap. According to Invesp, it costs five times as much to attract a new customer than it does to keep an existing one. Despite this, only 18% of businesses prioritise customer retention over customer acquisition.
Clearly, there’s a flaw in how businesses think about customer growth. Phil Foster, Managing Director of Love Energy Savings, one of the UK’s leading energy comparison sites, describes it this way:
“Trying to grow purely through the acquisition of new customers without considering the customers you already have is like trying to get water from a well with a bucket full of holes: you’ll lose just as much as you’ll gain. The obvious solution is to fix the holes first, but so many businesses are afraid of losing their perceived momentum that they put off doing this for as long as possible, not realising that it’s stunting their growth in the long term.”
Investing in a “Customer for Life” strategy is an effective way to reduce expenditure and boost profits. Research conducted by Bain & Company revealed that a 5% increase in customer retention rates can boost profits by between 25% and 95%.
Fred Reichheld, founder of Bain & Company’s Loyalty Practice, explains it like this:
“Return customers tend to buy more from a company over time. As they do, your operating costs to serve them decline. What’s more, return customers refer others to your company. And they’ll often pay a premium to continue to do business with you rather than switch to a competitor with whom they’re neither familiar nor comfortable.”
The bottom line is this: customer retention is good for your business, and in 2018, it’s more vital than ever in helping you succeed.
So, how do you go about turning those one-off window shoppers into brand ambassadors?
- Measure customer retention
Peter Drucker, often hailed as the “father of modern management”, once said “If you can’t measure it, you can’t improve it”.
It’s a quote that has fast become the mantra of many a marketing director and it’s especially relevant when it comes to customer retention. If you’re not currently measuring how customers are interacting with your site over multiple visits or transactions, it will be impossible to see whether the changes you make have any effect.
So, the first hurdle you need to overcome is how to measure customer retention.
Track both new and returning customers
If you’re familiar with using analytics tools, you should use them to track two basic metrics: new and returning customers.
As a basic rule of thumb, you want both of these numbers to increase over time, but – since returning customers are more profitable – returning customer data is the one you’ll want to keep your eye on.
Set a benchmark based on the previous data, such as the number of returning customers you had last quarter, to measure against your current performance. That way, you can measure the impact of any new initiatives you might want to try.
If you haven’t used analytic tools before, there are a number of free options you can get started with, including Google Analytics and Open Web Analytics.
Identify points of difficulty in your customer journey
If it’s difficult to interact with your business, it doesn’t matter how good your products are: customers won’t buy them. You have to ensure that the entire journey, from browsing to buying, has as few hurdles as possible.
Take a look at the pages of your site where customers typically drop off the most; maybe it’s the page where customers are asked for their personal details. Then take a look at why customers might be leaving this page. Are there too many mandatory fields? Is it unclear what customers are meant to do once they’ve filled in their details? Is there a clear call to action?
You can use A/B testing tools like Optimizely and Unbounce to see whether the changes you make based off your observations help customers get to the next page.
Assess customer spend and transactions
Identify not only what your customers spend on an average purchase, but how much the average customer spends over the course of a year, or how many transactions they make.
You can use this data to establish your Customer Lifetime Value (CLV) – once acquired, how much does a customer spend with your company? Measuring CLV will give you a much better idea into how much a customer is worth to you and how much you need to invest in improving customer experiences.
- Invest in experience
When Uber took the taxi world by storm, it did so by giving users an easier way to get a ride than had ever been available before. Millions of app downloads later, it’s a lesson in how making customers’ lives easier can lead to massive business growth.
Improving customer experience can ensure your customers transact with you again and again, even if it might be cheaper to go elsewhere: research from Oracle shows that 86 percent of users will pay more for a better customer experience.
That said, here are a few easy ways you can invest in customer experience.
Make it as easy as possible to buy from you
Basket abandon can be a big issue for businesses, so take a look at the analytics data of your checkout journey to see how you can improve this experience for your customers. Are you asking customers for too much information? Is it unclear what they need to fill in and what they can skip?
Solve problems quickly
Customers will always have the odd problem that they need help with. It’s up to you to ensure that when they need help, they get it from you readily.
Add on-site live chat facilities across the site so that users can ask for help while they’re still thinking about purchasing from you. You should also include a help link in order confirmation emails so that if a customer has any questions about their order, they can talk to you about it straight away.
Spoil your customers
O2 users get priority tickets to gigs all around the UK. Amazon Prime users get free next-day delivery and instant access to thousands of films and TV shows. Nandos give their customers a free whole chicken on every tenth visit.
The reason these companies invest in rewards is because they work. Spoil your customers by offering them gifts, exclusive discounts or unique experiences and it’ll be difficult for a competitor to win them over on price alone.
- Embrace complaints
If there’s one group of people who know what you could improve, it’s your customers.
Customer complaints often highlight key issues within the customer journey. David Ingram, Managing Director of Bring Digital, says that customer feedback is vital for retention and growth.
“It’s important to know as early as possible where you’re creating friction with your customers because this compounds over time. Find a way to get regular, honest feedback from your customers and use that to your advantage.”
Here’s how to get more customer feedback and start making the changes that matter most.
Don’t just wait for customers to leave you feedback – ask for it at every opportunity.
You can encourage more feedback with email surveys on the back of a customer’s first order and links to a preferred independent reviews website. Show customers that their feedback is valued by incentivising them; perhaps they could be entered into a prize draw or get a discount on their next purchase.
Once a customer has left their feedback – whether positive or negative – thank them for doing so. A great way to do so is by publicly thanking a customer on social media, or even sending them a personalised email.
Tell customers when you’ve made the changes they asked for
Don’t let the conversation end at “thanks”; you need to show customers that you’ve listened to them.
The only way to do that is with tangible action.
If you make a change to one of your products based on customer feedback, let them know. Get in touch via email or social media and highlight the original complaint and what you did to resolve it. Customers that see you making changes on their behalf will feel more valued and connected to your business, increasing the likelihood that they’ll come back to shop with you again – even if their last experience wasn’t positive. This positive interaction can also lead to customer referrals – helping you to save on new customer acquisition costs.
Make your customers the life of your business
Even in 2018, when technology appears to dictate everything we do, companies who make their customers feel valued are the ones that succeed.
So make it your year for measuring success, treating your customers better than your competitors and engaging with customer feedback and you’ll enjoy genuine long-term customer satisfaction that boosts your profits and puts you ahead of the rest.
Want to know how else you can save money while your business grows? Check out our guide to switching your business energy.
China’s factory activity growth likely moderated during February holiday lull – Reuters poll
BEIJING (Reuters) – China’s factory activity likely grew at a slightly slower rate in February as factories closed for the Lunar New Year holiday, a Reuters poll showed, although growth is expected to remain firm, buoyed by an early resumption of production.
The official manufacturing Purchasing Manager’s Index (PMI) is expected to dip marginally to 51.1 in February from 51.3 in January, according to the median forecast of 20 economists polled by Reuters. A reading above 50 indicates an expansion in activity on a monthly basis.
Chinese factories typically scale back operations or close for lengthy periods around the Lunar New Year holiday, which fell in the middle of February this year.
However, the resurgence of COVID-19 cases in the winter had prompted local governments and companies to dissuade workers from travelling back to their hometowns, giving a boost to the earlier-than-usual resumption of production at many factories, analysts say.
“Although government COVID-19 prevention measures may constrain some manufacturing activities in the near-term, the fact that a majority of migrant workers stayed in their workplace cities for the holiday should facilitate an earlier resumption of business activity following the holiday this year,” said analysts at Nomura in a note to client on Thursday.
Wang Zhishen, a migrant worker from Gansu, told Reuters that his factory, a manufacturer of logistics boxes in the manufacturing hub of Dongguan, only closed for three days during the holiday, thanks to overwhelming businesses. Lured by the 1,500-yuan cash subsidy his factory offered, he chose to work through the holiday.
The Chinese economy has largely shaken off the gloom from the COVID-19 health crisis, with consumers opening up their wallets after months of hesitation. Growth is now set to rebound sharply this quarter, also helped by the low base effect of a year ago.
The country has successfully curbed the domestic transmission of the COVID-19 virus in northern China, with the national health authority reporting zero new local cases for the 11th straight day. Cities that were on lockdown have since vowed to push for a work resumption at full speed.
The official PMI, which largely focuses on big and state-owned firms, and its sister survey on the services sector, will both be released on Sunday.
The private Caixin manufacturing PMI will be published on Monday. Analysts expect the headline reading will dip slightly to 51.4 from 51.5 in January.
(Reporting by Stella Qiu and Ryan Woo; Editing by Sam Holmes)
Shell in Germany seeks to speed up drive to go green
FRANKFURT (Reuters) – Royal Dutch Shell in Germany aims to produce aviation fuel and naphtha made from crops and to increase to commercial scale an electrolysis plant that makes fossil-free hydrogen, as it seek to move away from crude oil.
The energy major told an online conference on Friday it had applied for subsidies to carry out the work from the European Union and from German funds earmarked for decarbonisation. It did not give detail on the expected cost.
The global Shell group has set itself a goal of net zero emissions by 2050.
At Wesseling, part of the Rheinland refinery complex, it plans to use green electricity to produce synthetic, carbon-free, power-to-liquids (ptl) to replace its conventional jet fuel and naphtha output, building a ptl plant from 2023 and starting production in 2025.
The ptl plant can also use wood as biomass input.
Hydrogen is also considered a green fuel when electricity from renewable energy is used in its production.
Shell said last September it will set up offshore wind farms to provide power and on Friday it said it could also start building a 100 MW electrolysis plant, to be called Refhyne II, from 2022, scaling up from a 10 megawatt plant.
“The product portfolio of the location clearly must change,” said Fabian Ziegler, head of Shell Deutschland.
To further the shift to clean transport in Germany, Shell also plans to equip petrol filling stations with electric car charging points.
Shell is already the owner of German solar battery maker sonnen. On Thursday, it said it has agreed to buy Cologne-based virtual power plant (VPP) operator Next Kraftwerke, Germany’s biggest VPP.
Next aggregates wind and biogas power production and markets it in balancing markets, which can help offset the unpredictable flows associated with renewable output.
(Reporting by Vera Eckert, editing by Barbara Lewis)
Why digital must be at the top of a retailer’s strategy
By Chris Burnside, Account Manager, Specialty Retail, UK & Nordics Global Sales & Verticals, Worldline
COVID-19 is constantly shifting consumer shopping habits from on-site to online, meaning that eCommerce is becoming the main driver of physical retailers’ strategies. Changes in demographics, innovations in payments, and evolving customer needs, as well as the current social isolation that the nation is dealing with are all shaping the retail sector of today.
Online shopping, price-comparison search engines, online coupons and cashback deals have created a new breed of consumers. These shoppers are smart, tech-savvy, hungry for deals and conduct their own research before making purchases. However, these connected customers tend to be bigger shoppers and might potentially become lifelong advocates (including via social media) to bring in more following for a specific brand.
Therefore, retailers must be well prepared to survive in these lucrative, yet challenging times as online purchases surge and consumers demand a way of paying for goods online.
Changing customer expectations
Today’s customers are becoming increasingly more omnichannel in the way they shop and expect to be dazzled by interactivity and connected services, while retaining the simplicity and seamlessness of payments. These shoppers also expect on-site shopping to allow them to mix online and in-store purchases, pick-up of purchased goods, and transparent refund and return policies.
Some retailers might ask what the benefits are of bringing in such demanding customers. However, these types of shoppers can increase a retailer’s profits substantially as they have been proven to deliver a higher value purchase track record compared to regular or smaller ticket item shoppers.
If any physical retailers are in doubt, they should simply consider the benefits that go along with becoming connected and offering their goods online. Firstly, online shopping offers a greater variety of ways to target individuals’ needs, from targeted ads and special occasions coupons to personalised gifts for shoppers that drives sales and generates new and returning customers.
The surging power of online
The other massive benefit is the ability to offer more online. Online is increasingly what more and more customers today are looking for. As more purchases are made online, brands must be mindful that physical retail space is getting increasingly more expensive, especially in top locations. Therefore, with an eCommerce model, businesses can choose a central warehouse located outside the city.
Another vital perk of going digital is the potential to establish direct engagement with your audience via social media. According to research by Facebook, more than 80% of people use Instagram to research their potential purchases and discover new trends and products.
When entering the world of eCommerce there are several challenges that retailers must plan for. These include, online fraud, a lack of local payment methods, no direct support for clients in case of issues or questions, lower authorisation rates and potential IT issues. However, a reliable partner can help mitigate these risks and help retailers to effectively design the registration flow and the checkout experience to retain paying customers and limit fraudsters’ activities.
Such providers have in-store solutions that provide a unified and safe payment flow that immerses and connects the buyer and the seller in this financial journey. It constitutes a set of comprehensive hardware and software-based solutions to open up retailers to more customers and boost their sales and conversion levels. Bridging the gap between online and physical stores by introducing digital kiosks, touch screens and VR experiences to POS transform the shops of today into the shops of the future.
The value of strong acquiring capabilities
Alongside omnichannel, it cannot be underestimated the importance of also offering effective, fast, and reliable acquiring services that are tailored to retailers needs based on regions and their risk appetite. It means the capacity to implement smart routing and switching to effectively optimise authorisation levels.
When offering their products globally, retailers must also consider the importance of having a well-thought out set of local payment methods. This is because one of the major differences between physical retail and online shopping is that once in the shop, customers are likely to pay for the products they really want whether by card or cash. Online sales, especially on local markets can be more complex. This is because they will typically choose a specific local payment method that they are accustomed to, such as BLIK in Poland, Sofort in Germany or iDEAL in the Netherlands. By not offering these, it can be a deal-breaker causing people to drop sales and search for stores that have these options at checkout.
The right acquiring capabilities, by having a global presence and massive knowledge base, can offer pre-implementation support to retail owners and guide them through the implementation process itself. Therefore, with a massive infrastructure and immense experience in the payments industry behind them, the right providers have the capacity to serve customers around the world and provide a seamless payment experience of the future, right here and right now.
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