As we all know, customer shopping habits have changed dramatically in the past twenty years. Gone are the days when you would simply see something you like in a shop and then purchase it; there are now so many more stages in the customer decision making process that can be influenced positively or negatively. Technology has acted as a catalyst for this change and it’s become more and more easy to research products, read and post reviews and make the final purchase online. For online shops, this has sparked greater competition and the need to be constantly innovating and creating valuable content. For traditional shops, they come under threat from ‘showrooming’ and are forced to either create an additional online channel, move online completely or come up with new ways to increase customer retention / loyalty. Despite this, only 12% of the average marketing budget is spent on customer retention. Why do brands think it’s not a priority? A 2% increase in customer retention has the same effect as reducing costs by 10%.
It’s easy to think that customer loyalty doesn’t exist anymore. Some consumers base their purchasing decisions on price alone but this isn’t necessarily the majority. According to 60secondmarketer, 62% of online shoppers are brand loyal but there’s a possibility this 62% are sticking to the larger brands they know and trust. Smaller brands are disadvantaged by a smaller budget but even with limited resources it’s possible to increase your customer retention rate in a short space of time. Starting with the basics, the customer decision making process is a vital element to understanding buyer behaviour.
The traditional model is:
The problem with the traditional model, however, is that it is a little outdated and in need of a 2016 update. The modifications I would make are as so:
This model might not quite be making it into marketing textbooks in the near future, but the main point is that customers nowadays have higher shopping expectations, seek more approval online and wish to find the best deal available from the most convenient sales channel.
The way to increase your customer retention rate is to tap into these needs and provide a quick, easy, convenient and enjoyable online service. Here are our top 5 ways to increase customer loyalty which don’t involve reducing your prices: