Understanding the place of customer retention in an economic crisis
By Godwin Anyebe
One of the major challenges of brand handlers during a pandemic is how to retain customers. As a matter of fact, report revealed that, brands need to accommodate customers and partners with uncertain or reduced incomes due to the COVID-19 pandemic or lose their business entirely.
Findings by CONSUMERS ASSEMBLY show that, many business owners and growth strategists are familiar with the age-old statistic that acquiring a new customer can cost five times more than retaining an existing customer. This makes customer retention especially important for every business to master, especially during the coronavirus pandemic, when customer spending is at an all-time low.
All over the world, brands are changing their policies and strategies to support their customers in these tumultuous times. For instance, In India, telco brand Airtel extended prepaid validity for more than 80 million low-income customers by almost a month even after it ended and added ₹10 (US$ 0.13) to customers’ talk time so they could continue to make and receive calls.
Companies are flexing their approaches to dealing with suppliers and customers alike, changing contracts and payment terms to support partners when cash flows are less reliable. They’re also looking out for society at large.
In China, Bytedance offered premium business plans for its Lark enterprise messaging and productivity tool for free and made the three-year business premium plan free for hospitals, schools and non-profits in Hubei province.
In Nigeria however, it is believe in some quarters that, brands exposed nothing but sheer hypocrisy. This could be seen when some of the big brands in the country were donating billions of naira to the government in order to contain the spread of the virus while prices of their products were skyrocketing. Some of them, few days after donating huge amount to government announced retrenchment of their employees.
Expressing his thoughts on this issue, a consumer advocate, Pwano Maxwell told CONSUMERS ASSEMBLY that; “talk is cheap, but effective action can come with a hefty price tag. Brands which have made noise about caring for customers and communities, the environment, or more specific causes, may have to dig deep if they are to keep the promises they made now that the world is in the grip of a deadly pandemic.”
What happens when brand purpose is put to the test – and will customers forgive those brands that don’t meet the mark,? he asked.
According to him, “a global crisis means those brands have to dig deep, there are winners and losers, and the intelligent brands, the competitive brands, are the ones that realise they need to activate their purpose now.”
“They need to communicate effectively and be authentic. In the long term they will gain,” he said.
While reacting to question on customer retention, he disclosed that; “customer retention management is not a one-person job; it is a team effort across your entire organisation. However, there are three primary groups that play an integral role in customer retention management: sales, marketing and product.”
“All three groups should always be involved in this process, as they will each need to adapt their operations to better optimise customer engagement, as well as asking questions such as; is marketing addressing pain points? Is the sales team able to demonstrate the value? Is the product solving the client’s problem? Knowing and tracking those metrics are critical to optimising your business to retain customers,” he added.
For him, retaining customers is important for the long-term success of any business that wants to stand tall in the midst of competition, because it is far more expensive and difficult to acquire a new customer than it is to retain a current one. For example, SignalMind reports that the probability of a sale from a new customer is only 5% to 20%, whereas the probability of converting an existing customer is between 60% and 70%. Additionally, repeat customers spend an average of 33% more than new customers.”
He further stressed that, “customer retention is especially important now, as the coronavirus pandemic has caused many consumers to pull back on spending and reconsider how and where they spend their money. This is making it nearly impossible to recruit first-time buyers, resulting in a greater need to retain current customers to keep revenue flowing. Customer retention is particularly important for corporate customers, since some of them are likely to undergo directional shifts after the economy reopens.
“If corporate consumers hit the pause button now, it’s very likely they won’t come back, because they will go in a whole new direction when the situation over. There will be mass disruption to buying behaviours.”
On her part, while x-raying customer retention strategies, a customer relations expert, Edna Idowu said: “There are several retention strategies you can use to separate yourself from the competition and keep customers engaged with your business – especially during this economic downturn. Promote your brand initiatives is key because people are more likely to buy from brands that they believe in and feel personally invested in. Use this time to promote the “why” behind your company and connect your customers with your company mission.
She stated that it is also important to communicate your value to your existing customers. Instead of filling their inboxes with generic emails about how “we’re all in this together,” limit your communication to valuable insights that can help them during this time of need. Providing valuable resources is a great way to remind your customers that you are there to help them.
According to her, a great way to stand out amongst competitors at this time is by assessing how your business can uniquely pivot to address a greater concern or need. Instead of trying to sell a product that is currently irrelevant to consumers, analyse what you can do differently to meet consumers where they are now and address their immediate concerns.
Offer virtual products or services.
Pivoting your product or service may mean offering it virtually. Technology, like telemedicine and video conferencing software, has made it possible for many businesses to continue connecting with their existing customers virtually. For example, some hairstylists have started offering virtual services over video chat, walking their clients through DIY haircuts. Analyse your business to see how you can use technology to continue supporting your loyal customers remotely,” she added
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