Friday, April 25, 2008

Customer Retention--How the Internet Has Changed It

Read the first installment (strategy) here.
Read the second installment (acquisition) here.
Read the third installment (conversion) here.

When I began to think about this series of posts, my initial reaction was that retention had changed less than acquisition and conversion. I like the Peppers and Rogers model of retention – Identify > Differentiate > Interact > Personalize. It’s a data-driven approach to retention and that’s as is should be.

Long before the Internet, marketers who were able to identify their end customers and obtain a mailing address for them sent retention mailings—letters, catalogs, and offers of all kinds. The main difference is that the Internet allows more marketers, especially traditional mass media marketers, to identify their customers and communicate with them.

I was half right. Or maybe I was right until social media burst upon the scene a year or two ago. With that the retention scene was changed just as radically—and as permanently—as acquisition and conversion.

First, there’s email. My sense is that most marketers are using it badly. We have an email list and we blast emails to it frequently. It’s cheap—so what if we only get a small open rate or smaller (and declining) click-through rate? It’s not hard to get an ROI that looks pretty good. We should be asking how it looks to our customers. Are we contacting them too often with communications of too little relevance? Do we need to go back to the chapter on Segmentation 101 and begin applying it to our electronic communications? It will take a bit more time and effort, and therefore will cost a bit more. Will it be worth it in terms of both conversions and—even more important over the long run—the image of and trust in our brands? Look in your own inbox, take a quick tally of how many commercial emails are really relevant to your needs, and answer the question for yourself.

Second, there’s social media in the broadest sense. It gives us opportunities to push content—in a totally permissioned environment—to customers. In the process, it also allows us to reach people who might become customers, but my sense is that most of the best marketer uses of social media are for customer retention.

This whole blog is about social media, so let me just give you two brief examples, both from one of my favorite best practices sites. National Geographic publications and broadcast long predate the Internet, but they moved onto it well and smoothly. Take a look at the site and see how well they do cross promotions.

But my examples are pushing content to users on other sites and pages, all in ways that drive people to the site. They always have a great selection of screen savers and I change mine often. I’d love to show you the current Madagascar hibiscus, but my desktop is too messy. What I can show you is the bar that remains at the bottom of my desktop page. That’s a constant reminder of who provided the lovely photograph that improves my pc experience and imprints the National Geographic brand in my mind.

Then there’s the widget I downloaded to another blog a couple of months ago. The Green Guide Tip of the Week widget is perfect for the “Living Green at Wellfleet Bay” blog. I had to cut the size down a bit to fit in the column, so it’s a bit

small, but it works. If you look carefully, you can see that there’s the tip itself and two more pieces of “green” content that would drive readers to the National Geographic site. What you can see is the large “Get This Widget” bar. It should be somewhere; it is one way to increase the distribution of the widget. However, it’s the largest item and it’s easy to mistake it for the content. When you click, you get HTML, which could be confusing to the non-Web 2.0-savy reader. Overall, it’s a great performance, though! Their newsletters are wonderful in terms of content, but I don’t get the sense that the content is personalized to my activities on their site.

We all need to do branding. That applies to current customers as well as prospects. We all want to bring users to our site. We want customers to return frequently to consume content, purchase goods—whatever our objectives are. We want non-customers to come to our site in a way that makes them prospects for conversion. Good Web 2.0 applications can do both, but I maintain that retention is usually the primary objective.

For retention to work we have to be present in customers’ lives in ways that are non-intrusive but that support their needs and lifestyles. We have a lot to learn, a lot to experiment with, to make that happen. I suggest that Web 2.0 applications are a great way to accomplish retention in ways that are welcomed by our customers.
Sphere: Related Content

No comments: