A Simple Customer Rescue and Reward Plan
We’d like to share a short 6-step plan for customer retention, based on some years working in e-commerce. We’re going to find some key customers that you can rescue, and others that you can reward. Then help you reach them and increase sales.
Step 1. Segment your customer base. Rank your customers by amount of spend, then make the cut at a suitable point – somewhere like 10 – 20% of your total customers. You’ll probably be aware of the 80-20 rule (sometimes named the Pareto rule) which helps explain how a small number of customers are responsible for much of the sales (20% customers drive 80% sales). In the case of e-commerce, it’s often more extreme. We found on some sites that around 10% of the customer base brought in 50% of the revenue (and even more profit if you take into account acquisition costs). When you do the analysis, you may find it’s just a few hundred customers who make a sizable contribution.
Step 2. Identify your loyal customers. Survey your customers using the Net Promoter® Score question. You can find out how to do it in our 2-minute guide to the Net Promoter Score. Ask “Would you recommend us to a friend of colleague?”, with a 0 – 10 scale. Use the results to understand who in your customer base are “promoters” or “detractors”. You may get up to 30% of your customers responding, so this is a very good way of dividing up the base. Don’t forget to ask for customer comments.
Step 3. Draw up the matrix. See the chart above. On one axis, plot customer spend (or value). On the other, loyalty. In the top boxes you should have a manageable number of customers who represent a sizable portion of business, divided into those who would recommend you (promoters) and those who would not recommend you (detractors).
Step 4. “Customer Rescue”: Find the customers who are most at risk from defecting: High value customers that scored low ratings. If you do nothing, you risk losing repeat sales, or lose them to a competitor. At worst, they may warn their friends from buying from you. By reading their comments you can understand what the issues are. Don’t waste time – divide up the numbers and get your team on the phone to them within 24 hours of harvesting their comments. Failing that, personal emails will do. Acknowledge any problems, apologise if needed, and ask what it will take to put it right. Often, customers will make allowances for errors – and if you can surprise them by over-delivering on a fix, you may even turn them into evangelists.
Step 5. “Customer Reward”: Identify the high spenders who rate you highly. These are customers who are likely to make a repeat purchase, and with luck, bring you new customers. So give them the tools to do so. In the excellent book Creating Customer Evangelists (Huba/McConnell) you can get some good ideas on how to turn customers into referral machines – offer new product information, ask for product feedback, give small gifts. Surprisingly, there are more effective actions than financial incentives.
Step 6. Automate and track the progress. This retention model is not a one-off task – the successful companies bake these process steps into their sales DNA, and monitor which actions are most successful, while reducing the number of detractors. Keeping a customer is far cheaper than finding a new one.
Do the hard work, easily
Yes, you can do all the above steps using manual analysis. You can do it for next to nothing with low cost survey tools, if you have spreadsheet skills and plenty of time.
However, there is an easier way: CustomerGauge automates all the steps for you: segmenting, surveying, reporting, closing the loop. By integrating with e-commerce systems, CustomerGauge can survey every transaction with the Net Promoter Score question, and can often reach 30% response. Thanks to special reporting, the system automatically ranks customers (and repeat orders) by value, showing results in real-time, and providing call- and email-lists for actions. CustomerGauge even tracks open customer issues with internal workflow, and reports on returning customers.
Now all you have to do is come up with some creative ways of keeping your best customers recommending you to others!
CustomerGauge has built-in tools to identify your most loyal and high-value customers
Learn for free
Our upcoming webinar “Learn how to increase customer loyalty and grow online sales automatically” on 10 Feb 2010 has additional resources on how to keep customers. Details/sign-up here.
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CustomerGauge introduces new b2b survey tool for Net Promoter Score with publishable Document of Record
CustomerGauge announce new Net Promoter® Score tool for small and medium enterprises. The online system makes b2b surveys quick and inexpensive, includes many high-end features, and features Net Promoter Document of Record for publishing online.
Net Promoter Score with qualifications on Document of Record from CustomerGauge
Amsterdam, 1 Feb 2010 – Press Release:
CustomerGauge, provider of a hosted software solution for automatically surveying customers and calculating Net Promoter® Score, announces a new tool designed for small and medium enterprises. The new tool, “CustomerGauge b2b Edition”, allows companies to survey their customers or channel partners using the enterprise-standard Net Promoter Score, quickly, easily and at a breakthrough cost.
In response to the recent trend of companies announcing a Net Promoter Score without qualifications, the new CustomerGauge tool features a Net Promoter Score “Document of Record” listing the relevant information. This document acts as a certificate, and can be published internally within the organisation, or displayed online publicly to support press releases and act as a benchmark.
“We have been collecting company scores on press releases for our Net Promoter News site for over a year,” says Adam Dorrell, Managing Director, CustomerGauge “and we have seen a wide variety of reporting methodology, using different scales or with no sample size detail. To help the growing Net Promoter community, we have developed a Document of Record, which lists the relevant information in a certificate format. Using this certificate will allow companies to establish a new credibility with their Net Promoter Score reporting”.
Full size document of record (click to view online)
View our AcmeB2B demo site certificate online here
CustomerGauge b2b Edition also features HTML branded emailing with reminders, surveying in multiple languages, a real-time dashboard, advanced reporting showing scores for customer companies and individuals, segmented scoring and classification of “voice of the customer” comments. It also includes many features found on high-end systems – for example, results for separate divisions can be rolled up on to a single dashboard for internal comparison.
CustomerGauge b2b Edition is available immediately. Clients can be surveying within a few days, with results usually with 24 hours. System pricing starts at €3900 (approx US $5490), including three month subscription.
For product details and online demo, please contact info@customergauge.com.
About CustomerGauge
CustomerGauge measures loyalty and collects feedback to help companies to understand customer sentiment, centered around the Net Promoter Score standard. It is optimized for e-commerce and can be rapidly deployed anywhere in an organization, without investment in capital equipment or IT assistance. Customers include Philips, Canon and CMC Markets. The company is based in Amsterdam, NL.
About the Net Promoter Score:
Net Promoter® is both a loyalty metric and a discipline for using customer feedback to fuel profitable growth in businesses. Developed by Satmetrix, Bain & Company, and Fred Reichheld, the concept was first popularized through Reichheld’s book The Ultimate Question, and has since been embraced by leading companies worldwide as the standard for measuring and improving customer loyalty. Details: www.netpromoter.com *Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.
