Most businesses place more emphasis on customer acquisition over customer retention. They are unaware that the cost of new customer acquisition could reach a staggering percentage of 700%, based on the research reported by Frederick Reichheld (Director of Bain & Company). On top of that, time cost is also one of the crucial factors in customer acquisition. Thus, it is more feasible for businesses to adopt customer retention strategies to build a sustainable business approach.
Due to the relatively high acquisition cost, it makes total sense to nurture and satisfy existing customers. Imagine, after spending so much on acquiring a new customer, but due to poor customer satisfaction, the acquired customer could easily sway over to a competitor’s product/services. Customer retention may take a longer time but it also creates a certain degree of stickiness, which is also known as customer loyalty.
Customer loyalty provides long-term values to your business. Most people are only interested in the recurring selling part but neglected the part whereby loyal customers would be more proactive and will provide sincere feedbacks on how to improve your business. Moving on, the best layman method to gauge whether the customer is loyal or not, by just asking one a simple question: “Would you recommend our services/product to a friend?”
Customer loyalty has evolved briskly and it is time to say goodbye to conventional loyalty programs that is lacking on the feedback and analysis part. A very prominent example would be paper loyalty cards. Those cards are passé because you would distribute paper cards without the capability of having any customer insights. Furthermore, there is no way to measure the effectiveness of the imposed loyalty program.
At present, customer loyalty requires the elements of the Customer Relationship Management (CRM) system to serve as the adhesive glue for businesses towards customers. E-loyalty is a generic example efficient and revolutionized loyalty program. E-loyalty usually work seamlessly with your current business and it helps to track data. These data are the key to a successful business that builds on top of customer loyalty. With the aid of technology, data could be mined real time and with a high accuracy in the sense of analytically and cost efficient manner. By pursuing the e-loyalty program, it creates customer engagement that will lead directly to increasing the up-selling and cross-selling opportunities.
Mobile based loyalty is a legit example of how businesses can leverage on the advantage of technology to create a sustainable business. It provides a B2C channel to communicate with the customers and allow a business to be agile. Thus, having an e-Loyalty is the way to go. It provides proper focus, insights and a more promised way to create a more sustainable business.
### Special Thanks for our Start-Up Entrepreneur Commentator ###
Jermaine C, is the Co-Founder of Chop Chop, a consumer discount and rewards community website based in Malaysia. As a start-up entrepreneur, Jermaine and his team believes that there are better alternate ways for them to rewards the ever demanding consumer market with bigger rewards, incentives and discounts, with their dreams to grow Chop Chop into the next Groupon in Asia, though very different.
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