Keys to Improving Customer Retention through
Relationship Marketing Programs
Lee Marc Stein developed this checklist with
copywriter Mark Hallen, in preparation for a major
client. They came up with so many ways to improve
customer retention, we couldn’t fit them all in one
issue! The final 10 will be unveiled in next month’s
Marketing Advisor. View the first 11 keys here.
1. Realize that your Retention Program starts on
If your business model involves lead generation, Day
One begins with your handling of the lead. You not
only affect conversion, but the tone of the entire
If you’re generating most of your new customers at
retail, Day One is what happens when customers open
the box after they’ve left the store. Are you doing
enough to get them to register with you? How can you
help them use the product more easily?
2. Assume that all new customers are created
As a general rule that worked in the past, a new
customer generated through direct mail always had a
longer lifetime value than a customer coming through
direct response TV, inserts, or retail. Now, because
of the Internet and because consumers are using all
their channel options, we don't know how good a
customer they're likely to be. Only performance can
dictate that. Therefore you won't be able to pick
and choose which customers to invest in with a
relationship program. As the relationship unfolds,
we can reduce or increase the investment.
3. Don’t try to start the relationship in the
While an action-based loyalty program can be
augmented at anytime, a true relationship program
will get the biggest return by beginning at the
beginning. There will be less effect with older
4. Make it easy to be a customer.
Remove some of the necessary barriers you set up for
suspects and prospects (e.g. automated email and
voice response, long login forms). Think about a
dedicated phone line for repeat customers. Some
companies have different (easy re-order) web sites
for customers than for prospects.
5. Reward and recognize longevity.
You can afford to give long-time customers
discounts, special services, and red carpet
treatment. Don’t think so? Do the math. In many
cases, it’s not even necessary to invest in a formal
“loyalty” program. Recognition can go as far in
exceeding customers’ expectations as rewards. Stage
and invite best customers to “inner circle” events,
even if the customer has to pay for the trip.
Example: For its Select Banking customers, Chase
arranges for a week-long golfing trip to Scotland.
Even having a dedicated phone line for long-term
customers can help them understand how much they’re
6. Divide and conquer.
Score your customers as you would prospects and
leads. You can do this in many ways – everything
from the old standard RFM (recency, frequency,
monetary value) to share-of-wallet and potential
based on relationships with other direct marketers.
Once your customer files are scored, break customers
up into distinct groups and build mini-marketing
plans based on the segments’ unique needs, previous
behaviors, established predispositions and potential
to grow. Be sure to establish control groups within
each segment so you can see the incremental value of
your new marketing efforts.
7. Personalize and customize.
Think about how good it feels when the waiter at
your favorite restaurant greets you by name and
knows exactly where you want to sit. You return
again and again and always tip more than usual. The
same thing works even with hardened enterprise IT
buyers. Give them advice, counsel and content
specific to their needs. There’s no question that
direct marketers have the technology to do this.
8. Market to the life cycle stage and to the
New customers have different needs and expectations
than those you’ve had for years. What’s even
trickier is that new customers acquired today will
probably have different needs than the new customers
you acquired three, five or ten years ago did. Do
the research to understand and respond to these
Track triggers to certain behaviors and use those
triggers to time your messages. When is a customer
most likely to buy again? Immediately? A month
later? A year later?
9. Ask them what they want.
Most people want their opinions heard. And they’ll
like being asked for them. The act of surveying your
customers makes them think you care. When you report
the results of the survey back to them, that’s a
double confirmation of your concern. While you don’t
want to do format surveys too often, you can get
feedback after particular transactions.
10. Turn customers into stakeholders.
Build a customer panel and/or an advisory board and
invite customers to join. You’ll be surprised by how
many will join, share, refer and buy more as a
result of their participation. If you listen and act
on what they have to say, that not only builds their
loyalty but makes them more willing to reach out to
11. Use the power of referral programs.
No customer is going to make referrals and then
defect. Most customers will feel even better about
the value of your product or service when they refer
you to people like themselves who have stronger
Don’t forget to check back next month for the second
half of Lee Marc Stein’s 21 improvement keys!
Marc Stein’s Direct Marketing Newsletter Issue #55.
Reach him at firstname.lastname@example.org.
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