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12 Internet Customer Retention Tactics

By Eileen Shulock, Managing Editor of Web Digest For Marketers

The 12 tactics below are gathered and written by the Managing Editor of Web Digest For Marketers, Eileen Shulock. Eileen combed the Internet looking for the best and brightest examples of customer retention tactics. She uses these tactics herself in her "day job" as the director of a major fashion e-commerce website.

Keeping customers is one of the most effective and yet neglected ways to control marketing costs. There are always new and inspirational tactics for holding onto those customers you've spent so much to acquire.

1. Offer Customized Content: Did you know that Amazon.com will create a custom blog for you based upon your preferences? It's called "Amazon Daily", and it contains posts by Amazon editors on your topics of interest. All you need to do to customize it is select the categories (from dozens) that you are interested in hearing about. Across a wide range of book, movie, entertainment and technology categories, for example, you could create a customized blog that only features posts on book awards, documentary films, XBox and Apple. It's a great incentive for you to go back to Amazon and keep up with your chosen posts.

In the same vein, think about customizing your own blog or site content so that visitors/customers first see information that they have tagged to be of interest. Or offer an even more well-rounded selection of content to them, such as blog posts wrapped around whitepapers and product information, all based upon selected areas of interest. It's a very good way to keep people coming back for more.

2. Offer Personalized Picks and Services: We all know Amazon.com does this to perfection. So let's look instead at Netflix, the online movie rental service. The various tools available at Netflix enable you to pick movies that you want to watch and put them in the order you want to receive them. The movies are sent to you through USPS mail, and when you're done watching your current movie, you simply mail it back in the postage-paid envelope provided. Sounds simple, right?

It's the personalization services that are probably most responsible for the loyalty of the 8+ million customers who use Netflix. For example, you can help the site learn about your preferences by rating movies that you've seen in your lifetime. Netflix will then build your ever-changing assortment of suggested movies based upon what you like and what people like you who have seen those specific movies have enjoyed. You can reserve new releases so that you get the latest flicks as soon as they're out. And the service stores the movies you've rented in the past so that you never have that disappointing "Darn, I've already seen this movie" moment.

3. Ask for Opinions: Both your satisfied and not-so-satisfied customers have lots of valuable information to share with you. I regularly send surveys to customers who have returned items to us to find out why they did so. I offer a dollar incentive, such as $25 off the next purchase, to those customers who respond to the survey. In general, I expect a 10% response rate within the first hour that the survey is sent out and a 30-40% response rate overall. For example, I sent a recent survey to 500 customers. That led to 200 responses and an "exposure" of $5000 in potentially available credit. However, I have found that only about 10% of respondents actually use the $25 credit. So for a redeemed $500 in credit (on approximately $5000 in total orders, btw) I gained enormous insight from 200 not-so-satisfied customers - not the least of which was the feedback that most were actually quite thankful that I cared enough to ask them about their online shopping experience.

4. Develop an Email Personality: One of the tactics that has worked well for me is the creation of a personal, chatty tone in all of my company's customer service emails, even those that are automatically generated. There is no reason for an email to read like an alien drone wrote it. Phrases such as "we're so delighted that you ordered from us" and "your fabulous new piece will be on its way to you in less than 24 hours" make it sound like there are humans who do care about whether our customers like shopping with us - and we do.

When we send one-on-one replies to customer complaints, that same tone is used. We actually teach this tone to our customer service reps and we do spend a great deal of time thinking about and writing our auto-generated responses. Tip: Every once in a while we actually - horror of horrors - pick up the phone and call a customer who has emailed us. We tend to get a better, more satisfied resolution from a one-on-one phone conversation.

5. Research Before You React: Do you have any idea how much an individual customer is worth to you at the point when he or she is ripping your head off for a customer service issue? Even though I don't have the world's most integrated systems, I always train our customer service staff to check how much a customer has spent with us over the years (and how often) before making any kind of service decision.

If the customer has a healthy purchase record with us, we will bend over backwards to satisfy her complaint. Refunded shipping? No problem. We'll even send a messenger to her door to streamline a return or replacement of damaged merchandise (if the customer is in a major city). On the other hand, if the customer has not shopped with us before, we have a different strategy which is designed to give her a good impression of our company at the time of her first complaint. And if the customer falls in the nether world of a "bottom feeder" looking to take advantage of us, that also guides our decision-making process. In the CRM systems world, this is called "differentiated service" to customers based upon their value.

6. Create a Client Portal: Service and software businesses are more and more frequently creating useful client portals in which customers gain access to exclusive information about the service, the industry or both. One approach is to enable customers to share information with one another in terms of experiences, tips and tricks. Google Webmaster Central does this very well. There you can search for the insights of other webmaster members in addition to or instead of more traditional help/FAQ content.

On a software platform level, my e-commerce service provider creates indices of all client site performance metrics, both overall and within specific categories. Therefore, clients such as myself can compare results with like companies and see where we are excelling and where we can improve. (If you do have clients or customers of many stripes, they need to be able to compare apples to apples in order for this kind of information to be meaningful.) Tip: A few years back, a major US bank created a client portal in which corporate customers could and would share tactics and strategies. One of the hottest tactics discussed was how to negotiate better contract terms with the sponsoring bank.

7. Reward Loyal Customers, Part 1: This may seem like a no-brainer, but how often have you seen ads or commercials for a service you already use wherein new customers are offered great deals while you just sit there feeling neglected because you're paying more for the same product or service? This is maddening to existing customers. The advertiser's conundrum is figuring out how to lure in new customers with a good teaser rate without alienating their existing customer base.

In the old days of direct mail, it was a lot easier to offer "teaser" rates to prospects without anyone else knowing about the promotion. in today's open market, Internet-style economy, it's much harder to do this stealth style segmentation. If you market in this way, you should have a program in place to satisfy those customers who complain, or some other value-add that keeps them happily in the fold.

8. Reward Loyal Customers, Part 2: Another way to reward customers is with one of those ubiquitous "membership" cards or programs that accrue points or whatnot the more you spend with the company. In some cases these types of programs have revolutionized industries - for example, frequent flyer miles. In other cases, they are not so great. Are you thrilled to learn that you have earned the right to subscribe to any of 75 different magazines based upon your platinum hotel membership? Probably not.

It behooves you to ask around and study those companies that offer programs that your family, friends and colleagues swear by. In our case, winners include:

  • AAA Member Services, for their excellent cross promotions with hotels and other travel companies;
  • T.G.I. Friday's Gold Points, where you accrue points for every meal and earn complimentary drinks and appetizers;
  • Amazon Prime, which gives selected customers complimentary two-day and discounted one-day shipping as well as frequent $25 "we love you" gift cards;
  • Harrah's Total Rewards, where the big spenders among us are comped everything from hotel rooms to dinners and shows in exchange for just showing up at one of their casinos. ;)

9. Triggered Coupons: There's nothing like the immediate gratification of a reward or a discount right at the point of purchase. In the real world, I love the CVS drugstore chain because every time I make a purchase and swipe my CVS ExtraCare card, two things happen:

  1. I get secret discounts on some items that are only available to members; and
  2. A three-foot long receipt prints out that is chock full of coupons and offers that can be applied to future CVS purchases. Truth be told, I don't use the coupons all that often, but it's so gratifying to get that enormous receipt full of savings possibilities.

Online, offers can be triggered by specific actions. For example, whenever someone signs up for my e-commerce company's email newsletter, she is immediately sent a welcome message with an offer to save 10% off of any online purchase. On the other hand, I am severely annoyed by companies that want you to jump through hoops after the point of purchase to earn a discount. No, it isn't really worth telling 15 of my friends about your company in order to earn your measly $10 "gift". There are so many ways to do triggered coupons right. Judging by the number of coupon addicts out there, it's a very popular tactic.

10. Make the Tedious Easy: Sometimes the best way to retain a customer is to simply reduce the amount of tedium in his or her daily life. Once small example of this results in my spending over $3500 a year with this particular vendor. What is it? It's a salad bar. What they make easy is the selection of the ingredients I want in my salad for that day. How they do it is via an online salad bar tool. My customized salad is then delivered to my office within 20 minutes. It's a rare day when I actually make the effort to do something for lunch other than order my "quick and painless" salad.

The lesson here? Focus on streamlining or taking away those annoying little details that your customers have to deal with day in and day out. If you can remove the tedious little pain points from my life, you may have me for life.

11. Plan a "Win-Back" Program: This type of program is rarely promoted or advertised and is typically pulled out as a last-ditch effort to "win back" a customer who has already made up his or her mind to leave. One of the staff at Web Digest For Marketers decided a few years ago to pull the plug on his AOL account. Well, when this particular staffer called AOL to tell them to stop billing for connectivity, AOL had a super-duper, very cheap rate available for this exact scenario. It was a very attractive rate. It caused this staffer to extend the service for another year.

12. Under Promise and Over Deliver: The publisher of Web Digest For Marketers makes it a common practice to give existing and prospective advertisers lower predictions of response rates than is typical. He actually spells out that he is looking to manage their expectations by quoting figures that are lower than average in terms of response rates and deliverability. The clients and prospects appreciate the candor and realize they're not getting a typical "sales job" filled with a bunch of happy talk and bombast. It has the effect of increasing the comfort level and trust in the deal.

So much of this sales process - and most sales processes - is about relationship building. Everyone wants a fair deal. If clients and prospects think they are going to get one and actually do, you're apt to hold on to those clients for a very long time and thus reduce your cost of acquisition. It is exactly this premise that is lost on most sales operations, both B2C and B2B.