On clients, a bird in the hand worth two in the bush

Kenyan brands can increase profit by up to 95 per cent by embracing marketing tactics that seek to retain customers rather than acquire new ones.

“The high cost of acquiring new customers renders many customer relationships unprofitable during their early years. Only in later years, when the cost of serving loyal customers falls and the volume of their purchases rises, do relationships generate big returns.

‘‘The bottom line: increasing customer retention rates by five per cent increases profits by 25 per cent to 95 per cent,” Frederick Reichheld, the author of the book The Loyalty Effect, states in an article for the Harvard Business Review titled The Economics of E-Loyalty.

Indeed, consumers who recognise the effort of a brand to keep them happy become loyal to it, thus leading to purchase returns and referrals thereby having a positive impact on the sales of a brand. Therefore retaining customers goes hand in hand with acquiring new ones. “In addition to purchasing more, retained customers become loyal ones who also frequently refer new customers to a brand providing another rich source of profits. On-line customers can, for example, use email to broadcast a recommendation for a favourite brand to dozens of friends and family members. Because referred customers cost so little to acquire, they begin to generate profits for the brand,” said Reichheld in the article.

In retaining customers, email marketing has been found to be one of the most effective tactics because it employs personalisation by including the consumer’s names. According to a study conducted by e-commerce conversion optimisation firm Invesp Consulting, 56 per cent of marketers cite email marketing as the most effective online channel for consumer retention.

Deploying personalisation through emails helps demonstrate to consumers that the brand values them because the message is designed in a manner that suggests it is specifically for them and not a group email.

Marketing strategies

“Emails are designed to get customers more engaged, whether they are totally inactive or just not taking full advantage of a brand’s product. If customers are not getting value for their money, retention emails are a great way to show them what they are missing,” this is according to Vero product email platform in an article titled Retention Emails Reduce Churn and Keep Customers Happy in its website.

“They are automated as part of a drip campaign, are triggered as a result of behaviour or lack of behaviour, encourage consumers to get more engaged and notify them of features, deals or events taking place that they would have an interest in due to their activities with the brand.”

An example of a firm which used retention marketing strategies in order to increase retention is Australia’s R&G Technologies. Following growth in the company, the number of customers increased and so did its employees.

However, customer satisfaction was on the decline with a rise of complaints. In a bid to improve this, the company resorted to issuing customer surveys via emails which measured satisfaction across areas that included: accuracy, attention to detail, partnership and helpfulness. “By asking the right questions, R&G Technologies was able to get actionable insights from the customer feedback that helped the company make better business decisions, retain more customers and grow revenue.

In 12 months after the introduction of customer surveys, it increased consumer satisfaction by 15 per cent which helped increase customer retention and decrease the number of unhappy customers,” according to a case study on customer retention tactics by consumer satisfaction monitoring firm Client Heartbeat. However, retention marketing effectiveness depends on the product. Fast moving goods are bought more frequently compared to electronics.

- African Laughter