The Laws of Customer Retention

Most of us understand The First Law of Customer Retention, which states if you do something that pleases your customers you give them a reason to keep doing business with you. We even understand the First Corollary to this law that says the more we please our customers, the more reasons they have to return. It seems, however, that few of us understand The Second Law of Customer Retention which states if we stop doing something that pleases our customers we do not just remove that reason, we give them a reason to take their business elsewhere. Of course, the more reasons we give them to leave, the less likely it is they will stay. 


Would your customers say your business is following The First Law of Customer Retention or the Second?

Turn Your Customers Into Believers

The aim in business is to have profitable customers who stay with you for a long time. After all, if every one of your customers was profitable to you and they all stayed a very long time, you would have an extremely successful business.

The best way to achieve this goal is to turn your customers into believers. Believers buy. Believers come back. And believers tell others.

Getting your customers to believe in you and your products is not an easy task because trust between customers and the companies they deal with is at an all time low.

Certainly, satisfying your customers is not enough to turn them into believers nor is it enough to make them loyal. When you satisfy a customer, you simply give they what they expect. When people just get what they expect, they are not impressed enough to become believers, loyalists or evangelists. Nearly 20 years ago, Xerox did research showing that “Totally satisfied” customers were six times more likely to re-purchase than customers who were simply “satisfied.”

The best way to turn your customers into believers is to create a customer experience so positive, so powerful and so outstanding your customers believe if they did not do business with you, they would be missing out. Then they will trust you. Then they will be loyal. Then they will be evangelists for your business telling others just how fantastic you are.

Best of all, the one thing they will not worry about is price!

The Power of a Simple Single Idea

What does everyone get at The Warehouse? That’s right, a bargain.

And why does everyone in New Zealand know that? Because we have all been told many times over the past few years. This demonstrates the power of one single, simple, clear message delivered often, in the same way, over a period of time.

There is one single, simple, clear message you should be giving your staff throughout this year to make your business even more successful:

This is the most important message to give your staff because 100% of your profits come from your customers, as does the money to pay their wages. You and your staff need to be thinking about this single, simple, clear idea constantly because without your customers you would have no business and they would have no jobs.

I know all that seems common sense but usually people think about anything but, “Our customers are our business.” For example, lawyers think about laws, cases and documents; builders think about plans and houses; salespeople think about their products; people in local government think about rules and regulations; librarians think about books; and managers think about processes, policies and profits. It is human nature for people to think about what they do and not who they are doing it for. As a result, not enough time is spent asking questions and listening to understand what the customer is going to do with what we are giving them. It also makes it very hard for us to put ourselves in our customer’s shoes.

More Evidence Loyalty Programmes Need Improving

Nearly half (49 percent) of all loyalty program members never or rarely take advantage of the benefits of the programme they belong to when shopping online, and 78 percent said easy access to loyalty memberships would make them more inclined to use those privileges online, according to new research from ACI Worldwide, reported in a recent issue of CRM Magazine.


Many people say they simply don’t have the wallet space to efficiently use rewards cards, says Rob Seward, senior industry marketing manager at ACI. He suggests retailers consider consolidating loyalty programs onto a single device such as a smart card or mobile app.

The study also found 52 percent of American consumers would prefer a single card that could hold all their memberships, 33%s said they would prefer to have a consolidated key chain, while 17 percent advocated a mobile app that could access all their customer retail loyalty programs.

Effective Managers Know the Power of Repetition

Managers who deliberately repeat themselves are more effective at getting things done according to research done by Professors Tsedal Neeley (Harvard Business School) and Paul Leonardi (Northwestern University). Neeley and Leonardi headed a team who followed 13 managers in six companies for more than 250 hours, recording every communication the managers sent and received. The researchers found that managers who sent the same message two or more times moved their projects along faster and more smoothly.

How do your customers react to your actions?

Every human action creates a reaction in the person it touches. Your customer's experience with you is the sum total of their reactions to your actions. To manage your customer experience, map out all the places you touch your customers and then find out how your customers react to these touch points. You will quickly see where you can improve.

Business is the Activity of Creating Value

I know it is easy to believe that your business is different. Perhaps you have an unusual product, or a special process for manufacturing. Perhaps you have a monopoly due to government regulation or you trade with a unique sector of the market. But fundamentally every business is the same because the business of every business is creating value. Customers do not want your products and services, they want what your products and services can do for them. They do not want to know what you have to do to produce those products and services. They are not interested in the features of your products and they do not want service. They want value. Think of it this way, businesses do not so much make products and services as they buy customers by producing things that customers value.

Your Employees Could Sabotage Your Promotions

In the January, 2011 issue of the Harvard Business Review, Utpal Dholakia, Associate professor of business at Rice University, said his research shows that if team members do not support promotional offers, customers have a bad experience and the company gets no long-term benefit from the promotion. Employees may not be happy with the promotion because they do not believe it is a good deal or because of the extra work they have to do as a result of the promotion.

What do you do to make sure team members believe in and actively support your promotions?

New World is New Zealand's Best Supermarket for Customer Servcice

Customers have most positive experiences at New World

New World was the clear winner amongst the country’s supermarkets in the new segment aired recently on the Fair Go-Colmar Brunton Best in Service Poll, which identifies customer service champions for a particular sector each month.

Colmar Brunton spoke to 2,000 Kiwis and asked them if they had a particularly good experience at a supermarket in the past year, or a particularly negative one. Some 42 per cent of shoppers at New World reported a positive experience, outweighing negative experiences (7 per cent) by a ratio of six to one. That leaves the supermarket operator with a Nett Experience Score of 35, compared with a score of 25 for Countdown, 20 for Pak’nSave, 15 for Four Square, 13 for Foodtown and Woolworths with a score of 10.

The slot will identify the best provider of customer service in categories such as banking, airlines, telecommunications, power companies and real estate firms. The next Fair Go-Colmar Brunton Best in Service Poll will focus on home appliance stores; the segment will screen on Wednesday, May 25, on TVOne at 7:30pm.  

Colmar Brunton has conducted, at its own expense, comprehensive customer experience surveys in 2005, 2006 and 2010. The most recent survey showed that the personal customer experience in New Zealand has improved in the past five years, mainly because of a significant reduction in particularly bad customer experiences.