Maximise retention to improve business sustainability and drive growth

 

This post is sponsored by Edenred.

In Asia Pacific, home to 60% of the global population, there is a clear trend that customer retention is one of the top concerns of organisations. Due to changing customer behaviour, thinning margins, and low brand loyalty, organisations are facing extreme difficulty in keeping loyal customers, with whom they have invested over time.

Retention strategies differ from customer segments, markets and industries, making it difficult and complex for organisations to deploy them cost effectively.

We all know the cost of acquiring a new customer is significantly more expensive than the cost to retain an existing customer.

In Asia Pacific where the markets are diverse, demographics are varied, and cultural nuances are complex, customer retention obviously gets more complex with internal and external challenges (budget, priority, competition and regulatory requirements) in getting the retention programme right and sustainable over a longer period.

With the influx of technologies (smart personalisation, AI, big data), the proliferation of connectivity channels (social, mobile and digital) and boundary-less markets through globalisation, organisations are at an increased pressure to bring retention strategies to the forefront of marketing priorities.  A better retention strategy will support a more qualitative acquisition plan and long-term cost efficiency.

These bring opportunities for organisations to take the lead in focusing on long-term retention strategies of their loyalty programmes to achieve strong customer engagements:

  1. Delivering a strong value proposition.
  2. Establishing a superior customer experience.
  3. Increased customer satisfaction.

Delivering a strong value proposition

A great customer loyalty programme creates great value propositions for each customer segment. Most loyalty programmes fail or struggle to bring the right customer value proposition for the right customer segment.

Loyalty programmes, without the right value proposition, lose customers’ motivation and bonding very fast, and hence, fail to retain customers which have been acquired earlier with a high cost of acquisition. Weak relationships allow competitors and other new entrants to lure away the most valued customers easily.

Creating the right customer value proposition requires professional expertise in identifying and developing the value propositions, which needs a design thinking framework and human-centred design processes. It may seem complex, but the process of creating a great value proposition consists of four distinct phases – motivation, ideation, iteration and execution.

Establishing a superior customer experience

The second most important aspect in retention strategy is an organisational mindset alignment from top-down on creating a superior customer experience. Customer retention must be part of organisations’ long-term strategies for growth and sustainability.

As customers’ needs and behaviours continue to develop with social, economic and cultural evolutions, organisations need to change their mindsets from product and service providers to experience and human-centred engagements.

This is achieved through understanding the customer journey for each segment and integrating each journey to the retention strategy. This gives the organisation the opportunity to better manage customer relationships and continue to learn from the feedback of those engagements, and in turn, create longer term retention opportunities. It significantly lowers organisations’ risk of losing customers against competition, price and market uncertainty.

Increased customer satisfaction

A third important factor in the retention strategy of loyalty programmes relies on the consistent achievement of higher customer satisfaction. A drop in customer satisfaction leads to easy defection or a switch to competing brands.

Organisations need to continuously measure customer satisfaction, predict vulnerable or weaker engagement areas and take proactive and preventable actions to fix or mitigate risks.

The mantra of customer satisfaction is consistently achieved by delivering excellent service quality, timely communications, great promotions and offers, and recognising and rewarding the long-term relationship.

A great opportunity for brands and organisations in Asia Pacific to take the lead

Over two decades, loyalty programmes in Asia Pacific have come a long way starting from simple points and card-based programmes; today, loyalty programmes have reached a juncture where multiple dimensions of evolutions are taking place simultaneously.

Asia Pacific is poised to jump into the next level where retention will be key for organisations and brands’ existence. In the age where internet, mobile, social and digitalisation are no more a pilot in Asia Pacific, prototype and iterations combined with speed and agility will be the differentiators.

Organisations must use extreme agile methods and a paradigm shift in their designing and thinking processes where micro innovations, smart insights and superior implementations will be the key to success.

The good news is that organisations and brands can create and manage loyalty programmes by leveraging the industry transformations to stay ahead of the competition and create a sustainable competitive advantage for all stakeholders.

This article is written by JB Ray, COO of Edenred SEA, marketing services, who has 24 years of loyalty market experience in Asia Pacific. Click here to learn more about how Edenred can assist you to plan, design and launch your own channel loyalty programme in 2020.