Now, more than ever, is the time to step up customer-retention efforts.
Here’s why: 52% of formerly loyal buyers either reduced loyalty, switched or completely defected from brands between 2007 and now.
And an average of one third of all loyal customers quit between 2007 and 2008, finds a study by the Chief Marketing Officer (CMO) Council.
The study, “Losing Loyalty: the Consumer Defection Dilemma,” tracked 34 million shoppers and 685 grocery and pharmacy brands over a two-year period at 24,000 retail stores.
“The wishful thought that ‘my loyals will stay my loyals’ is no longer a comfortable assumption,” says the report.
“Price and promotion have become so salient at retail, that what we thought was the loyal customer can be moved with discounts,” Eric Anderson, associate professor of marketing at the Kellogg School of Management, told The Financial Times.
While the study only examined consumer packaged goods, similar trends are being seen in nearly every industry, including business-to-business.
What can you do to stop loyal customers from defecting?
- Save them early. The study found it was easier to retain loyal consumers who were in the early stages of switching (i.e., thinking about jumping or grumbling about service) than after they had left.
- Ask sales and service for help. Consider asking reps or sales staff for feedback on the most common gripes they’re hearing.
- Try an online survey. They’re an inexpensive way to get feedback from customers. Try SurveyMonkey.com, for example.
- Do more to engage and communicate with loyal buyers. You may want to provide loyal or long-term buyers with special treatment or profile these accounts on your Web site.
You can download the entire study (registration required) by Catalina Marketing’s Pointer Media Network.
Julie Power is editor in chief of the Internet Marketing Report and the blog, The Internet Marketing Report Online.
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Tags: Catalina Marketing, Chief Marketing Officer Council, churn, customer retention, Losing Loyalty, loyalty
June 25th, 2009 at 1:28 pm
Price, quality, and service are now more important than ever. Businesses who make the effort to meet the customers’ needs relative to these factors will be successful. Companies who “rested on their laurels” over the past few years are finding a tough go in the recessionary times.
June 25th, 2009 at 2:13 pm
Leu, I think you are right. But the report suggests that those companies who didn’t rest on laurels, whose customers were highly loyal, need to lift their games too. Being good isn’t enough, companies need to be great to keep customers. thanks for your comment, Julie
June 25th, 2009 at 3:05 pm
Communicating and engaging with customers — then responding in a meaningful way is the key to customer retention. Unfortunately, many companies do not either have the mechanisms in place or the structure and staff to put an ongoing program into effect and follow through. One of the major reasons why customers do not complain or provide feedback in surveys is that they do not believe that anything will come from their communication. Before embarking on a program to understand and respond to customer needs, make sure the plan can be implemented on an ongoing basis. The moral of the story is “Don’t ask for feedback if you don’t want to listen.”
June 25th, 2009 at 5:45 pm
Question: Are you seeing the same trend in your industry?
June 27th, 2009 at 10:32 am
This study just backs up other studies over the last 10 years. The bottom line to all these studies is to connect with customers emotionally. Most companies don’t know how. But that’s good news for me.
April 12th, 2010 at 7:27 am
This article is an eye opener for me.Last few years we have been pulling our hair out trying to figure out ,why we are not able to get our customers to commit,like in previous years.We spent a lot of money revising and updating our website/company store,making it more customer friendly and we stay in touch with them and are still not able to convert into diffinite sales.many times they come back to us with(Direct Marketing )retail links,for us to supply them with those products,instead.
At that point the sale is lost.