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Only One-Half of Brands Can Identify Their Most Loyal Customers

March 30, 2012

Despite the high cost of acquiring new customers (vs. retaining ones they already have), only one-half (49.6%) of surveyed marketing executives say they know who their most loyal customers are and how best to reach out to them, according to new study by Acxiom and Loyalty 360.

Among surveyed marketing executives:

  • Nearly 20% cannot identify their loyal customers (they strongly disagree (8%) or disagree (11%) they know who their loyal customers are and how to engage them).
  • Nearly one-third (32%) report their customer knowledge is somewhere in the middle (they're neutral about whether they know who their customers are and how best to reach them).

The cost of acquiring customers typically exceeds the cost of retaining them. For example, Bain Consulting estimates that it costs roughly six to seven times more to gain a new customer than to keep one.

Below, additional findings from "Making Every Interaction Count: How Customer Intelligence Drives Customer Loyalty," a report conducted jointly by Acxiom and Loyalty 360.

Strategies Are Set, but With Limited Success

Customer retention strategies have been widely adopted, but with limited success, the study found.

Most (85%) marketing execs say they have some type of customer retention strategy in place, but only one-half (49%) say those strategies are working; 12% of marketing execs don't believe they work at all; and 39% are not sure:

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  • by Deb Rapacz Sun Apr 1, 2012 via web

    My guess is that these same executives are frustrated by:
    • Churn rates of more than 50% each year, even among their heaviest most loyal buyers
    • Loyalty initiatives that aren’t driving incremental volume or producing positive returns
    • No strong ideas on how to Rethink Loyalty approaches

    I would also surmise that very few of them are delivering enough Commitment Content to strengthen the bond between their customers and their brand.

    These days I’m encouraging brands to adopt a mass communications-based approach to building loyalty. The framework works to leverage Loyalty Moments, spikes of interest in a brand that come from effective advertising and marketing, and then closes the loop to immediately validate that heightened interest by delivering a mix of About-The-Brand information.

    The key is to develop about-the-brand messaging that goes deeper than base brand advertising and quickly reinforces the “reasons to believe” behind your brand promise. Research shows that when a buyer or prospect has been aroused, his or her interest in your brand is heightened and wants to learn more about your brand, right then. Many want to validate that their emotional response can be rationally supported with proof. Leverage this window of opportunity and validate that arousal you worked so hard to create.

    How’s that for rethinking loyalty?

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