Inevitably, no matter how much effort you have made especially in the customer care department of your business, sometimes you will lose a customer, and even though that hurts it is normal as well. However, there are 6 things you should do when you lose a customer! Just keep reading!
Has your business lost a customer lately? Well, I am sure that you spend time and effort ensuring that your customers are happy! You are always trying to put your customer at the center of your business. You focus on marketing strategies and you are constantly trying to find new ideas to keep customers satisfied and help them come back.
And, yet, inevitably, no matter how much effort you have made especially in the customer care department of your business, sometimes you will lose a customer, and even though that hurts it is normal as well.
The million-dollar question here is:
“What you can do when you lose a customer?”
Well, there are several things you may do to soften the fact of a losing customer and turn it into a positive learning experience for your business. Below you can find 6 things you should do when you lose a customer and make the most out of it!
1. Don’t focus your efforts on trying to selling to them again
If a customer is gone, they are gone. Something happened, and they do not wish to use your product/ service anymore. The wise thing to do at this moment is not to push them to buy one of your sales as you most probably going to make the relationship worse in the long run. The moment a customer decides to leave, your main concern will be to maintain a good image with this customer.
2. Ask them the reason they left
When losing a customer, you are losing the opportunity to have profit. However, there is space to benefit from a lost customer by asking them the reason why they left. Dissatisfied, angry and disappointed customers are a huge customer knowledge tool for your business and for any further strategic actions.
The most important thing in this process is to make lost customers view this process as an honest attempt to make your product/ service and business better for them and not as a sales pitch or an annoying email asking more and more from them.
3. Listen to their feedback
In order to take advantage of the customer feedback you have collected, you should be receptive to the answers you get. There will always be customers whose feedback is biased, overly emotional or even irrational. However, this is not an excuse. Want to know why? A customer is someone who chose to trust your product/ service and invested in your business. What they have to say is of great importance and relevant to your business, no matter what.
4. Alert all customers if you have made a change according to their feedback
If customers gave you their feedback about something specific in your business and you changed it, send out an update and let those customers know that you have made this change in your business for the better because of their feedback and also, thank them.
The above is a great thing to do to maintain a good company image and make the customer feel heard. However, you should not see it as an opportunity to try and win them back or sell something to them. Make it from the beginning clear that you appreciate their feedback and that your efforts to improve your business are honest.
5. Give your current customers something extra
Losing a customer might be a great reminder of how important and how much your current customers mean to your business. A good practice is to implement a new strategy for making your current customers feel appreciated and loved, every time your churn rate raises.
We can assure you that you will never regret investing in customers who have already decided to invest in you.
6. Get feedback from current customers
One last thing you might do is to not let customers have a chance to slip away. Define the touchpoints with your customers and ask them in every step of their buying journey about their satisfaction and their experience. Willing doing this, your customer care department will have the chance to resolve any issues, concerns or disappointments before any customer decides to leave.
If you do not ask your customers, they won’t tell you anything about their experience.
Online shoppers have an irresistible tendency to respond to certain types of online prices and this is the so called psychological pricing. While determining such strategies it is wise to first understand psychological pricing and how our minds perceive prices. Let’s go through all the psychological pricing strategies that are used in e-commerce to trigger consumers’ purchase intentions.
A well-structured pricing strategy involves your competitions’ prices and your costs as well as your target audience’s motivations. Online shoppers have an irresistible tendency to respond to certain types of online prices and this is the so called psychological pricing. It is defined as a strategic and tricky way to price your products to guide potential customers when they are about to finalize their decision.
Let’s define Psychological Pricing in more detail.
What is Psychological Pricing?
Psychological pricing is a pricing and marketing strategy based on the theory that certain prices have a psychological impact. This pricing method is often expressed as just-below numbers, i.e 19.99 euro. The logic behind this method is that consumers tend to perceive just-below prices as being lower than they actually are, thus generating bigger demand, due to consumers not being 100% rational .
Pricing strategy options vary, according to business types and needs.
This is the reason behind the continuous effort of online retailers to try and understand potential buyer’s motives and therefore, create pricing policies that will encourage purchases.
While determining such strategies it is wise to first understand psychological pricing and how our minds perceive prices. Now, let’s go through all the psychological pricing strategies that are used in e-commerce to trigger consumers’ purchase intentions and we will show you how you may apply them to your own products.
1) Charm Pricing
Have you ever heard about the power of 9? That is the strategy, where you decide to end a price with a “9” instead of a “0” on a product’s price tag. This is found to be a very common tactic in physical stores but in online stores as well.
Let’s see why!
Our brain perceives $40.00 and $39.99 as two different values. According to consumer perception, $39.99 seems close to $30.00 which is cheaper than $40.00. Prices that end with a “9” are considered “the” deal to not miss.
How to make charm pricing effective?
There are several other ways to enhance the effect of charm pricing. According to the research of Thomas and Morwitz, “the left-digit effect in price cognition”, it is proved that if the left-most digit changes to a lower one, the conversion rates will be higher.
2) Prestige Pricing
Psychological pricing and purchasing decisions can be portrayed as:
Purchases made according to rational decisions.
Purchases made according to emotionalsatisfaction.
Depending on the spot where your products fall within these 2 paths, your strategies should differ, and this is where prestige pricing and charm pricing separate from each other.
In more detail, prestige pricing is suitable for high-end, luxury, emotion-triggering products, where you should apply round prices such as $600, opposite of charm pricing. Setting round prices on products which evokes emotions, converts better.
Are you wondering WHY?
A study by Kuangjie Zhang and Monica Wadhwa, indicates that “a rounded price ($100.00) encourages consumers to rely on feelings when evaluating products, while a non-rounded price ($98.76) encourages consumers to rely on reason. When a purchase is driven by feelings, rounded prices lead to a subjective experience of feeling right”.
Product that trigger emotions could benefit from rounded prices. On the other hand, functional products or products that trigger consumer logic could benefit from using non-rounded prices.
3) Using Bundle
Online shoppers spend their hard-earned money for products. Let’s assume, you have bought an expensive smartphone and dreaming of taking great and in high resolution photos. Even though you needed that smartphone, when that purchasing moment comes, you immediatelystart feeling guilty or have second thoughts.
Thisguilty psychology forces online shoppers to search between different companies in order to get an extra item with the purchased product at the same price. This can be seen as a golden opportunity for the e-commerce seller. By using bundling and by setting your price accordingly you may reduce consumer’s pain and encourage them not only to buy your products but also to reach deeper into their pockets.
For example, Amazon has an advanced bundling strategy. It always suggests 2 or 3 related products that you may want to purchase at the same time. Most of online shoppers seem to fall for these types of offers because they are amazed by the simplicity of purchasing them all at the same time.
The trick here is to bundle 2 or 3 items together with a single price, set an adequate discount and you can start selling less-popular products.
Nick Kolenda, a pricing expert, advised that adding an emotion-evoker product to your bundles would perform better than adding a rational and a functional product, since purchasing emotional products make you feel guiltier. Therefore, you will increase your chances of selling your bundled product if you discount your emotion-evoker as this type of product reduces the feeling of guilt. According to Khan and Dhar, “discount provides a justification that increases the likelihood of hedonic purchasesbut has little impact on utilitarian consumption”.
4) Odd Pricing
This psychological pricing tactic fits best on technical products and rationally driven purchasesending with 5,7,8, or 9, i.e. $286.96.
Odd pricing creates to consumers the inceptionthat the e-commerce retailer carefully calculated the costs of all the components of the product and set a price depending on these specific variants. While using the odd pricing tactic customers usually think that the price was a planned strategy to offer a fair price for them.
5) Price Anchoring
Price anchoring is defined as the tendency of online shoppers to rely heavily on the first piece of the price offered and as a result, depend their purchasing decision on the initial information. As 46% of online shoppers appreciate e-commerce stores that recreate price comparison, it is evident that consumers constantly compare prices while searching for a product to buy.
For that reason, price anchoring helps to increase conversion rates. The logic behind price anchoring is based on the notion that you will increase the chances of selling a targeted product if you place another related, but more expensive, product first. Placing higher value on the initial product will eventually make the cheaper options look like an even better deal.
6) Simplicity
Research shows that the number of syllables while pronouncing has a significant correlation with the decision-making process of an online buyer (Journal of Consumer Psychology). It has been proven that prices with more syllables are perceived drastically higher by consumers. The one which is easier to pronounce converts better than the longer syllable pricing.
7) Offer something for free
As online consumers, we all love free goods or discounts. Oh, come on, admit it!
Therefore, the psychological strategy at work here is straightforward. Once an online consumer comes across an offer with free goods, consumer behavior encourages the logic to purchase the free item.
The most important thing at this point is that you should select a related product to be given for free. If you offer something for free, but it is unrelated to the purchased product, it will most probably harm your brand identity. If it is difficult to find related “free stuff”, you may offer incentives such as: free shipping, buy one get three for free, buy one and get 50% off your next purchase etc.
To conclude…
All of the above strategies are academically and proven psychological pricing tips. Take a step back and think about your own pricing strategy and the ways you may influence consumers behavior towards making a purchase.
While successfully implementing a psychological pricing strategy, you will then address your customer’s emotions rather than their logic. Consequently, you will increase the chances of a customer making a purchase and boost your conversion rates, sales and revenue.
Perhaps the most important component to Customer Loyalty programs is measuring their effectiveness. A Forrester report found that 30% of companies pointed out that measuring the results of a loyalty program is one of the greatest challenges they face. To overcome this challenge, companies need to identify specific KPIs.
Perhaps the most important component to Customer Loyalty programs is measuring their effectiveness. AForrester report found that 30% of companies pointed out that measuring the results of a loyalty programis one of the greatest challenges they face.
To overcome this challenge, companies need to identify specific KPIs. It is important to track the most essential metrics that indicate success.
Customer Loyalty Programs should increase customer happiness and retention, and below you will find the 4 most important metrics to keep track of.
1. Customer Retention Rate
Customer Retention is an indication of how long customers stay with your business. With a successful loyalty program, this number should increase over time as the number of loyalty program members grow.
A useful idea is to run an A/B test, against program members and non-program customers, to determine the overall effectiveness of the loyalty initiative. As stated by Fred Rechheld, author of the Loyalty Effect, “a 5% increase in customer retention can lead to a 25-100% increase in profit for your company”.
2. Negative Churn
Customer churn is defined as the rate at which customers leave your business. Therefore, negative churn is a measurement of customers who do the opposite. Namely, they either upgrade or they purchase additional services/ products.
3. Customer Satisfaction Score (CSAT)
Happy customers are loyal customers. Customer satisfaction score asks customers, “Overall, how satisfied are you with our e-shop?”.
AHarvard Business Review study indicates that 48% of customer who had negative experiences with a company told 10 or more people. Said that, customer service seems to impact both customer acquisition and customer retention. If your loyalty program focus on customer service issues this might be one way to measure its success.
4. Net Promoter Score (NPS)
Net Promoter Score (NPS) is a customer satisfaction metric that measures the degree to which consumers would recommend your company to friends, family or colleagues.
NPS is calculated by subtracting the percentage (%) of detractors (namely, customers who would not recommend you) from the percentage (%) of promoters (customers who would recommend you). The fewer detractors you have the better.
Improving your NPS is a way to establish benchmarks, measure customer loyalty over time, and determine the effectiveness of your loyalty program.
Conclusion
Well, you have now measured the effectiveness of your program; what will you do next?
Your work is not complete after you have tracked your KPIs. Analyzethem over time to find trends and behaviors. Then use this information to clarify what is working and expand upon that. Then identify what is not working and look for ways to optimize those aspects.
Customer Loyalty Programs take a lot of different forms. Some businesses decide to use only one model, while others may combine two or more! We hope that this article will be of value to you and help you choose the best type of customer loyalty program that corresponds to your business needs and customers.
Customer Loyalty Programs take a lot of different forms. Some businesses decide to use only one model, while others may combine two or more!
We hope that this article will be of value to you and help you choose the best type of customer loyalty program that corresponds to your business needs and customers.
But, first let’s see what is the definition of a customer loyalty program:
A customer loyalty program is a structured strategy that combines use of communication, software, hardware, gamification (in some cases), commercial incentives, marketing tactics, event planning etc, in order to help brands build a stronger relationship between their customers. The goal of a Customer Loyalty program is to increase retention and eventually advocacy.
Different Types of Customer Loyalty programs
1. Point Programs
The point programs are the most common programs around the commerce world, as they the simplest ones. They are based on one simple principle: Spend more to get more.
Every time a customer makes a purchase in-store or on your website, they get a certain amount of points depending on the size of their purchase. These points are translated into some type of reward. Whether it is a discount or a special customer treatment, customers seems to work toward collecting a certain amount of points to redeem their reward.
2. Spend-Based Loyalty Programs
In spend programs, customer get loyalty credits for the amount they spend at a business. This program is very easy to understand, create and maintain. It is also proven to be an effective way to increase transaction amounts and reduce churn rate.
3. Tiered Programs
One way to find the right balance between attainable and desirable rewards is to implement a tiered loyalty reward system, which rewards initial loyalty and encourages more purchases.
In a nutshell, the tier program is based on levels of loyalty. Customers get points whenever they purchase something. The more points they receive, the higher loyalty level they will reach. And the higher the level, the more rewards they will get.
4. Paid Programs – VIP member club
Customers pay a monthly or annual fee to join your VIP member club with access to special services, discounts or unique opportunities. Your paid program should include benefits that are exclusive to members or either wise it will lose its value.
5. Value – based Programs
If you structure a loyalty program that is aligned to your customers’ values, they are more likely to become brand ambassadors. The million-dollar question here is: How do you reward your customers without rewarding them?
First, it is very important to define your values. Let’s imagine that you run an online pet store and you know that your audience values animal welfare. One thing you may do it, is to start a loyalty program, similar to the point system, where customers’ purchases translate into currency. Then, every time a customer makes a 50€ purchase, you would donate 5€ to an animal rescue organization.
The reward when choosing the value-based program is to connect with customers on a deeper level by creating a strong and ethical relationship with them.
6. Partnered Program
Strategic partnership for customer loyalty can be super effective regarding customer retention,as you offer them more opportunities. At the same time, it can help the growth of your business by building new business relationships (partnerships).
While providing your customers with value that is relevant to them and goes beyond what your company can exclusively offer them, you are showing them that you truly understand and care about their needs.
7. Game Program
Who doesn’t love games?
A good idea is to turn your loyalty program into a game application to encourage repeat purchases, increase customer loyalty, entertain customers and help strengthen your brand’s image in a more entertainment way.
8. Hybrid Loyalty Programs
A hybrid loyalty program is a combination of more than one type of loyalty systems. You may merge 2 different systems such as the tier and the game program, where customers reach new levels of loyalty every time they complete a new level in your game. The participation in the game should of course entail a purchase.
The most common combination is that of point-based system with a tier program as it makes the calculation of points easy for the customers and encourages them to pursue next loyalty level and thus, more purchases.
Do you find Customer Loyalty an interesting topic? Read more about it:
There are 4 basic steps that every business should follow when creating a customer loyalty program. We also have some great tips for you… all you have to do is read this article!
There are 4 basic steps that every business should follow when creating a customer loyalty program.
Step 1 – Research
The first thing you should do before the creation of your customer loyalty program is research. While conducting research you should be able to identify the following:
What your customers want
How much they are willing to pay for what you offer
What motivates them
Which brands or product categories they truly love
The above insights will help you find the sweet benefit spot between your customers and your business.
Another aspect that is of great importance when conducting a research, is to segment existing customers and your target market. Additional information such as demographics, purchasing behavior and patterns will help you develop your strategy.
The more data you have in your hands, the more effective your Loyalty program can be.
Step 2 – Make a plan
From the moment you have completely understood your audience, you may develop your strategic plan for your loyalty program. Part of this strategic plan should be the creation of specific, measurable goals and key performance indicators (KPIs).
After setting up the above, the next step is to decide which loyalty program model and types of rewards, will motivate best your customers and offer them the most value. After all, everything is about the creation of value for your customers and how you may factorit for the benefit of your business. In other words, it is about creating value to your customers and transforming this value to an asset for your business.
Click here to read more about customer loyalty program types!
Step 3 – Build your program
After creating your strategic plan for your loyalty program, the next step is to figure out its structureby using all the information you have already selected. Determine the rewards your business will provide to customers, as well as the step by step procedure that they will follow to earn them.
Below you may find some ideas of reward-worthy actions:
Email subscription sign-up
Account registration
Birthday
Referral
Social engagement
Shopping on specific days
Money spent
Start by giving each of these actions points of values and determine how many points your customers need in order to earn a specific reward!
Step 4 – Let your audience know about the program
To be honest, the fact that you have now created a customer loyalty program does not mean that customers will use it or be aware of it. A wise thing to do, is to give that loyalty program an identity, by simply creating a landing page on your website, and by developing an awareness campaign and promote in-store tactics (i.e. educate sales associates). In other words, at this step all you have to do is get the word out, let your customers know that you have a Loyaltyprogram.
We also have a bonus for you!!!
Below you will find 5 tips that will help you while creating your Customer Loyalty program.
1. Simplicity is the key
2. Start with your existing mailing list – Your loyalty card will easily have its first members
3. Make it easy to join – E-mail address and Customer’s Name can be a good start
4. Make reward rules simple – Clarify the rewards
5. Make it about your customers, not about money – Be Customer Centric
