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Strategy

Should You Tailor Your Retention Strategies Depending on Your Industry?

When it comes to retention strategies, there’s no one plan that will work for every business. The best strategies consider who your customers are, which services they value, and, of course, your industry.

Matt Duczeminski
September 11 2017

No two customers are exactly the same.

Since this rule applies to customers within the same industry (and even within the same company), it’s extremely likely that consumers within different industries vary greatly in terms of their needs and expectations.

The way in which an individual engages with a department store’s services differs wildly from the way in which that same individual engages with, say, their auto insurance company.

For this reason, customer retention strategies also vary wildly from industry to industry. While some retention practices remain constant regardless of industry, some strategies are often much more effective for certain industries than they are for others.

We’re not saying the various customer retention strategies we’ll walk through aren’t effective in other industries; just that they’ve the most effective strategy for a specific industry.

We analyzed data collected by Fred Reichheld and Rob Markey in The Ultimate Question 2.0, to pinpoint the industries that typically boast the highest average Net Promoter Score from company to company. Then, we took a look at the companies within these industries that boast the highest customer retention rates and dug into their strategies that keep customers coming back time and time again.

Let’s get started.

The Most Effective Customer Retention Strategies Used in the Industries with the Highest NPS

Before we dive in, let’s take a glance at the eight industries we’ll be analyzing, starting with the customer retention’s top performers:

  • Grocery Stores/Supermarkets
  • eCommerce Stores
  • Department and Wholesale Stores
  • Online Search Services
  • Auto Insurance Companies
  • Brokerage and Investment Firms
  • Computer Hardware Developers
  • Consumer Software Developers

Let’s start at the top:

#1 Grocery Stores/Supermarkets (NPS of 49): Loyalty Programs

Most grocery stores offer some kind of loyalty program to its frequent (and infrequent) shoppers.

While most supermarkets don’t require customers to sign up for their loyalty program, there’s often no reason not to complete the process. Once a customer becomes a member of a store’s program, they’re eligible for a number of perks, including:

  • Discounts on store-brand (and sometimes name-brand) items
  • Special coupons and deals sent via mail or email
  • Entrance into giveaways and contests

Some grocery stores also provide gas stations that are only accessible to loyalty program members. Typically, the price of gas at these stations tends to be a few cents lower than other stations in the area – a huge incentive for customers to become loyalty members.

UK-based supermarket Waitrose takes this a step further, offering loyalty members a free cup of coffee with every purchase they make (up until recently, no purchase was necessary; members could walk into any Waitrose and walk out with a complimentary cup of coffee whenever they wanted).

Even before the change, the coaxed customers into making purchases after grabbing their coffee. Managing director Mark Price reported that the initiative drove overall sales up 1.3% year over year – and cost the company less than 1% of sales overall, making the campaign worth their efforts.

#2 eCommerce Stores (NPS of 47): Multi-Channel Engagement and Support

Back when eCommerce was gaining prevalence, one of its main attractions was the fact that customers could purchase items from the comfort of their own home, without having to *gasp* interact with anybody.

While this, at times, is still part of the draw, most modern customers do expect to engage with eCommerce brands on a more personal level from time to time. It’s this personalized support that, nowadays, is often seen as a unique selling point.

There are a number of ways eCommerce companies can interact with their customers, such as:

  • Social media comments
  • Blog post comment threads
  • Email outreach (both mass and individual)
  • Telephone or video chat

The main concern here is to ensure they’re able to meet customers where – and when – they want to be met.

It’s often the case that customers can easily find the product they’re looking for from a variety of vendors. Because of this, it’s the company that can offer the most engaging, personalized experience that will keep customers on board.

3# Department and Wholesale Stores (NPS of 46): Immersive Experience

Recently, there’s been a lot of talk about the death of department stores.

With the eCommerce industry becoming more and more prevalent, retail stores, as they’ve traditionally existed, are certainly an endangered species.

Rather than throwing in the towel completely, many department stores have begun to adapt to the changing needs of their customers – and have done so to resounding success.

The modern customer leans toward making their purchases online rather than in person. However, consumers do still place importance on the act of physical shopping (or browsing). So while they might not make as many purchases via brick-and-mortar store, customers do use these physical locations for the purpose of deciding on a purchase.

Many retail and department stores have embraced this change, IKEA serving as one the most popular examples. Most known for its furniture, IKEA has introduced both augmented reality and virtual reality apps and programs that allow customers to visualize how a specific piece of furniture might look in a certain spot in their home. In turn, customers who may be “on the fence” about making a certain purchase are more equipped to make an in-store decision.

As IKEA’s AR app has been downloaded over 8 million times, it’s safe to say it’s helped the company keep many customers on the hook.

4# Online Search Services (NPS of 43): Efficient and Seamless Service

Up until this point, we’ve been discussing retention and loyalty in terms of customers returning to a business and continuing to shell out their cash in return for a service.

But retention also applies to free-to-use services, such as online search services.

While many search services have existed over the years, Google has been the clear-cut leader within the industry for quite some time now. Of course, it hasn’t maintained this status by accident.

In order to keep its users from heading to a competitor for their web search needs, Google has fought to always know what their users need and worked hard to deliver it to them. The search giant has also stayed as current as possible in terms of technological advances – to the point that Google itself has pioneered much of the technology we use today.

Another thing to note is that Google is not just a web search tool. The company offers word processing and spreadsheet software, email services, a social media platform, and more. Google’s all-in-one seamless experience that, quite simply, cannot be found elsewhere on the web.

5# Auto Insurance Companies (NPS of 35): Usage-Based Service

Loyalty to an automobile insurance is somewhat of an anomaly:

Nobody really loves having to pay a monthly fee for car insurance, but most happy customers will pretty much swear by their preferred provider.

In more recent years, many insurance companies have begun implementing various forms of usage-based insurance to “lessen the blow” of a monthly premium – and to keep customers on board. Typical usage-based insurance deals include safe-driving, academic achievement discounts, or individualized pricing based on average time spent driving or distance driven on a monthly basis.

Some insurance companies also offer UBI services that automatically send communications between customer and company in the event of an accident, breakdown, or theft. While the discounts and deals mentioned above have been cited as reasons for customers to start doing business with a specific company, these additional UBI offers are what keeps customers from defecting to the competition.

In what was a traditional, straightforward industry, offering usage-based services is an incredible way for auto insurance companies to meet the needs of the modern driver.

6# Brokerage and Investment Firms (NPS of 35): Provide Resources

Typically, when you enlist the help of an investment firm, you want either one of two things:

  • Advice on what to do with your money
  • For the broker to take the smartest action possible with your money

Now, it’s probably safe to say that, in the latter case, a firm’s ability to retain a customer is based solely on its ability to grow said customer’s investment.

In the case of the former, however, the surest way to keep customers on board is to be as helpful and effective as possible.

CEO and Qualifying Broker of Investment Homes Direct Calvin Brown, says his company is able to retain customers mainly because “(we) not only offer our clients market access to an inventory of potential investment ventures, but also offer access to an array of free resources including educational material and network connections.”

Even among people actively looking to invest their money, there will still be those who are hesitant to trust someone else with the job. Becoming a resource for these hesitant individuals works for two reasons:

  • It proves you know what you’re talking about
  • It shows customers exactly where their money is going – rather than forcing them to trust that “you’ll take care of it”

In turn, they’ll be much more comfortable parting with their money.

7# Computer Hardware Developers (NPS of 32): Supplemental Products

If you’ve ever owned a video game system in your life, this one will be pretty easy to understand.

If you’ve never played a video game in your life, let me explain:

Once you’ve bought a gaming system from Sony, Microsoft, or Nintendo, you’ve basically pledged to give that specific company a decent amount of money in the years to come. You’ll need to buy games, controllers, headsets…the list goes on. You might even choose to purchase monthly subscriptions to the various services provided by the companies.

The point is:

All of these additional purchases count as loyalty purchases for the company.

The same goes for purchasing items that go along with your iPhone or Android, such as headphones, charging pods, and Bluetooth speakers. Heck, even the apps you purchase for your mobile device are additional purchases that you wouldn’t have made had you not bought the device in the first place.

When it comes down to it, it’s not the initial system or device that creates loyalty; it’s the platform-specific peripherals, accessories, and other supplemental products and services that do the trick.

8# Consumer Software Developers (NPS of 31): Continuous Improvement

The needs of the modern consumer/user are ever-evolving.

As such, software developers must stay tuned in to these needs – or risk falling behind the competition. No matter how revolutionary and useful a piece of software currently is, developers should always look to what’s coming next if they want to have any hope of holding onto their customers.

Now, this doesn’t necessarily mean developing brand new apps, programs, or other pieces of software. What it does mean is that it’s necessary that developers constantly improve their current products to meet their customers’ current needs.

Constant iteration ensures that longtime customers don’t hit a “saturation point” where they’ve squeezed every last bit of value possible out of a piece of software. By adding new features to their product that benefits for the user, developers ensure their customers never tire of their product.

Wrapping Up

Many of the customer retention strategies we discussed can certainly work in a variety of industries.

For any given industry, there is no “one size fits all” approach; it’s about determining what your customers want and need, and figuring out how you can continually provide for these needs. The key word in that last sentence is “continually”; if you’re not always looking for a way to keep your customers coming back for more…well…they’ll have no reason to do so.

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Matt Duczeminski

Matt is a professional writer specializing in helping entrepreneurs improve relationships with their customers. He lives in Philadelphia with his wife, Sarah, and he'd probably get a lot more work done if his cat would stop bothering him.

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