Cultivating Loyalty

Continuity marketers know how difficult it is to generate new leads and then nurture them through the conversion funnel. The honeymoon phase — when the lead is showered with letters, ride-alongs and all sorts of materials designed to promote the program’s benefits and premiums — is glorious.

But the problem is that far too often continuity marketers focus so much on converting these new leads that they leave their best customers to fend for themselves. The assumption is that existing customers already know all the great benefits of the continuity they joined and they’re buying regularly, so they need less attention.

Or do they? How many times have you joined a continuity program and been excited over the new service and convenience but later canceled because it just didn’t seem interesting or exciting anymore?

Dedicating resources to continually testing ways to improve retention is critical. Just one additional shipment per customer could mean millions in additional revenue. Here are a few ideas to help you remind your best customers that they are, indeed, the best.

12 key questions

To improve your program, you need to start by identifying key exit points. When are your customers losing that feeling of excitement about your product or service, and the convenience and benefits that only membership can buy? Take a look at level-by-level retention and compare it to your communications at each stage. You may find that the feeling goes away in relation to when you stop creating it.

This doesn’t mean you can constantly re-create the initial pleasure and excitement of a new relationship. But hey, all relationships take work. Start by asking yourself the following questions:

Are you reminding customers of the reasons they joined in the first place? Remember all the excitement you created when you first hooked your members? Service! Customization! Flexibility! Convenience! These are great benefits — but they have to be reinforced or members tend to forget.

Do you send the same fulfillment package month after month to your best customers? Do you think they read the same insert or letter over and over again? Probably not. Regularly refresh your collateral and make it stand out in the package. Don’t let them forget how good you are — and how smart they were for joining your continuity.

Are you engaging your best customers? People who have recently joined continuities are more likely to use the services and benefits. But after time, they will begin to lose interest. As marketers we must constantly rebuild it. NetFlix, for example, regularly sends e-mails with tips for getting more out of membership, and reminders of its services. Green Mountain Coffee Roasters reminds customers regularly to customize their Café Express selections. Keep your best continuity customers engaged through e-mail, mail, feedback forums and chat groups.

Do you still build anticipation for each shipment? Use freebies, booklets, tips, etc. to make your shipments different from each other. People love to receive gifts — try to pepper in surprises when possible. This helps build your customers’ anticipation and excitement about packages arriving in the mail for them. Don’t allow your customers to think that every package will be the same, because once they do, the desire to open those boxes wanes.

Do you stagger premiums? Do you build excitement and anticipation through the delivery of premiums at different shipments? Do your customers have something to look forward to, something to build toward? Are you regularly sending free tools to help them build, house and use their collection or series?

The Franklin Mint used to send free shelves and display cases to hold its collectibles. Think about it: If a customer received a nice display case to hold six plates, he’d be unlikely to stop collecting at four. Send such premiums regularly, if you can, to keep the customer working toward a goal.

Do you remind them that they are your best customers? People don’t like to be ignored. When they see all of your new, wonderful offers to new customers, they might feel left out. Consider testing these offers on existing members, too.

Have you created a perception of loss if members don’t continue? People like to be working toward something. Constantly remind customers how far they’ve come, so that the idea of canceling goes hand in hand with loss.

Are you informing them of new products first? You might promote new products to your continuity customers before anyone else has a chance to see them. This “insider benefit” can be especially valuable to a customer if a discount is offered as well. Consider giving them the opportunity to save by ordering by a date prior to the release to the general public. Another strategy is to include your continuity customers as part of your product development cycle. Use them as a “focus group” of sorts — send your best continuity buyers your new product and ask them for their opinions. What would they change? How would they improve it? What do they like about it? Let them keep the item for providing feedback. This not only is valuable information for you, but also it builds serious loyalty with these customers.

Do you regularly cross-sell new continuities to your best customers? People like to try new things — maybe they’re growing tired of your product but not the ease and convenience of a continuity. Develop and cross-sell new continuities to them regularly. Many marketers do this at specific shipment levels, or send new and different products within regular shipments, hoping the customer will purchase the new item and provide a targeted cross-selling opportunity.

Have you put your continuity to the acid test? Sign up yourself, friends and family for your program and have everyone receive packages directly at home. You’ll get a lot of interesting feedback.

Are you constantly improving your infrastructure? Customers like to be in charge. Continually make it easier for your customers to tailor your program to their preferences and interests, either independently online or through your call center.

Send constant reminders of all the customization options and, if you have the ability, target the message based upon activity. If a customer skips a purchase or two, send her a reminder of how she can slow down or speed up shipments at any time. Or, offer a special discount for updating her account with her preferences.

How often are you testing new reactivation programs? Are you constantly fine-tuning the offer and timing of your reactivation efforts? Do you target different efforts and incentives to different audiences? You spent so much time and money on the honeymoon phase — do the same here. We all know the incredible value of winning back a good customer.

Does your call center have a strategy for “saving” customers at different levels of the program? Do your call center reps use the same tactics to “save” earlier customers as your best customers? Is that okay?

With so much information at your reps’ fingertips, it may be wise to empower strong reps to customize their reactivation efforts for your best buyers. You’ll need parameters here, but give your team some leeway to make decisions based upon a customer’s purchase history and preferences. This type of customization can be very effective.

Jeff Marsh and Karen Mayo are principals of Mayo and Marsh, a direct marketing consulting firm based in Waterford, VT.

More, more, more

Here are some tips to build average purchase among best customers:

Find your “sweet spot” for pricing

Smart pricing is one key to really fine-tuning your programs. Some continuities, such as collectibles, have shipments with variable price points where the price of the shipment changes each time due to product selection. With variably priced shipments, be sure to test to find the “sweet spot” — especially for those first three shipments where most customers cancel from the program.

The “sweet spot” is that optimum price point that generates the most response and revenue. For example, you may find that keeping the first shipment value under $25 helps you keep customers, but making it less than $20 results in too little revenue. Test each of your first three shipments to find the critical price point for you. Once you do, you’ll be generating not just optimum revenue and profits but, more importantly, conversions.

Offer add-ons

Your customers are expecting certain items in each shipment of product-oriented continuity programs. Try to expand their interests. What would it be worth to you to double their average purchase amount from every shipment? What would it be worth to you to enroll a good continuity customer into another program? Take a sample product from a different product line and send it along with a shipment. You are giving the customer an opportunity to see/try/sample another product, and giving yourself an opportunity to increase the lifetime value of that customer.

Set it up so that if the customer does purchase the product it triggers either a) always including this product in future shipments, or b) a new program that begins shipping separately. If you sell fruit and you have customers enrolled in a fresh oranges program, try sending a group of peaches (valued at $4.95) along with the fourth shipment of oranges (let’s say that shipment’s price is $34.50). If the customer likes those peaches, keep sending them the fresh orange program, but also enroll them in your Georgia peach program that ships on a different schedule.

Invest more time in your numbers

Continuity marketing — like all direct marketing — is a numbers business. If you are a continuity marketer, you undoubtedly have good systems, lots of data, and analysts generating lots of reports. But spend time to vet all of your numbers. Update all of your assumptions for standard costs, postage, returns, etc. Review your shipments and returns/purchases to ensure your retention curves are up to date. Look at results from different perspectives. Focus on the big money (initial offer and your first, second and third shipments) looking specifically for opportunities to increase response for each of these critical levels.

Don’t get your customers “stuck.” Let them get “stuck on you.”

Some continuity marketers tend to “hook” customers and make it difficult for them to cancel. While you obviously don’t want to encourage cancellations, you do want to provide outstanding service, lots of flexibility and choice to customize preferences, and you want to make it easy for your customers to talk to you in a variety of ways. Rather than make it a hassle for customers to modify their shipments (coffee flavors, type of fruit, coin types, etc.), make it easy to accommodate these requests. Reinforce how personalized and helpful your service is to the customer.

Getting started

Continuities have come a long way from offering the basics such as books and music. Today, many new products and services are sold successfully through continuity marketing. Does accumulating your products result in a greater whole than the individual pieces, such as a collection? Do you have a product that is used up over a period of time? Can you excite your consumers about new products delivered regularly? If so, your product might be right for continuity marketing. Here are some examples of successful niches.

  1. Certain consumable foods are well suited for continuity programs. Coffee, for example, is an excellent continuity product because it is used regularly and frequently, and people always seem to need more. Fruit, steaks and other consumables are ripe for continuity programs as well. Some direct marketers have perfected these niche markets, like Green Mountain Coffee Roasters, Gevalia, Harry & David and Omaha Steaks, to name a few.

  2. Gift products sold via continuity can include food, flowers, candy and others. These not only provide a unique experience for the giver, they are a great “refer-a-friend” program for the marketer.

  3. Beauty items, such as any type of replenishable skincare, make-up, etc., can have a huge following as a continuity program. Just be sure to keep each package exciting — a customer can easily grow tired of the same shipment time after time.

  4. Office-type consumables are perfectly suited, although we’ve not seen many companies capitalizing on this opportunity yet. Imagine if HP were to offer a program to automatically send you refills on your printer ink based on your usage. Paper and other products are also good fits for continuity marketing. H&R Block has done an excellent job of marketing its popular TaxCut software via continuity marketing, automatically sending the latest update annually.

  5. Collectibles are a classic of continuity programs. Collectors want to continue adding the next item they need to continue toward completion of their series. Coins, stamps, figurines and plates are all products that lend themselves well to a regular shipment program.

  6. Memberships of all types are perfect for automatic renewal. Everything from auto clubs like AAA to professional associations and even automobile insurance work nicely.

  7. Magazine subscriptions have made outstanding use of continuity marketing in the last decade as they’ve switched to automatic renewal by charging a credit card at re-up time.

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