Tuesday, January 18, 2011

The Toothpaste Side of CRM

How fast do customers defect?

It is well known in consumer package goods that a repeat rate (or the percent of customers who buy a second time) needs to be in the 40-50% range for a successful product launch.   In other industries the retention rate may be significantly lower - recently saw one where only 1 in 4 customers came back.   The implication is that only a portion of customer acquisitions are 'net new', i.e. those that grow the business.

If customers, like teeth, tend to decay, then how do we engage them in preventing it or at least slowing it down?

P&G talks in terms of 'moments of truth' - critical decisions that affect the relationship of a brand with a consumer.  The first two below are theirs, I've added a third.  They are...
  1. The decision to buy - here we need to make sure that we're in alignment with what customers want.  
  2. The decision to buy again - now we have to have delivered, both in marketing and product, a positive experience that met customer expectations.  
  3. The decision to make it a habit - now we're talking about engagement and supporting an ongoing and continuous stream of purchases.  
Communication and contact strategies should be aligned to focus on each of these three moments, each with their own strategies and metrics.   Ideas for campaigns might consider...
  • Promotions, offers, contests and entrainment for trial
  • Welcome Packs and Thank Yous for repeat
  • Experiences and participation for long term repeat