A company that retains a high percentage of its customers must be doing a lot of things right. That’s why Retention Rate is the best indicator of a company’s long term viability.
But keeping customers can be very challenging. To succeed, you need to understand how and why your customers buy your products and how innovating can affect their type of loyalty they have. There are four types of purchasing styles.
First is Brand Laziness. That’s when customers want to exert minimal buying effort. They don’t want to be bogged down with a lot of information. They just want to buy something.
Consumers use this style with old, familiar products and services that have worked well in the past, so they buy them out of habit without even thinking about it. They have no commitment to the brand. Think about how you buy flour, for example. This approach is highly efficient for low risk, simple products because it saves time and effort.
The key here is to be careful not to disrupt anything about your customers’ purchase flow. If you change the shelf location, packaging, or anything that makes them have to think too much about the purchase, you may lose them to another brand.
Next is Brand Loyalty. Truly brand-loyal customers are highly involved with the brand. They’ve had a good experience with it, and they know a lot about it. Instead of buying it out of habit, they buy it because they’re emotionally attached to it.
The key here is to continue to deliver high levels of quality and service. Consistency is the name of the game. If you let them down, they start drifting away.
Next are the Variety Seekers; people who shop for new alternatives over more familiar ones. Variety Seeking is the opposite of Brand Loyalty. Consumers use this style because they have yet to fall in love with a particular brand.
Try to get your customers out of this style as quickly as possible; otherwise, they’ll keep switching back and forth between you and competing brands. Try to lock them in with free trials, follow-up service, discounts, and loyalty programs.
And finally are the Problem Solvers. As the name implies, consumers use this style when dealing with complex products involving a lot of risk and uncertainty. They need to be highly involved, and they need to gather lots of information, especially if the product or service is expensive and purchased infrequently.
Think about buying a car, for example, or shopping for a plastic surgeon. It takes time and information to make a good decision.
As an innovator, you have to help customers when they’re using this style. First, provide as much information about the product as you can. Make sure it’s where people can find it—in your stores, online, or with your salespeople. And, show comparisons between your product and the competition.
Loyalty drives high retention rates. The best innovators are those that understand each type of loyalty so they can continue to give their customers exactly what they want.