Retain Customers by Building Community

 

While some may think that an annual customer retention rate of 80% is good, that means you loose one out of every five customers each year. Theoretically, this translates to 100% turnover every five years. And, as most business owners know, it is much more cost effective to retain a current customer than to acquire a new customer.

There are many approaches to retaining customers. Frequency programs purport to do so as do other customer loyalty programs. CRM systems are supposed to help with this. Some companies try to lock customers in through multi-year contracts and automatic rebilling. But the best approach to customer retention is community building because community building creates emotional connection and stickiness. People stay with the brand because it has created a community for them.

Think about how powerful coffee klatches, book clubs and bridge groups are. Imagine if you could create that type of community with your brand's customers.

So, what are some community building techniques?

• Producing user conferences.
• Creating customer advisory boards and customer steering committees. 
• Engaging customers through Facebook pages and other social media platforms.
• Holding customer meet-ups.
• Creating local brand-focused customer clubs.
• Creating physical spaces where customers can interact.
• Holding customer holiday parties and appreciation events.
• Recruiting panels of customers to beta test your new products.

Hallmark sponsors local Hallmark ornament collectors' clubs. Tesla Owners Clubs hold frequent owner meetups. Many wealth management firms hold holiday parties for their clients. Orvis offers free fly tying and casting clinics for its customers. Robert Graham offers exclusive closed door events for people who achieve Master Collector status within their Collector's Club. Most colleges and universities invite their graduates back to reunions every five years. Large churches create small groups focused on different interests to retain parishioners. Patagonia supports grassroots groups working to find solutions to the environmental crisis. Eastern Mountain Sports encourages people to share their outdoor photographs on Instagram with #goEast. SONY's Playstation has create an online space for gamers to connect. Harley Owner's Group (HOG) has more than one million members and holds HOG Rallies around the world. P&G created "Being Girl" as a resource for teenager girls to connect and find answers to the difficult questions that growing up entails. Lululemon's brand community offers free yoga classes, festivals and events and even an experiential store in Chicago featuring fitness studios and a juice bar.

If you want to retain more customers, identify and implement ways to create community among those customers. 

Sources of Brand Differentiation

Brands benefit from a wide variety of sources of differentiation. While many components can contribute to the differentiation, often there are only one or two dominant ones. For instance, Absolut vodka benefits from its unique bottle shape and the promotion of that unique shape. GEICO insurance benefits from its huge advertising budget and it unique and quirky advertising including its charming gecko character.  On the other hand, Amazon.com benefits from from being one of the first brands to adopt the online retail model, including its very powerful search and browse technologies. Also, the fact that it plows all of its profits back into business improvement. Uber benefits from a breakthrough business model and the technology that supports it, which drives costs down substantially while improving the customer experience. Robert Graham clothing benefits from its bold product designs, coupled with its highly unusual product features (i.e., custom designed Swarovski crystal buttons) and its interesting tagline - Knowledge, Wisdom, Truth. Tesla Motors automobiles benefit from a visionary product concept (all-electric luxury car), supported by leading-edge high quality luxury features and a relentless pursuit of excellence. Opaque restaurants benefit from a unique restaurant concept - dining in the dark.

While all of the benefits listed above might be classified as some combination of functional, emotional, experiential or self-expressive customer benefits, those benefits derive from different sources. In some instances, it is the result of product design, marketing strategy or advertising genius. In others, it is the result of radical new business models or organizational cultures driven toward excellence.

The point of this is that sometimes marketers create the primary source of differentiation, while in many instances it is something that is typically outside of the marketer's control - visionary leadership, business model design, product design, organizational design, the organization's culture, etc. - that leads to the brand's differentiation.

Think about what differentiates your brand. Visionary leadership, disruptive technologies, radical new business models and cultures of unrelenting excellence often can have a much greater impact than what a marketer can control. What do most all of these have in common? They are are based on a design and innovation mentality, whether it applies to business model design, organization design, product design, product packaging design or marketing strategy/tactic/campaign design, there is some level of design and innovation in each of these examples.

Brands and Belonging

Remember the television show, Cheers? People love to spend time in a place where everyone knows their name. Churches, coffee houses, book groups, country clubs, fraternal organizations, bowling leagues, summer communities - they all create a place where people feel as though they belong. People want to be recognized and understood. They want to hang out with others who know their name, share an interest, share stories and perhaps even share the same view of the world. 

Starbucks creates its in-between place where people can relax and get to know one another. I have met several of my friends of many years at Starbucks. Orvis is a place where people who love fly fishing can hang out. The North Face is for the outdoor enthusiast. Robert Graham wants you to join their Collector's Club and Hallmark wants you to join its Hallmark Keepsake Ornament Club. Harley-Davidson owners feel an affinity for one another as do Patagonia and Tesla customers. 

Colleges and universities want their graduates to feel a lifelong affinity to their institutions and brands. They go to great lengths to create alumni associations and events. 

How is your brand creating a space or platform for people to feel as though they belong and are known? 

Maslow's Hierarchy of Needs

Every marketer would do well to understand Maslow's Hierarchy of Needs. First, people's physiological needs must be met, then their safety and security needs. Next, they need to feel as though they belong somewhere. After they have found their tribe, they seek the respect of others. When they become fully confident about their social status, they refocus their energies on achieving their highest potential, emphasizing ethics, creativity, spontaneity and other higher ideals. 

Most, but not all, brands focus on the top three rungs - love/belonging, esteem and self-actualization. Think of the brands that focus on belonging. Certain beer brands do this. Part of Harley-Davidson's brand position is the "comradeship of kindred spirits." Friends was a television show completely based on the concept of camaraderie. A significant portion of people are focused on achievement and self-esteem. Because of this, many brands primarily confer social status. Consider Mercedes-Benz, Gucci and Salvatore Ferragamo. Others are focused on self-actualization. Patagonia and Newman's Own are examples of this. Some brands straddle different needs. Tesla operates in both the esteem/social status and self-actualization rungs as does Apple. With its fun designs and high price points, Vilebrequin also straddles the esteem and self-actualization rungs. Dove's Real Beauty campaign both promotes self-esteem and an enlightened view of "real beauty," causing it to span the top two rungs of Maslow's Hierarchy. Robert Graham's tagline is "knowledge wisdom truth." This, together with its highly creative designs, places it on the self-actualization rung.

Historically, Volvo focused on a safe ride especially for family members, putting it on the safety and love/belonging rungs. Because of its price point, it was also partially on the esteem rung. With its frequent repositioning over the past decade, its owners have pushed it up more to the esteem rung.

Where does your brand operate on Maslow's Hierarchy of Needs?