How to Create Customers for Life

Michael Woodruff | Head of Growth | Customology

The franchise market has been hit hard over the last twelve months. In what was already a challenging and competitive market, nothing could’ve prepared us for what lay ahead.

Franchisees had to adapt and find new ways to meet the needs of their customers.

Whilst most managed to ride the storm, the market conditions meant the significant effort put in by the franchisees unfortunately did not result in the business growth they were striving for.

Last year, in the midst of the uncertainty, we wanted to find out exactly how customers felt about the way brands rewarded, recognised and communicated with them. We spoke to thousands of customers to learn precisely what they value, so that we could share these findings with the market. Customer growth will certainly be at the top of the agenda for every brand in 2021. We hope these insights through a customer lens will enable your franchise brand to achieve it and create customers for life.

Customer Recognition:

57% of customers are rarely or never thanked after making a purchase

The first piece of communication with a new customer should always be a thank you - without asking for anything in return. That’s right, no discount on their next purchase and certainly no NPS/customer feedback questionnaire. We’ve worked with brands who saw a significant reduction in the days between purchases, by sending a simple thank you message to their customers post-purchase.

45% of customers don’t believe they are targeted in a relevant way

Our research revealed that customers are demanding personalisation, especially the younger generations. They expect brands to make it as easy as possible for them to make a purchase and don’t have the patience for anything else. You should be working with your marketing teams to segment your customers based on their actual behaviour. Personas and demographic targeting are speculative and frankly, miss the mark. Only through learning how your customers are behaving will you be able to target effectively to influence their next behaviour. A simple, yet very effective approach is the RFM segmentation model, which stands for Recency, Frequency and Monetary value.

Customer Rewards:

63% of customers believe they should be rewarded for referrals

One of our favourite quotes is “Loyal customers come back more often, and they bring their friends.” This is a fantastic opportunity for franchise brands to introduce or leverage existing customer referral programs. If you already have one in place, it’s time for a review - determine if it’s working hard enough for your brand and if it’s actually delivering value to the referring customer.

41% of customers would spend more if they got a special offer on bundled products

Not many brands do this well, Amazon is a clear standout - we’ve all been lured into purchasing more than we originally intended to because of the great value we received. Apply this to your own brand’s products or services, what could you bundle to influence the customer to spend more money with you? And it doesn’t have to be a discount - try a value-added offer instead.

Customer Communications:

51% of customers did not receive any form of communication after their first visit, despite sharing their details

We were really shocked at this stat - it appears that when it comes to customer communications, the majority of brands either bombard their customers, or completely ghost them. The positive news is that customers are

“Customology refers to the first 30 days post-purchase as the ‘moneymoon’ period. This is truly the best time to engage with your customers, whilst they are feeling positive about your brand.” Michael Woodruff | Head of Growth | CUSTOMOLOGY

still willing to share their details. However, they expect the brand they’ve shared their details with to look after them and only communicate with something relevant. Don’t focus on the wrong KPIs such as how many customers are on your database, instead focus on how many sales/redemptions you are receiving as a result. And if you’re not planning on sending any communications (which we believe is a very big no no), don’t ask for their details. They will be expecting to hear from you and when they don’t they will feel let down.

Customology refers to the first 30 days post-purchase as the ‘moneymoon’ period. This is truly the best time to engage with your customers, whilst they are feeling positive about your brand (assuming they had a good experience). You need to keep the momentum going, recognise them (with a thank you), find out what other products/services they would be interested in (research), suggest complementary items for them to purchase, that actually relate to their original purchase (recommend). Don’t spam or ignore your customers during this vital time. We recommend you work with your marketing teams to assess how your brand is communicating with your customers, especially during the moneymoon.

64% of customers would spend more if they received a special offer tailored to them.

This brings us back to customer behavioural segmentation - learn who your customers are so you can continue the conversation with them in a relevant way. There’s no ‘one size fits all’, so if you are sending more than 75% of your emails to 100% of your database, you need to look at this as a top priority. Tailored messages are extremely powerful. Make it easy for the customer - make recommendations based on their previous behaviour and encourage them along the path to re-purchase.

Growth is within reach

The final piece of advice we will share is to stop chasing quick wins. New customers do not equal growth. It’s a known fact that 80% of your future profits will actually come from just 20% of your existing customers (source: Gartner). You already have everything you need to drive customer growth. It’s a lot easier than you think. We have listed a few simple suggestions which could have a substantial impact on your brand - not one of them recommended investing in any new technology solutions or additional resources. Instead, we are asking you to take a step back and truly think like a customer. You’re a customer yourself, learn from the expectations you have of other brands who you purchase from, apply those learnings to your own franchise.

Our research revealed a daunting insight: that 82% of customers could be tempted by a competitor. They’re your customers, don’t let your competitor take them.

The insights shared are taken from our 2020 Customer Values Analysis research report, The Unspoken Customer. Download the full report at www.customology.com.au.

Michael brings over 20 years’ experience in customer facing roles, partnering with key brands including Specsavers, Laser Clinics Australia, Soul Origin, Chatime, Cotton On and Couriers Please. With a keen interest and passion for customer behaviour and motivation, Michael’s focus is on establishing relationships with brands, helping them stay ahead of customer trends, enabling them to understand, engage, and keep their customers.

“You’re a customer yourself, learn from the expectations you have of other brands who you purchase from, apply those learnings to your own franchise.”