Developing customer loyalty with online services

Recently, numerous articles, studies and statistics have focused on the increasing revenues of online advertising. These publications have explored the advantages, methods, emerging technologies and the expenses related to online advertising. Many managers question the benefits of this form of advertising before opting to include it in their mixed marketing strategies and would like to know what steps to take to ensure that an online advertising campaign remains profitable.

It is more profitable for a company to retain its existing clientele than to acquire new customers. By measuring the investment a company makes in a customer’s “next purchase”, it is apparent that this amount is less than the investment required for a new customer’s first purchase. For this reason, it is important to build loyalty among your existing clientele. Are you aware of the cost of acquiring and retaining your clientele?

Several methods exist to build customer loyalty. One of the simplest yet most efficient methods is to increase and maintain customer satisfaction. Above all else, customers who are satisfied with the business relationship they have with a company do not want to spend energy to start their decision-making process over again. Each contact made between a customer and a company is an opportunity for the company to prove just how important it is for the customer. Whether it be in-store, via telephone or on the web, customers must benefit from an enjoyable and valuable experience. Each of these “moments of truth” must influence their experience in a positive manner.

Online services have great virtues for supporting this type of “continual” initiative to win over customers. They bring about a reduction in the costs of retaining your customers for the following two reasons:

- The Web is an important tool for Canadian and Quebecois consumers. Nearly three quarters of Quebeckers between the ages of 18 and 34, and over half of all adults, used the Internet at least once a week in 2003. A quarter of these people also used the Internet for banking services and to collect information to make a purchase. [1]

- The web is often the least expensive channel for communicating and carrying out transactions with customers. These two activities are examples of “moments of truth” that must not be missed with your customers. For simple interactions (requests for prices, account balances, opening hours, file adjustments, bill payments, etc.) the web is clearly profitable: it is 3 to 10 times less expensive than the telephone [2] Moreover, these online services are frequently very simple to adapt for the web. It is simply a matter of choosing the best services portfolio based on the appropriate measures.

Nevertheless, it has been proven that the web is less effective for complex interactions, such as requesting a quote, purchasing a highly personalized product or discussing a problem with a representative. [3] In such cases, phone calls or in-store visits are more advantageous. Yet the web is excellent for promoting the other interaction channels that are more efficient at performing complex interactions. When customers visit a site to verify their account balance, the company’s business hours or find product information, this is an excellent opportunity to communicate with them and promote new products, cross-sales and additional products based on their past purchases or other factors.

By taking control of simple and repetitive interactions, the web increases the frequency and quality of a company’s contact with its clientele, and allows the other, more costly, channels to take care of the most important interactions. But above all, the web increases customers’ satisfaction by simplifying their relationship with a company. Customers who use online services are often the most loyal: in the case of banks, individuals who use a bank’s online services will quit that bank and switch to a competing bank four times less often. [4] Loyal customers imply lower retention costs, as well as higher and more frequent sales.

Where do you begin? To serve your online clientele well, it is important to properly divide customers into segments and establish a plan for each segment on the basis of their particular costs of acquisition and retention. The more personalized your approach, the more profitable your customers’ “moments of truth” will be for your company. You must also choose the optimal online services portfolio to offer depending on the respective costs they will represent for your company in terms of changes to implement, maintenance to perform and, especially, potential benefits. Lastly, you must anticipate a conversion strategy to implement the chosen interactions on the web, ensuring that this strategy fits into your corporate customer approach and blends with the other channels.

[1] Netendances 2003, CEFRIO and Leger Marketing, Jan. 2004, pgs. 11-16.

[2] Gartner, “ Estimated Cost per customer service interaction, by channel, ” 2003. and up to 17 times less costly than an in-store visit.[[Radio-Canada, “ Coût d’une transaction pour une institution bancaire selon le canal de distribution utilisé, ” Sept. 2003.

[3] Radio-Canada, “ Coût d’une transaction pour une institution bancaire selon le canal de distribution utilisé, ” Sept. 2003.

[4] Radio-Canada, “ Coût d’une transaction pour une institution bancaire selon le canal de distribution utilisé, ” Sept. 2003.