Is your company struggling to keep customers?
If so, you're not alone. Customer churn is a widespread problem costing business billions of dollars per year.
- Annual churn rates in the telecommunications industry are between 10 percent and 67 percent, according to the Database Marketing Institute.
- Credit card companies suffer an annual churn rate of about 20 percent, studies show.
- About 30 percent of people cancel their gym memberships each year, according to IHRSA, the fitness industry association. In some gyms, the churn rate is more like 40 or 50 percent.
Is Your Loyalty Program Betraying You?
The number of companies with loyalty programs and the dollars being poured into these programs is eye-popping.
In the US alone, companies spend a staggering $2 billion on loyalty program every year, according to Cap Gemini.
While loyalty programs can be effective, many companies are still losing too many customers. Sometimes, it seems like customers are going out the back door faster than they're coming in the front.
Advocates to the Rescue
Did you know you have a powerful and untapped weapon in your loyalty arsenal?
This weapon is more effective and dramatically less costly than traditional loyalty approaches.
The loyalty weapon I'm talking about is your enthusiastic customers, i.e., your "Brand Advocates."
As your most enthusiastic customers, Advocates will gladly share with other customers the compelling benefits they're getting from your products and services. This bolsters loyalty by reminding customers why they purchased or subscribed to your product or service.
They'll also happily educate customers about product/service features they may not be using and about new products and services. This helps increase product/service adoption and usage -- keys to retention.
Three Ways Advocates can Help
Here are three example of how Advocates can help boost loyalty:
1. Make sure current customers see positive reviews, testimonials, and other favorable content created by loyal Advocates
Look at this authentic positive review by Virginia Leach, a loyal DISH subscriber. Virginia and her family are "very happy" with DISH and "would never switch."
DISH's opportunity is to showcase this positive review and reviews like this by other loyal subscribers to existing subscribers in email newsletters, customer emails, and other email communications.
2. Get Advocates to educate customers about value-added products and services
Value-added products and services can help keep customers from churning. But customers may not be aware of these products and services or their benefits.
Since Advocates are highly trusted and influential -- about 2X to 3X more than brands -- you should be encouraging and enabling Advocates to tell current customers about value-added products and services.
We managed and powered a program where Advocates for a fitness company told members about yoga classes, personal training, group exercise classes, and other ways people could get more value from their memberships.
This program helped the fitness company reduce churn by more than 10 percent.
3. Get Advocates to invite customers to join your loyalty program.
A leading fast casual restaurant spends lots of time and money trying to get customers to join its loyalty club.
The restaurant found that one of the best ways to boost loyalty program memberships was to encourage loyal Advocates to invite their friends.
Over time, Advocates became the #1 source of new loyalty club members. About one-third of all new loyalty club members were referred by Advocates.
Not Just for Acquisition Only
Most Advocate marketing programs like reviews and referrals are aimed at getting customers.
But you should be leveraging your Advocates to help you keep existing customers. This is a powerful way to extend the value of your advocacy program and a smart approach to driving loyalty.