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5 Customer Retention Strategies from the World’s Best Brands

Mathew Maniyamkott

Mathew Maniyamkott

8 min read

Retaining a customer is the holy grail for most businesses especially because it is easy to keep an existing one but costlier to onboard a new customer. A thriving sales funnel to get new customers is what companies bend their backs on to achieve.

Most often, companies completely ignore the present customers although they are promised ‘Account Managers’ who are merely glorified versions of a customer service representative in most cases. There is no initiative from their side unless a complaint is registered. This is why companies should proactively make sure with customer pulse surveys that the present customers are taken care of and their expectations surpassed.

The first step to effectively retain customers is to understand what they expect, where you find yourself, and how invested are you to improve your position. Collecting feedback, especially right from the beginning of your journey with adequate market research surveys, is effort well worth it. Here are some of the best customer retention strategies that the best brands have employed:

Brand #1: Starbucks’ Customer Loyalty Program

 

customer retention strategy of starbucks

A study by Accenture said that 77% of customers participate in retail loyalty programs. It says that the average US household is enrolled in at least 19 to 29 loyalty programs at any point of time although they actively use only 5 to 12 of them.

The American coffeehouse chain Starbucks, with more than 27,000 outlets around the world, has case studies revolving around its loyalty programs. On April 12, 2016, Starbucks redesigned their loyalty program ‘Starbucks Rewards’ to incentivize the high-spenders.

The coffee behemoth gave a plethora of benefits to members of its loyalty programs like the following:

  • 2 stars per $1 spent
  • Pay by phone
  • Free reward on birthdays
  • Facility to order in advance
  • Free in-store refills
  • Exclusive events and offers for members

In the earlier program, people were rewarded for each visit, meaning there wasn’t any difference between a low-spender and high-spender in terms of rewards. With the new system, the more they spend, the more stars they earn.There are tiers like Green and Gold for customers based on their usage with various benefits for each of them.

What’s So Special About Starbucks’ Rewards Program?

Customers are eligible to get free stuff like refills, free birthday drink and the facility to pay from their phones before even arriving at the store. The user experience is pretty good as it is engaging for the users and prods them to use it more.

A customer loyalty program such as Starbucks’ would also enable them to collect more data about their customers which means that they can use it to serve them better. They also incentivized the high-spenders, making them feel valued for spending their money with Starbucks. A lot of people downloaded the app and pre-loaded the app with money. Apparently,  people are willing to spend more when they have in-app balance!

Brand #2: Amazon’s Prime Memberships

 

amazon customer retention strategy

The online retail giant’s program might look like just another retention program that has deals and faster shipping but there are also a lot of additional benefits included in it. Apart from the promise of faster delivery, it also gives its customers access to streaming video services, music, ebooks, free delivery and a plethora of other Amazon-specific products. More than 64% of households across the US have an Amazon Prime membership. That would make up to 80 million Prime members in the US alone.

The Prime members are much more valuable to Amazon as they spend around $1300 on the e-commerce site while non-members only spend around $700 on an average in a year. There is a stickiness factor with Amazon because you can buy almost anything on their store, with the added benefits that cover almost everyone with unique desires of their own, it is only normal that people prefer buying Prime memberships.

Moreover, these aspects set apart Amazon from its competitors.

Best Practices in E-commerce

A subscriber gets free shipping and when you reduce the number of delivery days in a purchase, it would be impossible for a customer to not feel valued. It also promotes impulsive buying as a user knows that the product would be in their hands within two days. One cannot call Amazon Prime a customer loyalty program, it is more like a privilege program.

Using Data to Serve Better

For those customers who seek exclusivity, there are offers that are given only to Prime members. By giving Amazon Prime videos free for the subscribers, it can also understand what kind of programs customers want based on insights from the data they have. The bundling of such resources is what makes Amazon Prime tick.

Ensuring that Nothing is Lacking

Amazon leaves all of its competitors struggling behind because of the deals, smooth user-interface, delivery speed, product availability, genuine sellers and much more than it has at its disposals. Each factor is important to a customer and when an e-commerce store is found lacking on one of these aspects, the customer would face a lot of headaches. This is why Amazon keeps winning and as a result, more people would make the subscription to Amazon Prime for its additional benefits thus strengthening the relationship with the customer.

Brand #3: Coca-Cola Retaining Customers Over the Years

 

coca cola customer retention strategies

If there is one brand that would remain consistently among of the top brands the world has ever seen, it has got to be Coca-Cola. They keep innovating when it comes to their strategy for connecting with their customers. The 135-year old company continuously creates amazing experiences for its customers through its ads, events, or through product interaction.

Experiential Campaigns that Bring Customers Together

If you look at it closely, customers only care about a few basic things. That the product that they pay for is of the best quality is a fundamental requirement while the next in line is good service and proper communication. Coca-Cola has had an amazing run with its advertising campaigns over the years, one of its campaign on college was its “Friendly Twist” bottle which can only be opened with the help of another person. The objective of this was to make first-year students at a university in Colombia bond.

Coke’s Ability to be Flexible Amid Concerns

The fact that Coca-Cola has maintained its image despite health concerns, economic changes throughout the world, alternating consumption patterns and much more is a win in itself. When customers grew concerned about sugar consumption, it developed Coke Zero and Coke Life, both of which were well-appreciated by the health conscious, this ability to be flexible ensures that the brand never loses its crown.

To achieve all of this, Coca-Cola has spent millions on extensive marketing and stays well connected with its targeted customers. This is why there are so many brand advocates for Coke.

Brand #4: Costco’s Membership Card

 

customer retntion strategy from costco

Costco is a billion-dollar multinational corporation and one of the world’s largest retailers. With the ability to buy online with zero hassles, it is a miracle that Costco is still one of the most preferred places to shop for the average American. Just like Amazon Prime, they have a membership program too that costs between $60 and $120 based on the benefits associated with it.

For members, Costco makes bulk-purchase look like the smartest decision they would ever make, thanks to the steep discounts that are offered. It encourages their customers to stock up on essential items by offering items in bulk. Young professionals these days associate buying bulk as a wise financial decision, an attitude that they developed after seeing their parents buy in bulk too.

Help Make Choices with Free Samples

Not only this, even in the stores, they make sure they treat their customers in an inimitable way. Since each warehouse has all the items a household would need, it might get a little overwhelming for people to decide what to buy. To alleviate this problem, Costco employees offer free samples of various things to help the customers make sure that they are buying the best item on offer.

Making it Risk-free for Customers

With free samples and demos of electronic items, coupled with their 90 days return policy, it is impossible for a customer to make a buying mistake. This keeps customers satisfied as they know that they will not be taken for a ride, thanks to a faulty product. They don’t mind offering an extra sample if you want to make sure that you have the right product.

The services don’t end here for members, they also get access to a huge range other services like an optometrist, mechanic, mobile phone service provider, pharmacy, restaurant and much more. The membership number was at 90.3 million in 2017 and it is no wonder.

Brand #5: Hilton’s Dogged Pursuit to Keep its Customers Happy

 

hilton customer retention

All big hospitality brands are known for keeping their customers fully satisfied and at Hilton, even more so. Even if you are not a member of its rewards program, you will still get the best treatment that is humanly possible. For the business traveler and regulars on Hilton, its rewards program Honors includes an exclusive discount while providing them with other ‘experiences’ as well. It also offers other instant perks like free standard Wi-Fi, digital check-in with room selection, Digital Key and free passes for many exclusive concerts and dinners.

It is impossible not to be on the top of your game every single day when serving guests especially when your mission statement and everything else revolves around keeping customers happy. The 98-year old hospitality behemoth Hilton Worldwide has more than 7.6 lakh rooms spread around 100 countries. Having a network like this makes the Honors program much more appealing as you could redeem its benefits in any of its member nations.

Targeted Service Increases Effectiveness

Their rewards system is specific to the customer activity and not just directed at anybody with a card. The offers depend on factors like how often have they stayed, demographics, partner payment cards the guest has used and other behavior patterns. A member can log in to the Honors site to check their status at any point of time including hotel transaction data, redeemable points, any special offers, eligible hotel rewards and much more.

Reminding Customers Of What they Stand to Gain

Honors also send its guests personalized emails in response to their activities. This alerts them of the many perks including incentive points. The personal touch means that it encourages customer loyalty and promotes repeat business. The customer is repeatedly told that being an Honors member is replete with complimentary bonus hotel stays, surprise upgrades and gives airlines miles as well. Such a level of communication and service is only bound to increase the number of Honors members.

When you see the biggest brands in the world trying hard to retain their existing customers with their elaborate strategies, you would as a business know how important it is to keep the present paying customers than vying for new ones alone. Be in constant touch and listen to the voice of customers, get on a call with them to understand their pain points and see if there is an opportunity for you to go beyond your call of duty to ensure and manage customer experience. You will be able to do good for yourself if you can replicate what some of these brands did.

Happy Retention!

Mathew Maniyamkott
Mathew Maniyamkott

Guest Blogger at SurveySparrow

Regular contributor to various magazines. Passionate about entrepreneurship, startups, marketing, and productivity.

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