In a world of fierce competition, market saturation, and evolving data privacy regulations, brands are finding attracting new customers more difficult (and more expensive) than ever. This naturally increases the focus on building customer loyalty retention strategies to retain existing customers and maximize customer lifetime value.
But this can be equally problematic.
As our latest CX trends report reveals, consumers don’t necessarily feel the need to stick with tried and tested products or services. Seven in ten (71%) say they actively shop around to get the best deal, and 61% are likely to switch to a different brand if it’s cheaper. With customers having endless choice of – and easy access to – products and services, placing a focus on customer loyalty retention is essential.
The bright spot in all of this is the promise of personalization. Customer expectations are high, and people want their brand interactions to be relevant and tailored to their interests and circumstances. In fact, our survey revealed almost three-quarters (73%) of consumers are willing to stay loyal to brands that deliver a great customer experience – one that’s personalized to their unique needs.
There are many opportunities to deliver these meaningful experiences, whether it’s through personalized offers, seamless customer service, or a well designed loyalty program to reward each repeat purchase. But there are certain times in people’s lives when brands need to supplement these longer-term customer retention strategies to provide an exceptional personalized experience that will retain customer loyalty in the short term.
These occasions are major milestones or life transitions that will radically change the customer’s needs and motivations over a relatively short period of time. They include:
- Graduating college
- Getting married
- Buying a first home
- Moving
- Having children
- Retiring
Brands must prioritize customer retention during these milestone transitions on the customer journey. They must work smarter to understand how people are changing and ensure they stay relevant to their changing needs if they want to be sure of a repeat customer.
The impact of life transitions on customer loyalty retention
When people hit major life milestones, their needs change in two key ways:
- Products: The first change is more practical, with the transition triggering specific purchases or requiring people to access different products and services.
- Perceptions: The second change is less tangible, with a life stage transition often accompanied by a shift in a person’s perception of themselves, as well as their priorities.
The combination of these two changes means brands need to rethink the way they speak to existing customers if they want to maximize retention rates.
Take starting college as an example. A college student who’s leaving their parents’ home for the first time and living on campus will have some fairly obvious new needs, like supplies for a dorm room, and perhaps some new clothes. Maybe even a car. But their persona will also change as they experience independence for the first time. On a recent podcast, Acxiom’s Director of Product Leah Quinn explained:
“College students are a market of people that are ready to buy. It’s an opportune time for brands to get in front of these people where they’re moving out from their parents. They’re starting to make decisions on their own. They want that independence. It’s a great time for brands to make that connection and start to build loyalty.”
Leah shared her own personal customer success story as an example of the importance of building and retaining loyalty at this early stage in a consumer’s life. Upon graduating college, she was keen to be totally independent and really wanted to buy her own car, but few banks were willing to give her a loan. The bank that did approve a loan has been her bank ever since. It has nurtured the relationship with financial products that are relevant to her life stage, and she intends to stay loyal for life, despite now living in a different state.
Delivering exceptional, personalized experiences throughout a student’s journey – from leaving high school and heading off to college, to graduation and beyond – doesn’t just result in repeat business and satisfied customers, it can create lifelong brand advocates.
Hear more from Leah in our Connecting When It Counts podcast →
Having children is another great example of a lifestage where customer behavior and perceptions can change dramatically, and retaining customers requires more than just a customer loyalty retention program. Someone who’s just had a baby will need products and services they’ve never used before. From formula and diapers to strollers and age-appropriate toys, their needs will change from a practical point of view.
But their persona will also evolve. They’ve become a parent – a person with responsibility for another human being. This transition is likely to change their perception of themselves, their priorities, and their motivation for engaging with brands. Being sensitive to that shift is crucial for brands to connect with new parents in a meaningful way and retain a loyal customer base at this pivotal time.
Of course, brands won’t just want to focus the customer experience solely on the life transition. They’ll also want to factor in all the usual attributes such as interests, preferences, and buying behavior to ensure customer satisfaction and drive customer retention.
The risk of customer churn in milestone disruption
One of the reasons it’s vital for brands to get their customer loyalty retention strategy right as people hit these milestones is that these major life changes are high-risk periods for customer loss. A time of upheaval, when people are starting a new chapter in their lives, is a prime time to try new things. Just consider the upheaval of the COVID-19 pandemic where, according to McKinsey, 75% of consumers tried out new shopping behaviors and almost 40% deserted trusted brands for new ones.
Minimizing the extent to which life transitions reduce your customer retention rate means getting ahead of all the other brands that are trying to take advantage of their changing needs. Moving to a new home is a key example. It’s likely that every year around 10% of your customers will move, and it’s one of the most significant changes in their lives, especially if they move to a new area or different state. It’s also a time when your competitors will try to tempt them away from you.
The Welcome Wagon model that’s been in existence since the 1920s is still valid today. Brands will be falling over themselves to get in front of new movers – offering excellent customer service as well as great deals to win their business. Everyone wants that new customer and – from the homeware brand they use to furnish their house to the restaurant chain they visit on a Friday evening – new movers will be incentivized to try new things.
To maintain high customer loyalty retention rates through a move, your brand should ideally start at the pre-move stage, perhaps when someone puts their home on the market or starts searching for a new rental property. At this stage, your brand can remind existing customers that your services or products will still be available wherever they’re going, and make it as easy and beneficial as possible for them to continue your relationship.
As Dina Plath, Senior Product Manager at Acxiom, explains, when customers are moving, brands must, “Continue to solidify and enhance those relationships throughout the entire journey, pre-move, post-move, and lifelong – hopefully.”
Hear more from Dina in our Make Connections When Life Is Happening podcast →
Identifying those major milestones
So, this brings us to the important question, how do you know when your so-far loyal customers are approaching, or in the midst of, a life transition?
Making assumptions based on factors like age has never been a very effective approach to customer engagement, but in an increasingly unpredictable world it’s even less so. You can’t assume all 18-year-olds are heading for college, for example. With Gen Z priorities changing, many are considering alternative, non-traditional options for continuing their education.
Equally, you can’t make assumptions about when people will get married or have children. Census data shows the average marriage age has increased significantly over the years, while the average age for motherhood recently hit a high of 30. The average age for buying a first home is currently 35, but that doesn’t mean all 35-year-olds are investing in their first property – far from it.
To really understand what’s happening in the lives of your current customers, and identify when they are experiencing these life transitions, you need customer data that is accurate, reliable, regularly refreshed, complete, and ethically sourced. You need customer intelligence that will allow you to speak to them in a relevant and meaningful way, so you can deliver the best possible customer experience. And that’s something Acxiom can help you with.
