Build Customer Loyalty: What E-commerce Can Learn From Hotels
How E-Commerce Marketers Can Build Customer Loyalty
I’ve just come back from a wonderful trip to South Tyrol in North Italy, and it was the best example of customer service I’ve ever experienced. “Wouldn’t it be great if e-commerce companies could offer a similar experience for their customers?” I thought.
In this post, I’ll be revealing some examples of successful customer communication during my trip and how marketers can apply it to create customer loyalty in the ecommerce industry. We’ll be looking at:
- The Business Point of View
- Customer Lifetime Value
- Channel of Communication
- How It Relate to E-Commerce
- How to Treat Regular Customers Well
A little back-story: We were traveling as a group of five adults (my wife, her sister and husband, and my mother-in-law) plus four children (two in each family) under the age of three. We booked two family suites and a single bedroom. My wife and I had been to this hotel four times already over the past seven years and I couldn’t recommend it.
But I digress… A day before departure, I received a phone call from the Head of Reservations:
“Hello Mr. Nowak. We’re looking forward to welcoming you to our hotel again. I’ve seen you’re traveling with other parties, if you agree our Managing Director would like to offer you our Presidential Suite free-of-charge for your entire stay. Is that something that you would be interested in?”
Needless to say, I was. Having a 250m² living space and the same sized roof terrace, a private pool, Jacuzzi and sauna is just amazing, especially for four small children with the energy of race horses.
The Business Point of View
Of course my wife and mother-in-law were overwhelmed, and asked: “Why would they do that?!”. Well, I tried to look at this from a business point of view.
Firstly, we travelled in the region’s off-season, meaning the Presidential Suite would have remained empty during our stay. Secondly, it’s kind of simple math and common sense!
A couple who had their first visit seven years ago is now traveling with their kids, close relatives and friends. Chances are, they’ll recommended this hotel due to their good experience (in fact, I just did!), and this might even result in a new family becoming regular guests.
The Customer Lifetime Value
We’re looking at a straightforward customer lifetime value analysis here; over time our available budget and standards increase (relative to our salaries), making it more likely that we can afford higher quality vacations.
Hotels, in general, rely on recommendations, be they online through sites like TripAdvisor or Holidaycheck, or traditional word of mouth. We could assume that recommended friends will have the same potential budget available, similar interests, and are in a similar family situation (in this case, small children).
Taking all this into consideration, there is much to be gained in the fu
The Channel of Communication
Let’s also look at the channel of communication here; the phone call made sure that this offer would be noticed immediately and added a very personal touch. Chances are I would have completely missed this if it were sent via email. I genuinely felt like a VIP, and I can say without shame that I really liked that!
How Does This Relate to E-Commerce?
I know what you’re thinking: “Philip, that’s a nice story and all, but a hotel might have a couple of hundred guests. In e-commerce, companies have hundreds of thousands, if not millions, of customers, so doing all this (manual) work simply wouldn’t pay off, not to mention the resource you’d require, right?” Wrong. The overall concept of “treating your regular customers well” remains valid.
How to Treat Your Regular Customers Well
Given the right tools, the scenario above can happen almost 100% automatically. All you need to do is come up with a scoring model for your customer base so you can identify your most valuable active customers.
Then your data collection tool provides the customer lifetime value and potential revenue gains in the future. This entire process is very economical in terms of operational resources, execution costs and margin.
Highly Personalized Communications
Since you’ll already have a database of active customers, you will have contact details for them, such as their phone number and email. Create a list of customers and let someone from senior management (MD, Head of CRM etc.) call them. Even if it’s just one customer per day, which might take 5 to 10 minutes that will mean something like 250 customers per year that would receive highly personalized communications that make them feel like a VIP.
And it doesn’t even have to be a special promotion. It can just be a “Hello, my name is X, and I am the founder of Company Y. Today, I just wanted to call you to thank you for your business. You have been with us for so many years, and your on-going purchases help me provide workspace for my employees and invest into higher quality products and services. Thank you again. I wish you a nice day.”
There’s not a single customer in the world that would not feel positive after such a call.
Automated Messaging Across Channels
Still, if you say, “That all sounds nice in theory, but my Managing Director would never do this. He just doesn’t have the time (or interest)”. Well, in that case look for other personal communications. A letter with a hand written address on the envelope, a text message from a real person, even a personal (automated) email.
Combine this with relevant product recommendations and high value incentives and it will also be highly relevant, it certainly won’t be missed. Try (and test) different channels, compare and analyze the revenue impact.
Customer Segmentation & Audience Targeting
Another great channel, Facebook Advertising, lets you target Lookalike Audiences based on your own customer segments. What could be a better potential new lead than someone who is similar to your most important active customers?
If you have the right technology in place, with supportive and proactive partners that help you to define and execute your strategy, there’s very little manual work to be done, other than creative messaging of course!
Don’t take loyal active customers for granted. They will pay back your treatment with word-of-mouth promotion, continued loyalty, and most importantly… more revenue.