Customer Retention: Keep ’Em And Hold ’Em

Beyond death, taxes and postal rate hikes, most catalogers’ primary worry in life is retaining customers. Aside from continuously offering appealing products and services, there are a number of effective approaches you need to take to keep your customers happy and doing repeat business with you.

Naturally, the question is, “What methods can I try that I haven’t already tried 10 times?” For a few possible answers and techniques for you to test in different departments, consider the strategies offered by several catalog experts.

Customer Service

Good customer service starts with the first interaction you have with customers. And if your call center still is fielding a sizeable portion of your orders, you naturally have a “human” opportunity to keep them happy.

San Francisco-based telephone accessories cataloger Headsets.com takes a majority of its orders over the phone, despite its dot-com era pedigree. “Our inbound contact center is really what makes people remember us,” says founder and president, Mike Faith. “When you provide that ‘wow’ experience over the phone, in a few years time, when they need another headset or their colleagues need headsets, they’ll remember us as the place to come.”

Faith gets his customer service reps (CSRs) to consistently provide that “wow” experience by hiring the right reps. Headsets.com CSRs go through a rigorous interview and testing process. Included in the process are separate interviews with Faith and a customer service manager, an IQ test, and significant time spent listening to live calls.

Teach CSRs that respecting customers is of the utmost importance.

Once hired, Headsets.com CSRs are taught that respecting customers is of the utmost importance. In fact, being disrespectful to customers, either during a phone call or while talking with co-workers, is a fireable offense. “Rolling your eyes, or making inappropriate gestures or comments about a customer are all things at some stage of our lives that we’ve been guilty of,” Faith says. “But it’s just not an acceptable trait, even if the customer is wrong. Customers can be wrong, but they’re paying us money and deserve our respect.”

Training CSRs to consistently deliver a high level of customer service is paramount to customer retention. Meanwhile, to Bensalem, Pa.-based hosiery cataloger and continuity marketer HCI Direct, getting feedback from reps’ interactions with customers may be just as important.

While HCI Direct employs an outsourced call center, a team leader at the call center conducts a thorough debriefing at the start of every workday. Director of Customer Retention and Service Alysia Caccuro notes that she’s looking for anything out of the ordinary from the prior business day, such as common customer complaints or service problems. “If we have six agents saying they had customer calls regarding problems with the color of their shipments not matching their orders, we can then go to fulfillment and operations and let them know we’re having a problem,” she says.

In addition to the daily debriefings, Caccuro and her marketing team listen in on customer calls at least once a week. While part of the exercise is designed to provide feedback to the CSRs regarding their scripts as well as upselling and cross-selling opportunities, Caccuro adds that she wants to make sure the marketing team literally hears and connects with the voice of HCI Direct’s customers.

Fulfillment

Another potential chance to wow or lose customers comes during the fulfillment process. “In terms of preventing attrition, one of the big hidden leakages out of businesses is the tolerance for poor quality coming out of the distribution center,” says Paal Gisholt, co-founder and president of SmartPak Equine, a Plymouth, Mass.-based multichannel merchant of horse and dog nutritional supplements and supplies.

He notes that 99 percent accuracy in order fulfillment is considered good for many marketers. But because his continuity business ships up to 13 times a year to some customers, he’s quick to add that a 99 percent accuracy rate actually means up to 15 percent of his customer base has had a problem in the past year. “So we’ve put in place a bunch of systems to get our quality level up to about the 99.9 percent range,” he says, “and that takes a lot of commitment.”

To combat the problem, Gisholt holds a meeting with senior department managers to discuss fulfillment errors. Combined with a fulfillment system that allows CSRs, purchasers or anyone else in the distribution center to report errors, the meeting serves to dig deeply to eliminate the root of fulfillment problems.

For example, if customers say they’ve received the wrong product, it might superficially appear to be a picking error, Gisholt says. But during the error meeting, his team closely examines the problem and may find that the product had the wrong barcode applied in the receiving process. And the root cause of the problem is that a vendor didn’t affix a UPC code. By drilling deeper, Gisholt’s team determines the warehouse has many items on the shelves that have the wrong barcodes on them, but they catch the problem, relabel those items and take follow-up action to make sure the vendor barcodes these items in the future.

“Operating in a continuous improvement mode for many years in an intense, multifocused, multidepartmental meeting has allowed us to eliminate a lot of the sources for errors,” Gisholt points out. And as errors disappear, customer satisfaction and retention increase.

Ongoing Communication

Knowing when to reach out and touch your customers can be a tricky proposition, as any catalog circulation manager can tell you. But what about communication beyond the catalog?

Faith notes that because Headsets.com’s products have such a long shelf life, he likes to remind his customers that he appreciates their business between purchases. In April, for instance, he mailed a letter to his customers outlining what the company had been able to achieve with their support. While he envisioned it solely as a thank-you letter, his marketing team kept insisting he add an offer to the piece. Because he didn’t want customers to think his sincerely grateful letter was a ploy for sales, he eliminated any special offers from the piece.

While expecting no particular response, Faith spent $80,000 to send the missive to his customers. And although he won’t divulge sales made as a result of the letter, he says he was floored by the thousands of calls, letters and e-mails he received from customers expressing pleasure at his letter.

Gisholt also stresses the need for ongoing customer appreciation. Since 60 percent of his dog supplement continuity business comes in on the Web, his CSRs don’t get the opportunity to establish a rapport with customers. So, he recently implemented a call program. About two weeks after new customers place an order online, SmartPak’s CSRs call and give the following message: “Welcome to SmartPak, we’re delighted you’ve chosen to let us help you simplify feeding your dog. If you have any questions or things aren’t working as you expect them to, please give us a call.”

“When we do catch people live, they’re generally extremely happy we’ve made the effort to connect to them,” Gisholt says.

Also as part of the continuity program, his customers receive monthly e-mails several days before their orders ship. At that time, they’re given the option of canceling their orders entirely. While he recognizes that he’s inviting customers to leave every time an e-mail goes out, Gisholt believes it’s the respectful way to treat his customers. Plus, he also gives them the opportunity to add items to their orders and increase their average order value.

Gina Valentino, president of catalog consultancy Hemisphere Marketing, notes that continuous messaging and offers to valuable customers can add to your share of wallet. She notes how computer merchant Dell recently used a direct mail piece to celebrate its 22nd anniversary. Playing off the fact that 22nd anniversary gifts traditionally are copper, Dell sent a direct mail piece emblazoned with a penny in a champagne glass, along with a copper-colored gift card.

With customer reactivation, ongoing communication combined with the right offer can reactivate lapsed buyers with surprising effectiveness, Valentino notes. She suggests that if your 12-month housefile growth is flat or declining year to year, you’d better start trying to bring older buyers back into the fold.

Looking back on buyers who haven’t purchased in more than 36 months, Valentino suggests segmenting by merchandise. If a customer’s last purchase was a large one-time purchase or from a category you no longer carry, that customer will be harder to reactivate. If on the other hand, it was a gift purchase, then reactivation might be worthwhile.

Once you decide to reactivate a certain segment, you’ll probably need some kind of incentive, Valentino says. Sometimes, however, that incentive can be remarkably inexpensive. “Although it’s somewhat clichéd, a ‘We miss your business’ message can be quite effective,” she points out.

As for the popular, “This could be your last catalog” message, although she considers it a loud-and-clear signal, Valentino feels it’s overused by the industry. An additional message helps. For instance, home décor and gifts cataloger Collections Etc. uses a “last catalog” message as well as an, “Everything in this catalog is $14.95 or less” message.