Cost Effective Customer Retention Strategies using Offer Tiers

Retaining customers is a difficult task no matter which industry of operation, especially in tough economic conditions when the market is saturated, and competition is concentrated. Providing customers with exclusive offers for continuing to make use of your services is a tried and tested means of ensuring that they stay with your service or select it over those that might not have such offers. But how do you design such a program? How do you target for the gains in retention without spending more than you gain on the offers themselves? At Opti-Num Solutions, we have developed a data driven methodology for developing offer programs to ensure that both you and your customers gain from the initiative.








Customer retention – What is it? Why is it important?

Increasing the number of repeat customers via collective activities and strategies aims at increasing the profitability of these existing customers. Customer retention is of utmost importance in a business that strives to express reliability and trustworthiness. A steady customer base not only brings in a steady income, it also creates a trustworthy feedback mechanism to ask for critique regarding new developments or changes. This could further develop into brand loyalty and community; the core of what businesses should strive for in trying times.

Returning customers result in greater Return on Investments (ROI) and can be strongly cost effective. The success of an offer initiative will stem from the use of analytics to assist in prioritising and leverage the right existing platforms and elements within the business to elevate the responses.

General practices include having successful introductory programs that not only teach the customers to use the product but also to maintain it. This opens an avenue for creating a variety of options for the customer to experience with the trust in knowing it lasts. The feedback from these products and services form the crucial next step for the business to form a relationship with the customer so that the sentiment of the solution can be gauged. This outcome is addressed and used to improve the existing offering.

Customer KPIs – What are you getting from this initiative?










Along with understanding the customer’s duration with your service, it is also important to note the nature of the activity within that period. Whether it be daily, weekly, monthly, or annually, offer tiers need to be structured around the sustained customer activity within your business. While the Pareto’s 80/20 rule applies broadly, you would want to precisely condense the customers impact on key indicators. With this approach you can begin specifying activity categories for your customers by defining them around the frequency peaks that occur naturally to define your offer tiers. These definitions should not be easily swayed by a sudden spike or drop in indicators, but by consistent activity trends over the customer’s tenure while accounting for potential seasonality throughout the year. The offers, which are generally stable, could also be arranged to accommodate such sudden surges in activity from customers to a point.

Customer Segmentation – How can you leverage from your customer behaviour?

Once the spend of a customer is known, advanced analyses can be incorporated for this customer base. Spend is made up by the use of the products and services on offer, and although customers can be grouped based on spend there is a further step that can be undertaken; segmentation, whereby your customers can be grouped based on engagement with the products and services on offer. With these segments of customer behaviour, a strong understanding of each groups positive and negative attributes will become apparent and can be utilised in your business to further enhance customer affinity. Segmentation allows for the understanding and deployment of customer focused offers and marketing campaigns to drive your business KPIs.











With the intelligent use of customer data analytics, you can gain a deep understanding of your customers behaviour and provide them with offers that drive retention with a positive ROI. If you are interested in how these concepts could apply to your business, simply contact us for a conversation where we can explore the possibilities in finding these patterns within your customer data.

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