Tyler Whitehead, CEO of Arbonne International, shared his insights on retention and loyalty programs at the DSA ENGAGE conference held last month in New Orleans. Whitehead opened his session by sharing some basic facts about customer retention:
- 15 to 20 percent of direct selling customers will be retained after one year.
- It's five to twenty-five times more costly to acquire a new customer than it is to attain an existing one.
- A 25 to 95 percent increase in profitability can come from just a 5 percent increase in retention rates.
Whitehead believes the future of direct selling is to focus on the overall experience of the customer. “First, drive value through purpose orientation, or mission, to open up the portfolio of products, and, ultimately, the business opportunity,” he says. “These are fundamental pillars and building blocks of a great brand and a great company in the direct selling space—mission, product, opportunity.”
Whitehead says that when value is added at every touchpoint of the customer journey and all participants have an experience that is transparent and simple, loyalty will be enhanced.
“We have to move from what has been a short-term focus to what can we do for a customer relationship over time,” he explains. “How can we build a relationship where people will continually want to come back and see how our products, our brand, and our community can help benefit them?”
Independent research conducted by Arbonne revealed that the lifetime value of a customer who has a price point under $100 versus a customer with a price point over $300 is six times higher. The equation clearly shows that less on the front end is truly more when it comes to the lifetime value equation.
Here are a few building blocks Whitehead and his team have leveraged to build their loyalty program.
- Do you have metrics that clearly measure your customer retention and success rates? Do you and your programs align to move those metrics?
- Are you incentivizing your field and your consultants to move that metric in the right direction?
- Do you know precisely what volume and revenue comes from which set segments of your business?
- How much of that is coming from consultants?
- How much of it is from first-time purchasers? How much of it is from second month?
- Are you personalizing your outreach from the company your consultants?
Whitehead says the goal is to know the customer journey and the targets for the different segments of repeat purchasers over time. “Some of them might have been customers for many years on a certain product, some might be brand new and looking at the portfolio for the first time, and some of them might only have one product that they're interested in but would gladly buy if it's on some kind of subscription program,” he says.
Whitehead stresses that it is vital that a company find the way to personalize customer journeys, and to have and build a dedicated function within the company—a team dedicated to this challenge. He also points out a company needs to orient consultants as ambassadors for, and on behalf of, customers. Their input in simplifying and providing a seamless and transparent process will help to create a strong loyalty program.
“When we build programs and relationships, the big win for us is that we have happy customers, and we have consultants with volume that supports their business from month to month so they can go and do what they do best,” says Whitehead. “That is empowering others.”