By Ritu Mehta
During the ongoing COVID-19 pandemic, many brands are facing the challenge of customer churn. The hospitality, in-store retail, airline and member-based services sectors are particularly affected. With the decline of the second wave of the COVID-19 pandemic and a calibrated unlocking of economic activities, marketing strategists are stepping up their efforts to retain customers. One of the critical issues these businesses grapple with is who should they target with their retention programs given their limited marketing budget. At one extreme are those customers with a high propensity to default due to the changing dynamics of the post-pandemic world, and at the other end are the most loyal customers of a company who have demonstrated adherence. during times of turbulence. How can the marketer best allocate his expenses and critical marketing efforts?
Interestingly, one of the parallels to this decision-making emerges in dealing with the pandemic on a global scale. One of the problems that almost every country has faced is the allocation of limited resources like beds and ventilators to the overwhelming and unrelenting demand for these resources during the upward trend in the number of cases. Countries like Italy have prioritized saving young lives with the aim of maximizing the chances of saving a life and also maximizing the years of life. By the way, long before the COVID-19 pandemic occurred, New York health guidelines state that “patients with the highest likelihood of death without medical intervention, as well as patients with the likelihood of death the lowest with medical intervention, have the lowest level of access to ventilator therapy.
Thus, patients who are most likely to survive without a ventilator, as well as patients who will most likely survive on ventilator therapy, increase the total number of survivors. segments of society that may view it as favoring one group over another on the basis of age. There is arguably a credible threat of perceived unfairness in such policies.
Likewise, marketers during the economic recovery face this dilemma of who to target with their retention programs. Should they focus their marketing program including communication strategy, promotional offers and sales efforts to their best customers in terms of value and share of portfolio or to customers most likely to switch to competing brands. This classic problem of optimizing the allocation of marketing expenses may borrow lessons from the allocation of scarce resources in the management of healthcare during the pandemic. Therefore, marketers should ask themselves this question: Who is most likely to respond to their loyalty programs?
Read also: 2021 cabinet reshuffle: Prakash Javadekar and Ravi Shankar Prasad resign among 12 ministers
Since the pandemic has brought about changes in purchasing behavior and consumer preferences, the first step for marketers would be to not make assumptions based on past data and rely on the collection so much information about their customers and preferences that can help design the retention program. This may involve introducing a new, very basic variation of the product or service to retain customers who can no longer afford the company’s flagship product. This can be followed by a marketing study to identify the clients most responsive to the planned program in terms of demographic and behavioral variables. These customers can then be engaged at an appropriate time with the right channel of intervention and the right offer. For B2B customers, the way forward might be to segment based on how the pandemic has affected their respective industries and design the assistance program accordingly. At the same time, all businesses need to ensure that their loyal customers are not ignored.
While applying retention tools aimed at a particular segment of customers, marketers should avoid situations where it seems less fair or unfair to customers in general, which can result in backlash for the business. In the age of social media where information sharing occurs at a rapid pace, it is important to choose tools carefully to avoid the anger of customers, social activists and regulators.
The author is a faculty of marketing at IIM Calcutta. Opinions are personal.
Watch BE + with Ambi Parameswaran: In conversation with industry leaders like Jasneet Bachal, Pawan Sarda, Siddhesh Joglekar