The ultimate guide to loyalty and retention

THE ULTIMATE GUIDE TO LOYALTY
AND RETENTION
How to overcome silo thinking and retain your subscription customers
An eBook from Loyalty Bay to help you become an advocate for customer centricity inside your company.

It’s five times more expensive to find a customer than to keep one.
Yet many companies treat their customers, once onboarded, almost as an afterthought.
They send them a few upsell emails here or there. They publish the odd blog post. And
they start the sweet talk when it’s time to renew the contract.
That cannot be a good long-term strategy for success.
In this eBook, we argue that this problem stems from company centricity. Company-
centric organisations look inwardly and do what is convenient.
Instead, companies should refocus on making the customer the centre of attention again.
This eBook provides a roadmap to get there.
First, we explore how company-centric silos fragment the customer experience.
We then suggest a framework for how to become more customer centric.
Finally, we outline the rules for developing a durable Retention and Loyalty practice. We
base this advice on what we at Loyalty Bay and Perkbox have learned over the years.
We hope you enjoy it!
Introduction
The Ultimate Guide to Loyalty and Retention | 2

Contents
Meet the Team at Super Tel
A Silo Organisation with good intentions but poor communication....................................................4
The After-Sales Butterfly Effect
How small changes in the early customer experience can have massive consequences..............7
Company Centricity vs Customer Centricity
Who do you prioritise?............................................................................................................................................9
The Right Customer Centric Organisation
One Team - One View - One Metric................................................................................................................13
Retention vs Loyalty
A retained customer is not necessarily loyal...............................................................................................17
Takeaways................................................................................................................................................................19
How Loyalty Bay can help you improve Retention and Loyalty.....................................................20
Further Reading.....................................................................................................................................................21
Appendix..................................................................................................................................................................26

Meet the team at SuperTel
John
is an account manager at
our fictitious telecoms
company SuperTel. He
onboards new clients,
which takes about 2
weeks. After that, he loses
touch with them. He is
supposed to add details
about the onboarding into
the CRM. But there is no
incentive or oversight, so
John is less than diligent
about it. There are many
customers!
Jane
is part of SuperTel’s
Customer Support team.
She mainly deals with
product inquiries and
bill complaints. When a
customer calls to cancel
the contract, she hands
them over to Arthur.
Arthur
works in SuperTel's
customer success team.
His job is to identify
candidates for upgrades.
He then calls and upsells
them. Given his sales skills,
he’s also the go-to man
when a customer wants to
leave. In 10% of cases, he
turns them around.
Shivani
is in charge of digital
marketing, which includes
email outreach. Her team
runs segmented upsell and
loyalty campaigns. Referral
incentives are also part
of her communications
arsenal.

None of these four people communicate
with each other as a matter of course. The
only time they interact is when a customer
gets handed over between them.
John reports to the Chief Revenue Officer
via the Director of SME.
Jane is part of the Operations team,
reporting into the Chief Operations Officer.
Arthur is also in the CRO team, but he
reports to the Director of Programmes.
Arthur’s boss doesn’t have a formal
communication channel set up with John’s
boss.
Shivani is in the Marketing team, reporting
to the CMO.
Does this
sound familiar?
Do you see the problem?
Sure you do, and you are not alone.
CEO
CHIEF REVENUE CHIEF OPERATIONS
DIRECTOR OF
SME
DIRECTOR OF
PROGRAMMES
JOHN ARTHUR JANE SHIVANI
CHIEF MARKETING

Rigid silos lead to poor customer experience
and inferior business results
In siloed organisations, there is no unified view of the customer. No one owns the relationship.
• Teams don't know what others do.
• Records of interactions are kept in different systems.
• Customers have to repeat their issue to different
agents.
• Marketing doesn’t inform Ops about their activities,
which leads to understaffed call centres.
• Customer loyalty is only driven by financial
incentives (“recommend us to your friends”).
• Retention efforts occur only at contract expiry or
cancellation.
• Customer care is mainly reactive, and only proactive
when trying to upsell.

The After-Sales
Butterfly Effect
In the film The Butterfly Effect, protagonist Evan time
travels to his childhood and changes the course of events.
Every time he reawakens in the present day, he has lived a
completely different life. The changes he made have led to
unintended consequences. Every iteration worsens his fate
and that of his friends.
The film’s premise is that small changes in circumstances
early on have huge effects down the line.
Your company’s after-sales organisation greatly
influences your customer satisfaction and lifetime
value. Small changes in your setup can be the difference
between loyalty or churn.
This sartorial taste needs some time travelling to fix.

By then, interactions have become painful for the
customer. They better learn to appreciate the on-hold
background music.
Careless treatment of new customers is that extra flap
of the butterfly’s wings. It turns the potential warm
breeze of customer satisfaction into a hurricane of
resentment and churn.
A well-known provider of poor after-sales is the financial
sector.
Retail banks roll out the red carpet for potential
customers, offering generous incentives. But one month
into the relationship, the service will have become a
commodity.
“It takes 20 years to build a reputation,
and 5 minutes to ruin it”.
Warren Buffett
Case in point
A well-known bank

Company Centricity vs
Customer Centricity
When silos form, like in our SuperTel example,
customers get neglected.
Most silo structures emerge along the lines of:
• Departments: Marketing, Sales, and
Operations don’t speak to each other.
• Marketing channels: The digital marketing
team doesn’t interact with the PR department.
• Hierarchies: Executives, managers, and
rank-and-files don’t communicate across
hierarchy lines.
INFORMATION OVERSiGHT
ACCOUNT OWNER
CUSTOMER
PR
RETENTION
EMAIL
MARKETING
SALES
CUSTOMER
SERVICE
ACCOUNT
MGMT
CUSTOMER
EMAIL
MARKETING
PR SALES CUSTOMER
SERVICE
ACCOUNT MGMT RETENTION
COMPANY CENTRIC
CUSTOMER CENTRIC

“All silos have one thing in common - they are
company-centric. They place organisational
expediency above the customer’s needs.”
Click-to-tweet
All silos are company-centric. They place organisational
expediency above the customer’s needs. This is
convenient, but it damages the agility and accuracy of
customer communications.
The antidote to company centricity is to assign each
customer to an account owner who knows about all
customer touchpoints over time, and oversees content
and form.
You don’t have to hire a new person into the account
owner role. Someone from Account Management or
Customer Support can do the job and prioritise it over
their usual work. But it’s important to have someone
who is ultimately responsible for a given customer.
Ideally, they would have a financial incentive to nurture
and retain them.
Of course, not always will there be a deep relationship
between an account owner and the customer. Depending
on the average revenue per customer, an account
owner may have to manage hundreds or thousands of
customers.
That doesn’t change the principle: account owners
have final responsibility for their customer. They may
need to use scalable tools, but they can never say that
something customer related is “not their job”.

The road towards customer centricity is unique for every
company. But it’s important that everyone on the inside
become aware of the need to start the journey. Over
time, people learn to see this problem for what it is: a lack
of focus on the customer. And recognising the problem
is the first step towards a solution. As people contribute
with ideas, the company will gradually become more
customer centric.
While observing, it’s a good idea to write down where
you see silos and company centricity in action.
Examples make abstract concepts more tangible. And as
you gather allies inside the company, your written notes
will come in handy.
How to overcome
company centricity
“Become an advocate for customer focus in
your company by writing down where you
see silos and company centricity in action.”
Click-to-tweet

It’s all revenue
(1) US shoe e-retailer Zappos has become famous for treating customer support not as an operational expense, but as marketing investment. Customer support agents don’t have scripts or goals
to shorten resolution times, but are compelled to build a relationship with customers and help them with whatever they need. This has led to eccentric results like a customer service rep helping a
customer find a place to order pizza late at night, or 10-hour long customer support calls. We recommend Tony Hsieh’s book “Delivering Happiness” for more background.
It’s wrong to treat functions that nurture the after-sales
relationship as a mere operational expense.
Instead, companies should consider every interaction
with customers as an opportunity to build a relationship
and grow revenue in the long run. However, companies
who view customer support as marketing investment,
like Zappos1
do, are very rare.
To get our take on injecting a growth mindset into
Customer Service, read our eBook "The Ultimate Guide
to Customer Service Excellence".
“Once you leave the early adopter phase, all your leads will
come from brand, brand, brand. Protect it at all costs. Put the
extra dollar into customer success, not sales. Do more customer
marketing, less demand gen, if you’re resource-constrained.”
Jason Lemkin, Co-Founder of Echosign and SaaS Venture Capitalist
In fact, every customer interaction impacts revenue:
• Negative customer support experiences result in
churn.
• Fast response times and targeted perks drive
loyalty and referrals, i.e. more revenue.
Loyalty isn't a nice-to-have side effect of customer
satisfaction. Make it a strategic goal, driven by
deliberate triggers along the customer’s journey.

So how can we bring customer centricity into our
after-sales customer relationship?
And how does this help us drive loyalty and retention?
The right customer-
centric organisation
We like to describe it as the
1-1-1 FRAMEWORK:
ONE TEAM–ONE VIEW–ONE METRIC
PICTURE A
MARATHON RUNNER
It’s useful to view your customer
like you would a first-time marathon
runner. On their arduous path lie
many obstacles: Rain, fatigue, leg
cramps, sheep crossing etc.
You’re the race organiser. It’s upon
you to provide for the runner:
Cheering them on, providing snacks
and water, having medical staff on
the ready, and closing down traffic
for them.
The better support you provide in
the right moment, the more likely
the runner will stay in the race.

(1) For suggestions on which tools we’d recommend, scroll down to the appendix.
“You don’t need to have one specific tool where you record all customers interactions.
But you do need a systematic view across tools to give you the big picture.”
Click-to-tweet
Ideally, the functions that touch the customer should be
under one manager.
But that may not be possible right away. In that case,
all senior leaders who manage customer touch points
should find a way to collaborate.
Most importantly, they should ensure that individual
customers get recognised across silos.
One Team,
at least virtually.
This should not only apply to 1-1 interactions the
company has with the customer. You have to add email
marketing and social media touchpoints into the picture.
You don’t need to have one specific tool where you
record these interactions. But at least you need a
systematic view across different tools1
, even if that
requires a rubber-band solution in the beginning.
One View
where all customer interactions get recorded.

And that metric is Customer Lifetime Value (CLV).
You’re pursuing revenue or profit
1
goals, after all.
There’s one problem, though: Retention tactics will take
a while to show whether they are effective or not. If
renewal is many months away, you will have to wait to
see a retention tactic's effectiveness.
Whereas in customer acquisition, you get early feedback
on what works.
So while CLV is indeed the most important metric, we
should also create and monitor a proxy metric in the
meantime. Something that gives us ongoing signals of
customer engagement and predicts CLV improvement.
One Metric
that matters most.
(1) Gross profit (revenue minus direct cost) is a better metric for Customer Lifetime Value measurement than revenue. A software customer paying £50/month is worth more than a
paper magazine subscriber paying £50/month. The latter has material, printing and delivery cost attached to him, while software has no marginal cost of delivering an extra copy.
Each company will have their unique recipe to create that
proxy metric. But in most cases, it will be a composite of
elements such as:
• Positive social media mentions
• Trustpilot reviews
• Email open and click rates
• Login frequency and product usage metrics
• Time on site
(if you have a media component, such as a blog or a
video channel)
• NPS survey results
• Etc.

Combine these ingredients into one. Have this
aggregate metric be a barometer of your customers’
sentiment towards you.
Over time, you will learn if this custom metric has a
predictive quality towards CLV growth. You will then be
able to refine it by changing the weight of the various
factors, add new ones, etc.
Now, let’s look at two of the most important contributors
to CLV growth—Retention and Loyalty.
“Combine various customer engagement
signals into an aggregate metric—it will
be the barometer for your customers’
sentiment towards you.”
Click-to-tweet
We at Loyalty Bay are really good with
retaining your customers.
For example, we’ve cut a publisher’s churn
by 15% by offering personalised gift cards
to their customers.
Learn what we can do to boost YOUR
customer retention, and call us on
(+44) 20 8626 3679
or drop us a line at
enquiries@loyaltybay.co.uk
And follow us on Twitter at
@LoyaltyBayLtd
Let’s have a chat!

Although they seem to cover the
same ground, these terms are not
synonymous. The main difference
lies in the fact that a retained
customer is not necessarily loyal.
Retention is merely a measure
of whether an existing customer
continues to buy. Loyalty,
in contrast, is a behavioural
predisposition. It suggests that a
customer will respond favourably
towards you. They may even
promote you to their network.
Retention vs
Loyalty
Retention
Your retention success depends on two factors
1. The quality of the staff who bring a customer back from
the brink of leaving you. If your cancellation process is
online, it's about the quality of copy and user interface:
Will they win over those who are about to leave you?
Amazon Prime, for example, is doing a terrific job in their
online retention effort.
2. The quality of incentives. You can make many customers
stay if you offer them a little perk. Provide choice, real
value and, ideally, some guilt-free spending (e.g. through a
restaurant voucher). Avoid giving discounts—they rarely
trigger gratitude or an urge to reciprocate.
Loyalty is a more complex universe.
It's similar to the concept of brand in that
• It takes time to build (and very little time to damage).
• It makes the customer resist competitive offers, even if they are cheaper.
• It makes the customer proud to be associated with you.
• It predicts the customer’s willingness to become your promoter.
Loyalty

From our experience, doing well in these areas predicts
high customer loyalty:
• Good customer support, i.e. reactive
communication. This means
- Good availability: According to this 2017 study,
60% of callers said their max waiting time was two
minutes.
- Few handovers: Avoid having more than one
handover per single-issue call.
- Information Sharing: Don't allow handovers
without sharing customer ID and reason for the
call. A customer should never have to repeat
anything.
- Low effort: As Jeff Gardner of Intercom says, “The
endgame isn’t customer delight. It’s empowering
the customer to succeed with the smallest amount
of mental expenditure.”
• A non-sales relationship: In a survey we conducted
with subscription customers,
- 58% said that the relationship with their supplier
influenced whether they would stay.
- 29% complained that they only hear from their
supplier when they’re being upsold.
- Almost no one received a reward for their loyalty.
So whether it’s through great content or loyalty
recognition, non-sales communication matters.
• Personalisation: Use the customer's first name,
and mention when they first signed up. List any
milestones1
they might remember in this relationship
(e.g. signing up to a different plan, upgrades etc.).
Have your customers' back, e.g. through behaviour-
based suggestions to switch to another pricing plan
to save money.
• Genuine care: People notice when a company treats
them well without ulterior motives. As Des Traynor,
CSO of Intercom says: "You can automate and
visualise almost anything, except caring. That has to
come from you."
(1) Google does a great job in this regard. They send users of Google Analytics monthly reports about their website’s performance.

Here’s what we covered:
• In After-Sales, companies are on a spectrum between
company and customer centricity.
- Company centricity is a child of convenience. It is
born when siloed departments don’t talk to each
other, even if they all talk to the customer.
- In contrast, customer centricity is built around the
customer. An Account Owner function is in charge
of the entire customer journey.
• Although company-centric organisations won't
change quickly, we hope this eBook gave you tools to
influence and nudge your company towards customer
centricity.
Takeaways
• A customer-centric company works in the 1-1-1
framework: One Team – One View – One Metric
• Impact on CLV takes a long time to show. You need an
interim “barometer” metric that indicates loyalty and
predicts retention.
• Retention is a momentary success, but doesn’t imply
loyalty.
• Foster loyalty by providing excellent customer service,
establishing a non-sales relationship, personalising
communication, and genuinely caring.

Remember how we talked about building a non-sales
relationship with your customer? That’s exactly what
Loyalty Bay does.
Our tools allow you to easily tailor offers to your
customers, and to send them digital gift cards, offers,
and incentives that delight and reward them for their
loyalty.
We help you engineer a great customer relationship
right from the start.
Our customers report results such as
• 15% in decreased churn of a publisher’s
subscription customers
• £18m that a financial services provider’s customers
saved using our loyalty management system
• 12% conversion rate increase for a price
comparison website.
How Loyalty Bay can help you
improve Retention and Loyalty
Call us on
+44 (0) 20 8626 3679
or drop us a line at
enquiries@loyaltybay.co.uk.
Let’s talk about how Loyalty Bay can
help you drive customer engagement.

Further reading
Case studies (1/2)
DollarShaveClub: How the company
integrated their CRM and customer service
tools to achieve One View of their customer
(link - you’ll have to enter contact details).
MeUndies: Interesting observation that customers who
signed up without using a discount code ended up being
the most loyal ones. (link—scroll to point 7)
That said, MeUndies still do discounts for first-time
customers who are listeners to podcasts they advertise
on (permalink).
A List of Loyalty Programmes on Salesforce’s Blog
(link)—great examples, with links, to all kinds of
companies’ loyalty programmes, including community-
driven, refer-a-friend, multi-visit, get-to-the-next-level
rewards etc.
Costa Coffee: Example of a successful loyalty card
scheme and why it succeeded. Particularly striking
is the response rate from active users (35% email
open rate, 70% redemption rate) (link).

Amazon Prime: An interesting, fresh perspective on
Amazon Prime on Hubspot’s blog (link, scroll roughly
mid-way down). Are there ways for your customers
to bypass a common nuisance that your business
entails (in Amazon’s case, shipping fees) by paying a
small upfront fee? Amazon loses $1-2bn per year on
Prime itself, but more than makes up for it because
Prime customers spend 2.5x as much as others.
Unbounce: A good method to dramatically
decrease churn is to make sure that you only
convert customers who are likely to stay. Unbounce
introduced a free version of their landing page
optimisation tool, which meant that only those
who had used it and understood it became paying
customers —with far higher retention rates than
before (link — scroll to point 8).
Case studies (2/2)

Silos, Politics and Turf Wars by Patrick Lencioni (link).
Customer Success: How innovative companies are
reducing churn and growing recurring revenue by Nick
Mehta, Dan Steinman, Lincoln Murphy (link).
Evergreen: Cultivate the Enduring Customer Loyalty
That Keeps Your Business Thriving by Noah Fleming
(link).
Delivering Happiness by Tony Hsieh (link).
Books

Jack Welch’s Approach to Breaking Down Silos Still
Works (link), Harvard Business Review Magazine. A
good example of how an engineering firm broke down
silo barriers.
Seven Strategies for Breaking Down Silos (link), 16
page white paper from Strategy&, a consultancy, with
specific advice on how to overcome the challenges that
arise in the process.
How Silos Damage Customer Experience (link), blog
post in MatchBoard. Useful to understand different
types of silos.
Loyalty vs Retention and Best Practices for Measuring
Loyalty (link), blog post by Vision Edge Marketing.
Contains a useful suggestion how to model loyalty
through expansion, influence and advocacy.
Articles
What Makes Customers Loyal, infographic from
Zendesk on econsultancy (link). The most important
factors in customer retention are: product/service
quality and customer service. (methodology not
disclosed!).
Real Customer Delight Isn’t Over the Top, blog post
from Intercom (link) how low effort for the customer is
the holy grail for customer service.
Reduce Churn by Re-Engaging Your Customers, blog
post from Intercom (link) about how activity churn (i.e.
people doing less on site) is a powerful predictor of
subsequent customer churn.
How to Increase Customer Loyalty Through a Call
Center, a useful checklist on 3ccontactservices.com
(link) for call centre best practices.

Appendix: Tools1
(1/2)
There’s at least four tool groups to consider:
• CRM as the centrepiece of your customer
interactions, where everything, on and offline, gets
logged. Our top choices are Salesforce, Pipedrive, and
Hubspot. Also worth mentioning for outbound sales is
Outreach which integrates with Salesforce.
• Customer engagement: This is a broad and catch-
all category. These are tools that facilitate customer
interaction but are not part of the other three
categories.
In the section One View, we recommend you have one unified view of the customer.
• For customer support, our top choice is Zendesk.
• For on-site chat, we recommend Intercom and Drift.
These two offer ways to customise when and how to
engage with site visitors. There are other free chat
tools available that jump at the visitor on every page
with the same message—not great.
• For rewards and perks for subscription customers, we,
unsurprisingly, recommend Loyalty Bay.
(1) We don’t have a commercial affiliation with these companies. We recommend them because we use them ourselves or have heard good things about them.

• Web Analytics. This is especially useful if your
website has a logged-in area. Having an Analytics suite
track user behaviour on your site will allow you to
infer what they may need next. Google Analytics is an
obvious starting point, but Mixpanel and Kissmetrics
are also great.
• Email Marketing / Marketing Automation. This
can be as simple as Mailchimp or Aweber for email
marketing. But this area includes multi-purpose tools
like Infusionsoft, or, the Rolls Royce of marketing
automation (both in performance and price)—
Hubspot. Mixmax is also worth mentioning, especially
how easy you can poll people via email.
Appendix: Tools1
(2/2)
Unless you have legacy systems, these four areas will
give you a 90% picture of your customers’ interactions
with you.
The good news is that, most of the mentioned tools
offer integrations with the others, so you won’t need
the proverbial rubber band and chewing gum. If you do,
there’s very useful tools like Zapier and Segment.io that
integrate web applications with each other.
There are a few tools that cover a big part of the four
categories in and of themselves.
• Hubspot is one such example. CRM and Marketing
Automation as its core proposition, it offers plenty of
customer engagement tools. But its web Analytics are
not as powerful as Mixpanel’s, for example.
• Intercom as well, to a smaller extent. It combines
Customer Engagement with a good Analytics suite.
(1) We don’t have a commercial affiliation with these companies. We recommend them because we use them ourselves or have heard good things about them.

22 Tudor Steet, London, EC4Y 0AY
(+44) 20 8626 3679
enquiries@loyaltybay.co.uk
www.loyaltybay.co.uk

The ultimate guide to loyalty and retention

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