Do you know that customer retention, loyalty, and delight are different? It’s okay if you’re finding out. All three are linked to customer satisfaction and provide substantial benefits for a medical device company.
Remember, the goal of any marketing strategy is to attract, satisfy and retain customers in the target segment. This is because the longer customers stay with a company, the more benefits the customer generates. And often, it’s a win-win for both parties.
In this article, I’ll discuss the differences and similarities between customer retention, loyalty, and delight. So keep reading.
What is Customer Retention?
According to Wikipedia, customer retention refers to the ability of a company or product to retain its customers over some specified period.
The benefit generated by retention is related to a few different factors, as follows:
- higher initial costs of attracting a new customer
- increased value and/or number of purchases
- customer and company alignment
- possible positive word-of-mouth marketing
According to Harvard Business Review, it is suggested that the costs of customer retention activities are less than the costs of acquiring new customers, which is also valid in MedTech.
Customer satisfaction is associated with customer retention. However, a company needs to do more than maintain high levels of customer satisfaction to ensure customer retention.
The reason is that unhappy customers may decide to stay because they do not expect to find a better product or service elsewhere. And satisfied customers may change suppliers if they think they can get better services.
Every MedTech company needs to know how to retain its customers, even if they appear to be satisfied. Retaining customers depends on a few other factors, such as available choices, product substitutes, competitors, conveniences, prices, and budget availability. All these factors can increase or decrease customer retention.
Impact of Customer Retention on profitability
Higher customer retention means a customer base buying more and more prone to buy other products from the same company (see upselling and cross-selling). Thus, increasing revenue, reducing the cost of marketing and sales, and possibly producing positive word of mouth.
Therefore, customer retention is directly connected with customer value.
Although many models have been developed to measure customer value, their logic is the same.
The contribution to the bottom line is [revenue – (acquisition cost + maintenance cost)]. Whereas the acquisition cost is an up-front expenditure, and the maintenance cost and revenue are recurrent.
Medical device companies that acquire new customers but are unable to retain them are unlikely to see positive bottom-line results.
The company loses sales and the benefits of lower service and, marketing & sales costs.
To replace lost customers with new ones, the company faces high acquisition costs, lower revenues (due to smaller quantities), higher service costs, and higher marketing costs.
Hence, the damage of customer defection can be much more significant than the benefit realized from retaining a customer.
What is Customer Loyalty?
Customer loyalty implies a favorable attitude towards a brand or company. And loyalty is a valid concept in situations where customers have many options to choose from.
Loyal customers are brand advocates and can influence their peers and other stakeholders. This will automatically result in customer retention; however, there is a distinction between customer retention and customer loyalty.
To explain further, customers may be retained in different ways but may not necessarily be loyal.
For example, locking in the customer with proprietary consumables compatible only with the company capital equipment or, in the case of IVD, specific reagents are standard systems producing retention but not necessarily loyalty.
As a reminder, customer loyalty is associated with a less price-sensitive customer with higher order volumes and frequency. And such customers are willing to publicize your brand to those around them through word-of-mouth advertising.
What is Customer Delight?
When a product or service delivers value beyond customers’ expectations, we can refer to the customer experience as customer delight.
To create delight, MedTech companies must deeply understand and anticipate customer needs and wants, deliver more than the customers expect, and make the relationship deeper by developing an emotional connection with the customer.
Most of the time to achieve this goal, the company must exceed customers’ expectations in more than one determinant of customer satisfaction, including empathy. Delight creates an emotional bond with the brand or company, not just a rational preference.
Key takeaways
Customer satisfaction, customer retention, loyalty, and delight are all key intercorrelated marketing concepts. The marketing department’s goal is to create long-term loyalty relationships, and these three metrics make that possible.
In my opinion, MedTech companies should move from product-centric philosophy to a holistic marketing logic to outperform the competition. Remembering that the cornerstone of a well-conceived holistic marketing orientation is a strong customer relationship. MedTech companies must also connect with customers to develop satisfaction, retention, loyalty, and delight as this can affect overall profitability.
What do you think about customer delight? Is it the goal of your company? Let me know in the space below, and remember to subscribe. Also, share this with your friends if you find this blog interesting.
Thanks for reading.