Research: Thanking customers yields a powerful ROI

By Nadine Chevolleau

TORSTAR Corporation

Toronto, Canada


Everyone likes feeling appreciated. The simple gesture of expressing genuine appreciation to a family member, friend, or co-worker can go a long way in maintaining a healthy relationship. But it’s something many of us would acknowledge we don’t do often enough.

This holds true for many B2C relationships as well. I can’t recall the last time a company with whom I do business reached out to me for no other reason than to say thanks for being a loyal customer (not counting interactions I initiated, such as a call to customer service).

Reaching out to customers and highlighting why they are appreciated is valuable for building relationships.
Reaching out to customers and highlighting why they are appreciated is valuable for building relationships.

Yes, businesses may interact frequently with their customers throughout the customers’ lifecycle. However, generally we are reaching out because we want something from the customer. There’s nothing wrong with reaching out to customers for the purpose of upselling or cross-selling products or services, or to request their feedback (such as through customer surveys).

The risk is when our interactions are all take and no give — especially with tenured customers. It’s a mistake to assume a long-term “loyal” customer doesn’t need the same consideration and care as a newly acquired customer.

I don’t think anyone would argue with the notion that interactions with our customers should be more than just a financial transaction and that expressing appreciation to customers is a good thing to do. I do think that even a good thing to do should be measured. As the saying goes, “You can’t manage what you can’t measure,” meaning you can’t know whether what you are doing is successful unless success is defined and tracked.

So how do you measure if thanking customers has any benefit?

The two metrics a subscription-based business would want to measure is churn reduction and payment percentage. We conducted a test with a small group of subscribers to determine whether simply thanking customers versus offering an inducement would reduce churn rates and increase paid percentages.

The test included subscribers who were up for renewal within 30 days. Communication went out via direct mail or e-mail. Subscribers either received a thank you message or an offer to enter a special subscriber contest to win a C$500 gift card (the inducement).

We tracked the churn and payments for these subscribers versus a control group.

Here are a few of our key learnings:

  • Thanking customers can have a financial benefit. The best result came from the subscribers who received a thank you letter by direct mail. This group had the best reduction in churn and incremental paid percentage compared to the control and inducement segments.
  • Inducements work too. Even though the inducement (a contest) segment had less impact on reducing churn and increasing payments (there was still an improvement versus the control segment), we did see a high level of engagement based on the number of subscribers that entered the contest. This is worth testing again using different inducements.
  • Communication method matters. The subscribers who received their communication via direct mail outperformed e-mail for both the thank-you group and the inducement group.
  • One test isn’t enough. We followed up this test with a weekly initiative to further determine the impact of thanking customers to see if this tactic consistently delivers the same result.

Incorporating appreciation initiatives into your overall retention plan can be an effective way to build brand loyalty. But as Sarah Chambers, founder of Supported Content points out: “The key is to be personal, thoughtful, and genuine. Customers — and people in general — love a sincere thank you but dislike insincerity.”

How else can you demonstrate appreciation to customers?

Budget limitations need not be a barrier as there are so many ways to demonstrate appreciation that have little cost. Here are a few additional tactics publishers may want to consider:

  • Say thanks in the newspaper or on your Web site. Publish a message in the newspaper or online thanking your customers. The message doesn’t need to be long, but it does need to be authentic and not just a branding message.
  • Designate a customer appreciation day or week. You can either set your own customer appreciation day or week (maybe the day your company was founded) or check if there is an official or unofficial customer appreciation day or week in your area. One idea is to provide additional content or puzzles just to your paid subscribers.
  • Feature your customers. Allow your customers to be immersed in your brand by featuring their life milestones (like a wedding, birth, or graduation). This can be done using your social media accounts. Think of this as an extension to your letter to the editor section where readers get to share their views/opinions or the special announcements section. Bridal salon Dream regularly spotlights its customers on social media.
  • Reward customer advocacy. The old saying “birds of a feather flock together” is said about people who have similar characters or interests. You don’t need to look much further than your customers’ direct circle for new customer prospects. Ask your customers to be brand ambassadors and develop a plan to reward them for it.

Writer Kiera Abbamonte lists four traits of a fruitful customer appreciation effort:

  1. Memorable and meaningful.
  2. Sincere.
  3. Unexpected.
  4. Affordable

Organisations need to remember not to limit their please and thank yous to the onboarding stage of the customer relationship. Let’s not abandon these niceties once we decide a customer is “loyal.”

Remember, people do more for those who appreciate them.

About Nadine Chevolleau

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