A deliberate, proactive focus on retaining current customers is a key component of the integrated customer experience (CX) strategy that your company—any company—must have, and commit to, in order to attain brand excellence and customer-centricity. It’s difficult, and highly unlikely, to achieve high retention simply by default. It’s much easier to achieve high retention by design: e.g., a well-thought-out and carefully executed strategy.
It’s painful to watch companies incur customer loss, reduced revenues, or declining brand reputation. Yet I see it all too often with early-stage and mid-stage companies lured away from focusing on current customers—those who gave them their trust and bought their products—and turning instead toward acquiring “bright and shiny” new customers. Please understand, I love all customers, and I certainly acknowledge the vital importance of new business.
Yet, research shows that “between 60–80% of your future business will come from about 20% of your current customers.” That’s a critical piece of information! And little concerns me more than when a company gets wrapped up in new customer acquisition and everything else while churn burns away their existing customer base. Losing that base destabilizes your company and is very difficult to come back from once you hit a certain point.
Having spent my entire career in customer service, experience, success, and strategy with firms of all sizes, I’ve recognized crucial characteristics of the companies and leaders who succeed. If you’re like me, you haven’t had the same one year of work experience 25 times in a row; rather, you’ve passionately pursued new understanding and challenges—and survived a few failures (good for you!)—honing your craft to construct a cumulative, expanded body of expertise and capabilities. That experience and knowledge, combined with your attitude, are called upon every day as you create value and high-quality experiences for your customers. Success at retention is about learning new leadership skills, strategies, metrics, and approaches.
How company leaders spend their time, effort, and resources dramatically determines whether their business becomes customer-centric and viable or whether their current customers leak away, draining precious profits and rounds of investor funding. Here’s what I’ve seen: Companies endure by creating integrated CX strategies, inspiring engagement, and pursuing relentless action—all directed toward reaching the highest levels of retention, loyalty, and profitable lifetime value for both customers and company (note the word profitable). These goals are achieved through 1) people, 2) process, and 3) technology.
I’ll talk about #1, people, in a future blog dedicated to employee engagement and customer relationships, as mentioned in Mend the Holes in Your Leaky Bucket. I’ve already talked, in part, about #2 in an earlier blog, Customer Journey Mapping: Destination Success!In this blog, I want to touch on a few of the technologies currently enabling the important work of customer retention and churn prevention.
At last week’s SIIA conference, “Deciphering Customer Success,” I met several technology thought leaders from Totango, Gainsight, Service Source, and Bluenose Analytics as they participated in panels and presentations to educate a roomful of customer success executives, and I’m excited to see the rapid changes and new developments in the SaaS/Cloud technology roster supporting customer loyalty. I advocate using customer health dashboards and social media scanners as well as other facilitating technologies in the areas of voice of the customer (VoC) and customer intelligence, application adoption monitoring, and engagement and retention marketing. The deliberate facilitation of ongoing customer relationships post-sale using these tools provides a powerful competitive advantage.
In the emerging retention technology category of Customer Health Monitoring, these systems provide insight by observing usage behaviors during the customer lifecycle; adoption, engagement, and product usage can be gauged, and interventions prescribed and administered. This purposeful assistance enables individual customers to achieve more value in their specific situations with SaaS/Cloud technology products. The technology enables customization of health indicators, while the vendors provide best practices to monitor leading indicators. Based on where each customer is in their lifecycle journey, the technology enables companies to respond proactively and contextually to problems or opportunities.
A second emerging category, Voice of the Customer systems, is among the most powerful retention tools when utilized fully and in the context of a closed-loop feedback system. Already offering companies precious information about customer attitude, sentiment, and behavior, this technology has expanded into unstructured data capabilities, which enables effective social media scanning that yields highly valuable insights for even better-informed decision-making.
Clarabridge executives recently shared their thoughts on this topic: “Companies must listen to all of their CX data; not just some of it, but all data. Then you must analyze that data as accurately as possible—accuracy is everything. Ask your text analytics provider the right questions, helping to ensure accuracy and giving you the ability to ACT decisively across your enterprise, taking corrective actions at the right time.” (See what Clarabridge customers are saying here.) Other companies taking the lead to elevate customer value through VoC insight and closed-loop feedback include Satmetrix and Medallia.
Digital Retention Marketing is a third emerging technology category. Customer engagement and retention marketing is an uncommon but very promising approach for creating customer value and enhanced profits while preserving existing revenues. Using customer-centric, data-driven approaches to reach out to current customers on an individual basis, at precisely the right time with exactly the right information, effectively promotes customer loyalty. By specifically facilitating ongoing relationships post-sale, these tools provide a powerful competitive advantage.
Technologies that enable retention marketing and other innovative tactics start with traditional CRM (see below) and mining “Big Data.” But customized, personalized, proactive “email and beyond” marketing to current customers is made possible by emerging and evolving technologies coming from such companies as Marketo; Adobe Marketing Cloud,where sophisticated, multi-channel retention marketing can be deployed “to everybody, individually”; and Urban Airship, where mobile app engagement enables real-time, responsive push messaging sometimes triggered by geolocations and iBeacon activations. This is a very sophisticated, targeted, and immediate approach to “turn location into loyalty”—another step forward in the pursuit of customer retention.
A fourth category, Traditional CRM Systems, is more familiar but still very much in play. These foundational technologies (too many to list here) allow the capture and aggregation of many types of customer information, ranging from simple demographics to personal preferences to algorithmic buying propensity. Traditional CRM systems also assist the delivery of customer support, from a service perspective, in more customized, personalized, and proactive ways.
As with all technology frontiers, the evolving roster of SaaS/Cloud tools that support customer retention is changing everything. At a time when business is growing more complex and competitive—especially in the areas of retention, loyalty, and profitable lifetime value—the use of technology will forever alter the way we proactively and systemically perpetuate value for current customers.
Stay tuned weekly as I delve more deeply into the remaining best practices for higher customer retention identified in Mend the Holes in Your Leaky Bucket. This 10-article series will give you valuable insights and guidance as you plan, develop, and implement your own customer retention strategy.
Ready to move forward more quickly? Interested in personal assistance? Let’s chat. Please sign up for my complimentary one-hour Customer Insight Strategy Session by calling our office at 617.848.4589 or emailing [email protected].
Lori Carr is a customer experience pioneer and expert. Working with Fortune 500 companies for the past 25 years, she helps popular brands and emerging brands to dramatically increase retention, loyalty, and profitable revenues.