New Perspectives on Customer Retention

When it comes to customer retention programs, most companies do too little, too late, and spend too much money on minimally effective programs.

The later in the customer life cycle you begin focusing on retention, the more costly and less effective your efforts will be. To maximize the effectiveness and efficiency of your retention program, the time to start implementing retention strategies is when your first acquire new customers ... not when they already have one foot out the door.

A New Approach To The Customer Life Cycle

Today's challenges of marketing in the internet age combined with uncertain, down-spiraling economic conditions call for a new paradigm of the customer life cycle and customer retention.

The traditional marketing model has always viewed the customer life cycle as containing 4 distinct stages: customer acquisition, customer up sell and cross sell, customer retention and customer win-back. Customer retention has always been considered a separate "stage" in the life cycle process that only receives attention after acquisition and other marketing efforts and there is some threat of losing the customer. As a result, marketers go into the retention stage with a "losing attitude" and their backs up against the wall.

Effective Customer Retention Requires A Winning Attitude

Viewing the retention process as a purely "reactive" strategy creates a negative mindset and forces marketers to continually play "catch up ball". As any professional athlete or coach will agree, you always want to be "in the lead" and maintain an aggressive, positive attitude if you're going to win the game.

Focusing on retention only only after experiencing a drop in sales, decline in market share, or an unusually high attrition rate is not a winning strategy. Customer retention needs to be an ongoing pro-active strategy in the marketing process that begins when new customers are first acquired acquired.

Any Customer Worth Acquiring

Should Be Worth Retaining

Many marketers view customer retention and acquisition as being totally separate when they actually should work hand in hand.

In virtually every industry, the costs of acquiring new customers is constantly increasing. Just the cost of a sales call alone... without including marketing,advertising and other acquisition costs ... is staggering. So in the long run, it's far less costly to acquire those customers who are most likely to maintain a long-term profitable relationship with your company and its products. Customer acquisition and retention are closely related and should be integrated in the marketing plan.

Effective Retention Requires

A Change of Attitude

By incorporating retention into your marketing and communications strategies from the start, it becomes a positive pro-active customer-centric mindset rather than a negative, panic-driven, knee-jerk reaction.

As retention becomes integrated into the creation and management of the product experience, customers become more satisfied and loyal with a lower risk of becoming a retention problem down the road.

Even if you're a home-based business, with no formal retention program, there are several simple things you can do to begin incorporating pro-active retention strategies into your marketing. Here are a few simple, no cost things any business can do:

Know Your Customers

It's very hard to keep something if you don't even what it is. Get to know your customers. Learn as much about them as possible. The more you know about them, the easier it will be to keep them as your customers.

Stay In Touch With Them

Customers can very easily feel abandoned or not appreciated if you don't keep in touch with them as often as possible. You know your competitors are probably contacting them all the time. Make sure they aren't contacting your customers more than you are.

Thank Your Customers Every Time Your Can

One of the major reason for customer attrition is that customers don't feel appreciated. Thank them at every opportunity you get. Be sure to thank them after every sale and referral ... many businesses unfortunately forget. Every thank you give a customer has a cumulative effect ... they all add up and pay back dividends in loyalty and retention.

Start Recognition and Loyalty Programs

Small tokens of customer recognition and loyalty promotions go a long way. Even the simplest gestures and promotions have a major impact on retaining them as long term customers

Listen To Your Customers and Respond To Their Needs

Listen to what your customers have to say, thank them for their feedback and act on it immediately. Even the most sophisticated Voice of Customer programs rely on this one-to-one communication. Customers want to be heard. If you don't listen, your competitors will.

Maximize Your Customers' Experience

Do everything you can to make sure that your customers' experiences with you at every contact point satisfies their needs. The key is to remember that "it's all about them ... not about you" ... and your customers know it. Keep customer service levels high and hire the best customer service reps you can.

Customer Service Isn't A Silver Bullet Anymore

While providing a high level of customer service is important, it alone is no longer enough to retain customers who have become attrition risks.Customers today naturally expect great customer service and 100% satisfaction.

With widespread internet access, a wealth of product information to help in decision-making, and an ever increasing array of interactive media, customers have a voice ... and they want to make it heard. Customers want involvement and two-way communication.

Voice of Customer Increases Retention Rates

As part of the product experience, customers want to voice their opinions and concerns ... and get an honest, timely response from the companies whose products they buy.

Getting accurate, real-time, actionable customer feedback through VOC programs lets marketers keep their finger on the pulse of their customers so they can better understand their needs. This provides valuable data that can be used create product experiences that maximize customer satisfaction and secure retention. It is important to get customer feedback real-time, not after the fact ... or not at all .... so you can identify potential problems and make changes before they become retention issues. Real time means "right now" .... not 6 days, 6 weeks or 6 months after the contact with the customer.

Automated phone and web surveys conducted immediately after a customer contact are the best ways to listen to the voice of your customers and measure their experiences in real-time. If you operate a call center, you can invite the customer to stay on the line after the call to conduct a brief "satisfaction" survey or call the customer back immediately after the call with an automated outbound survey. Just remember to keep the survey as brief as possible, never more that a few minutes maximum and offer an incentive for them to participate if possible.

You Can't Afford To Wait

The earlier you start listening to your customers and acting on their feedback, the more effective and less costly and stressful your retention efforts will be. It's never too early to focus on customer retention. Don't wait until it may be too late.