What does it take to build a retention-focused organization?
If you look at the actions of businesses today, you would conclude that it takes more than they can do. How many times have you "grown old on hold" waiting for customer service, or paid higher prices than you needed to, because the company put short-term profits ahead of long-term loyalty?
In the case of retention, the "devil is clearly in the details," since most organizations can agree that keeping customers, particularly their best customers, is better than losing them. But focusing on retention requires planning, executing and measuring results of five key strategies, which Shelly Towns describes in her article below.
While her article well represents the five strategies, it does not go on to address why it is so difficult to move organizations to a retention-focused game plan. I believe part of the issue is metrics and compensation, and another part is culture.
People will do first as they are comped, second as they are measured, and thirdly exactly what they used to. If metrics and comp are total revenue based or based on customers acquired, clearly retention is a doomed cause, as it is in many organizations. If the culture is short-term "ready, fire, aim" - then the result will be the same?
Do you have a retention focus in your company? How is it sustained?
Whether the economy is great or in the pits, your business not only needs to find good customers, but you also need to know how to keep good customers.
Some facts are indisputable. When it comes to customer relations, one fact that bears the test of time has to do with the cost associated with acquiring a customer versus how much it takes to keep a customer. Some experts feel that it can cost your business five, six, maybe as much as seven times to get a new customer as it takes to keep a customer once they are buying whatever you are selling. If this is even close to being true, and we'll assume the facts are on the right path, what can your business do to maximize its investment in customer acquisition through effective customer retention?
The following are five techniques you might consider implementing within your business processes. When it comes to customers, they are not all the same, and how you treat various sub-groups of them can spell the difference between bottom line success and failure.