Book Lou Today

How can there be 42 ‘Number One’ Ways’?

I am always looking for interesting statistics that I can use in my training. For example, we all know customer acquisition costs 6-10X that of customer retention, but who did the actual research? Actually, many sources have.  I look for that kind of stuff, which is strange since I’m not much of a numbers guy. I do, however enjoy some the statistics as they demonstrate how on-target we are with looking to improve the customer experience. My style is to just go with proven programs and measure later. SOME people want actual facts and figures? The nerve….

I was doing some of this research today and I came across one of those articles that gathers the opinions of dozens of experts and lists their top tips on how companies can increase their customer retention. Wow, that’s a lot of knowledge right there. But is it really useful? I’m not knocking any of the experts in any way, nor the publisher that put this list together. Well, actually I guess I am because most of the respondents led with, ‘the number one thing….’  This led to 42 top tips.  How can there be 42 top tips? If you think of top tips, aren’t there two or three at most? There are many, many really great tips although almost all of what was addressed the symptoms, not the a problems. Three of the responses:

  • Find out why customers are leaving in the first place
  • Build a loyalty program for a better customer experience and gather data for the company
  • Create a good experience. (Really, just ‘good’? Just asking…)

One response involved issuing loyalty cards, having customers register on a website (adding that now you can direct market and text them) and making them swipe/show the card at each purchase. Why do you want your customers to do so much work – just so you can create a marketing program around it? Call me the cynic, but no, I’m not doing all that and now have to carry around (another) loyalty card. This reminds of of a great quote form a Forbes article from Feb 24, 2014, “I’m a very loyal customer. I have five supermarket loyalty cards.’ Right……

These are very segmented, very specific responses and thoughts, not prone to company-wide roll-out. Sure, marketing wants to know why people leave and the customer service group is always doing their best to ‘create a good experience’ (again – why not great?), but there is not much crossover into other areas of the company. Customer retention is not a program and it is not run in a silo. It involves everyone, and I mean everyone.

There are Two and only Two ways to drive customer retention and they both are company-wide, all-hands-on-deck, integrated, addressing the problem, not the symptom.

  1. Re-write the company narrative and strategic directive, right from the top. Create the culture of customer retention everywhere within the organization, so that every employee, in every department, at every level understands WHY their work matters to the customer and therefore contributes to customer retention.
  2. Focus on the metric of customer retention as if your life depends on it, because it does. Ask the staff to develop the processes and policies that create customer retention – they are the front-line and know best what customers want and need because they talk to them every day.

These two methods work in concert to create a new mindset, a fundamental shift. Does it work? Yes it does! At my SatCom company, the number one directive is ‘Thrilled, Loyal Clients’. I created the framework and the staff created the processes that serve our clients so they are ‘Thrilled and Loyal’. This happens year after year, even with changes that happen in the business environment and ecosystem – even through rate increases. Some clients leave but since we deal with the government it is a pricing issue, never a client service issue. Since the staff created and update the processes, it means they own the processes. The results? 90% retention rate, 25 points over the average. Life cycle three times the industry average. How would you like those metrics for YOUR business?

When you start to do these two things….

  1. Commit to a strategic directive that focuses on customer service
  2. Focus your attention on customer retention

… everything else – and I do mean everything else falls in line. Policies, procedures, IT, billing, service rep skills, logistics, product development, manufacturing, even the facilities folks – yes a safe, clean work environment contributes to customer retention – all of these will be addressed, modified, and improved/changed/eliminated as the business environment changes.

I am about to start building a retention program with a top player within their segment in the consumer electronics industry. Step 1 is to measure customer defection rate (although they told me what it is). Step 2 is to re-write the company narrative into a customer retention strategic directive. Then we’ll bring in all the other departments and have them build in their role and figure out how to adjust what they do to support the strategic directive. That’s where the loyalty programs and great interactions and marketing offers come in. You don’t lead with that stuff. You cannot design a retention program around a loyalty program or skill-building if IT isn’t on board to set up the systems to provide the support. I’m reminded of a very large retailer that has 23 systems for service reps to switch between in order to complete any of the service tasks that may be asked of them. 23. Wow.

I enjoy reading the ‘top things/best practices’ kinds of lists. However, in my experience of developing customer retention programs and having built a company with the express focus on retention, I can assure you that you really need to start with the two points listed above and let everything else fall into place as it will.

If you commitment is strong enough and your staff buys into the new directive, everything WILL fall into place.