• August 1, 2008
  • By Donna Fluss, president, DMG Consulting

Hold On to Your Customers

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A fundamental truth in the business world is that competitors are always looking to steal your customers, and many customers are on the lookout for a better deal. Annual customer-attrition rates range from 7 percent in some industries with high exit barriers, such as banking and insurance, to nearly 40 percent in the cable/Internet service provider industry. Slowing the customer churn rate by as little as 1 percent can add millions of dollars to any sizable company's bottom line. As it's a great deal more expensive to acquire customers than to retain them, an effective customer retention strategy is crucial to success.

Customer retention is a primary concern for all companies, whether B2B or B2C. Enterprises have traditionally placed a greater emphasis on customer retention during recessionary times, when new customers are much harder to find. Over the last few years, as companies have begun to accept the painful reality that consumers view most products and services as commodities, senior management has also begun to appreciate the crucial role played by contact center personnel in retaining customers when marketing and loyalty programs fail to achieve their goals.

Marketing and Service Need to Work Cooperatively
Contact center staff can provide the necessary insights for proactive customer retention, if marketing and senior management invite them to the table. Contact center managers should participate in strategy sessions to build customer-retention marketing programs, as they know firsthand why customers are closing their accounts -- and they may have good ideas about the best ways to retain them. In many cases, customer dissatisfaction is driven by an operational problem, back-office issue, process failure, or lack of a critical product feature. Contact centers can also be effective in the last-ditch effort to save disgruntled customers, but the ideal situation is to avoid reaching this point at all.

It's time for contact centers and marketing organizations to work cooperatively to achieve enterprise goals for building a loyal customer base. The marketing department has to realize that, while it's responsible for creating loyalty programs, the contact center helps customers understand the initiatives and is often instrumental in the success of the effort. The best way to achieve interdepartmental cooperation between the two is for them to share enterprise and customer retention goals, where the success of one organization is clearly dependent upon the success of the other.

Empower and Recognize Customer-Retention Specialists
Enterprise management must empower contact center managers to take immediate action to retain an at-risk customer, and not tie their hands with strict limits from compliance and auditing groups, as happens all too often. It's fine to assign guidelines and budgets for fee reversals, free services, gifts given away, etc. -- but customers are not all equal. Some are worth a lot more than others and managers need to be able to handle each one individually. Since agents are the last line of defense against customer churn, they should have the flexibility to do what it takes (within reasonable limits) to retain customers.

Contact center agents who retain customers also must be recognized for performing what is unquestionably a difficult-but-crucial task -- preventing frustrated and often angry customers from deserting the company. Successful retention agents must be consistently empowered, supported, and recognized. The best ones are highly motivated by the intrinsic challenge of the job and thrive on their success -- but even if they don't perform solely for the recognition, formal rewards and incentives will help attract the best talent for this high-stress function.

Customer retention is an enterprise goal and contact center personnel are well positioned to contribute to the success of this objective, but only if they are invited to the decision-making table. Asking contact center managers to retain customers is a good start, but they can contribute more substantially if they participate in developing the strategy for customer retention and loyalty programs, as they know firsthand what customers want and why they defect.

Donna Fluss is founder and president of DMG Consulting LLC, a leading provider of contact center and analytics research, market analysis, and consulting. Contact her at donna.fluss@dmgconsult.com.

Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationcrm.com/subscribe/.

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