The 5 Realities of Customer Retention
We've all heard the legends around the costs of customer acquisition versus those of customer retention. The Harvard Business Review found that a 5 percent increase in customer retention can boost profits between 25 percent and 85 percent. The increasingly collaborative nature of the Web and the exponential adoption of social networking, however, are making the rate of retention critical to growth, regardless of industry.
Today, every customer has the power to hurt or strengthen your brand through social media. Any news about your business — the good, the bad, and the ugly — now spreads like wildfire at the click of a button. Strong customer relationships translate to social media activity, which builds the kind of brand loyalty that drives new business.
Here are five things you must do to retain customers and maximize the revenue potential they offer your business in today's increasingly collaborative world.
1. Truly Change Into a Customer-Centric Organization
When dealing with customers and creating a customer-centric culture, you need an action plan — not a set of platitudes common to every business. Think about what organizational changes and strategy shifts will reshape and redefine your culture to focus on customer satisfaction and retention. Here are some tips:
- Make sure you have management in place to control processes and manage the pivotal people focused on customer satisfaction and retention.
- Automate your processes and establish a customer-feedback loop that spans the breadth of your organization with your customer service representatives (CSRs) at the crux.
- Put in place creative and revolutionary compensation structures that reward customer-focused activity and successes for everyone in the organization.
2. Social Media — Don't Hide from It, Harness It
Social media may feel like an unfunded mandate, but resistance is futile, and by harnessing its real power your brand and your business can reap unprecedented value. By integrating social media into the customer-feedback loop, you can enhance everything you do — from improved customer service to streamlined and focused product development to more highly visible and consistent marketing — all to the benefit of improved revenue generation. Servicing your customers in the channel they prefer, from Facebook to the Web, builds loyalty and helps you keep the customers you have.
Define who owns social media efforts and how they fit into your organizational structure and the customer-feedback loop. It is crucial that your social media strategy and its players span all cross-functional areas.
3. Understand that Customer Service Is the New Marketing
Customer interactions are a rich vein of information for your business, one that the integration of social media only just begins to tap.
Traditional and online demand-generation tactics still play an important role, but a customer-centric organization focused on service and implementing customer feedback will generate more revenue and reduce traditional marketing spend by building brand loyalty in new channels that go beyond print advertising and pay-per-click programs .
Make interaction with your brand and your business easy, rich, and multichannel in nature. The new world of digital media means customers can get their information from many different sources, depending on their whim: On some days they may prefer Facebook; on others they'll want to chat live with a CSR.
4. Run Service as a Profit Center, Not a Cost Center
Companies with the highest satisfaction and retention rates run their service centers as independent profit-and-loss units. The key to service-center profitability is through the CSR. Successful organizations must empower front-line service personnel with the tools and the knowledge to seize each unique customer interaction as a chance to create "promoters" of your brand.
Provide service in a way that is convenient for your customers, not your CSR's schedules. To do that effectively, your service reps need to provide a dynamic, pleasant, and rapid first-call resolution, whether via Facebook, Twitter, phone, mobile, forum, email, or chat.
Continually improve and grow the content available to your CSRs — provide automated responses that facilitate promotional and upsell activities for more revenue generation. Also, enable your CSRs to provide feedback on the sales potential of a customer by integrating your support solution with your sales and marketing operations.
5. Treat Every Customer as High-Value
The concept of "low-value customers" is a fallacy in today's collaborative Web environment. You may not care if some customers take their business to a competitor, but the popularity of social media means every customer has the potential to affect your brand, market presence, and competitive reputation.
Beyond social media, support availability through multiple communication channels translates to the delivery of effective, top-tier service. You'll avoid brand damage while driving new customers all without adding headcount and escalating costs. This kind of process also nurtures customers to renew and sign on for new business. You may even recruit a new "Net Promoter" or collegial member of your online army of customer advocates — someone who drives new business through traditional and social media word of mouth.
About the Author
Ben Martin (firstname.lastname@example.org) is the vice president of customer care at Parature, where he oversees the pre-eminent technical support that the company provides its global customer base. Ben is also responsible for leading the development of new support offerings for Parature customers and partners. Prior to joining Parature, Ben held positions at The Morino Institute Netpreneur Program, an organization dedicated to helping Washington-area entrepreneurs grow their technology businesses, and with the Advanced Technology Department of the American Chemical Society.
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