If the focus is on rate of customer churn instead of today’s version of digital customer retention, chances are your organization is playing defense instead of offense.
Customer churn is measured by the number of customers who terminate their relationship with a company within a specified time period. Mostly, that time period represents the duration of the customer’s contract with the company.
As a result, the majority of customer retention strategy focuses on preventing customer defection within that specified time period. However, who said that customers who terminate their relationship with an organization actually defect to a competitor?
Sometimes termination simply is that. Termination represents the customer’s decision to cease to do business not only with your company. Also, they stop buying the products and services offered by similar companies.
Customer churn can impact an entire set of competitors within an industry.
Consequently, playing defense when it comes to customer retention benefits can be costly.
First, consider that clients rarely anticipate having to terminate their relationship with your organization. Otherwise, why bother to purchase in the first place?
Then, evaluate just when it is that your organization starts to pay attention to existing customers in order to play the defensive game of retaining them. Is your company playing just-in-time defense?
Also, consider whether the benefits of “sticking close to the customer” (in your perspective) actually represent the same to customers. Perhaps you are looking at these customer touchpoints through a cloudy lens.
Finally, do customer service and sales people contact the customer just short of the end of their contract? Consequently, is executing your customer retention strategy merely a matter of attempting to upsell and cross-sell at renewal time?
Perhaps your strategy is executed several plays too late.
Customer retention benefits outweigh the time it takes to continuously serve clients.
The seminal 1990 study by Earl Sasser of Harvard University and Frederick Reichheld of Bain and Company posited that increasing the rate of customer retention in an organization by as little as 5% overall could result in an increase in profits ranging from 25% to 95%. For starters, that profitability is extremely important to the growth, expansion and sustainability of your own organization.
Alternatively, it costs at least 5 times as much to acquire new customers as it does to retain them. Proactively. In the first place.
Except for some reason, the benefits of creating and executing a rock-solid customer retention strategy are perceived as a cost, rather than a benefit. After all, customer retention takes time, personnel and resources.
After all, in my Playbook, Do YOU Mean Business? , customer retention is a continuous (at least it should be) rather than an occasional initiative.
Where does your organization stand when it comes to embracing customer retention benefits?
Either your organization is defensive and reactive when it comes to executing customer retention strategy or you are proactive and anticipatory. In addition, either you have hired a workforce which is continuously connected to customer wellbeing and success or not.
Today’s businesses are wrestling with transitioning legacy business models and human capital strategy into innovative and collaborative ones, tailor-made to serve digitally connected customers. Tomorrow’s customer retention strategy leverages the connectivity and interrelationships between people, software, products, services and equipment.
As a result, the old meets the new.
Where do you stand in this continuum when it comes to customer retention benefits vs re-acquiring and replacing lost customers?
Planning your next team, corporate or association meeting? Searching for a one-on-one catalyst to get you unstuck? Engage me to present a One Millimeter Mindset ™ program! Delivered virtually or in-person. Contact me here.
Babette Ten Haken | Change Catalyst | Purpose-Driven Professional Innovation | Cross-Functional Team Leadership | Trust-Based Client Retention | In Person & Virtual Speaker, Consultant, Coach, Author |
Babette Ten Haken, Founder & President of One Millimeter Mindset™ Speaking & Consulting, catalyzes trust-based, purpose-driven, cross-functional leadership. She leverages Voice of the Customer and storytelling to translate across communication and collaboration disconnects impacting successful business outcomes across people and professional disciplines. Babette is a cross-functional business-oriented STEM professional, qualitative Voice of the Customer facilitator, and Six Sigma Green Belt (Quality). She is a member of the ASQ, SHRM, PMI, the National Speakers Association. Her playbook of cross-functional collaboration, Do YOU Mean Business? is available on Amazon.com. Contact Babette here. Image source: Adobe Stock.