Keeping more customers in your installed base is a sure-fire way to grow more quickly and handsomely increase profits. However, like trying to stop smoking, effective customer retention strategies are easy to embrace but difficult to implement. Everyone agrees it is the right thing to do but success is more difficult, if not elusive.
To retain more customers, highly effective organizations should do the following:
- Consider customer retention a key performance indicator. As a core business metric, customer retention is an invaluable business tool for the management team. The ability to accurately measure customer retention (churn) on a regular basis quantifies the ROI of customer retention.
- Get regular customer retention "physicals." Every organization can benefit from regular customer retention audits that assess current and past customer retention efforts and the effect of business process, corporate culture, measurement systems and technology utilization. This applies for those just starting to focus on customer retention, as well as those that have focused on customer retention for some time.
- Build the business case for customer retention initiatives. Improving customer retention can be as simple as making it an executive priority or it can involve investing in new initiatives. Understanding the costs and benefits of customer retention programs allows organizations to appropriately prioritize investments.
- Understand how customer retention rates vary by customer segment. By analyzing how customer retention differs by classification, companies can determine which customer segments are and are not being effectively addressed. More importantly, segment analysis allows organizations to appropriately allocate resources to their most valuable customers.
- Use customer retention analysis to validate product value. Information gained by analyzing customer retention data can validate current product offerings while also identify gaps and opportunities.
- Foster a customer retention culture. Customer retention becomes a driving factor in important business processes throughout the customer ecosystem via education, communication and marketing to all stakeholders (employees, partners, customers).
- Develop and implement a customer retention road map. Continual process improvement is a critical step for highly successful companies, and effective organizations always have one or more initiatives focused on improving customer retention.
Companies don't attain these levels overnight. Institutionalizing customer retention as a key means for measuring and improving business performance takes time and energy. The first step is to evaluate your organization in light of customer retention as a goal and establish a means to accurately and consistently measure customer retention. These steps will lead to the others as you start to understand where you are and define where you want to go.
RealMarket provides advisory services for organizations looking to increase profits through best practices in customer retention. RealMarket provides real-time and on-demand industry news, research, webcasts, case studies, white papers, and product information.
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