Customer retention is key to success
Customer retention should be a top business priority explains Tim Delahay, chief executive at DSTi Output.
Existing customers can be vastly more profitable than newcomers, yet many companies keep better track of office supplies and magazine subscriptions than they do of their customer relationships. However, as the economy continues to decline, growth no longer rests with customer acquisition but depends upon increasing the value of existing customers.
Research (from The Matrix Group) has also shown that there is a correlation between the number of messages and communications put out from a business and its turnover levels . Therefore to boost customer satisfaction and ultimately customer loyalty, businesses need to know their customers, identify and address their needs and expectations.
“To do this, businesses must ensure that the type of customer is carefully identified and targeted against each proposed service,” Delahay explains. “Retaining the trust of the cynical customer should be at the top of the agenda and a genuine understanding of a customer’s identity is now a vital ingredient for targeted, effective customer communications.”
There is no one size fits all solution and businesses need to focus on minimising churn, and maximising customer retention by fixing basic problems such as poor customer relations. So how can companies make the most of their customer communications?
Getting it right first time
As marketing budgets continue to be squeezed, getting customer communications right first time will become increasingly essential. But with communications channels in abundance, businesses must ensure that the right one is used for the right customer, be it direct mail, advertising or email.
By ensuring the use of the right channel, businesses can help to ensure customers feel valued and remain loyal, while also potentially increasing sales by communicating the best marketing message, up-selling or cross selling.
Delahay continues; “With many businesses facing challenging trading conditions every day, budgets are under serious scrutiny and there is increased pressure to make sure every penny counts.
The tightening of budgets means that businesses need to look at every possible avenue open to them when looking to communicate with customers. For example, one medium that is often not used to best effect is the TransPromo communication channel – the delivery of statements and bills combined with marketing messages. Statistics show that – 95 per cent of transactional documents are opened and read by customers, compared to just 30 per cent of DM leaflets or adverts. So when used correctly transactional mail has proved a very powerful marketing device.
“As the credit crisis deepens, the clever marketers out there will be looking to ensure that all customer channels are maximised. With businesses vying for the consumer pound harder than ever before, you need to get it right, first time. Key messages must be made individual to the customers, and communicated in a targeted, timely and relevant way to stimulate trust, loyalty and retention.” Delahay adds.
Clever customer communications will help build relationships, but ensuring trust and loyalty is at the core is not a simple task. Businesses that place an emphasis on clever targeted customer communications will reap the benefits of long lasting, increased revenue and ultimately retain customers and business.
Careful churn management
Leveraging the insight gained from customer data combined with sound business knowledge, will allow businesses to communicate effectively to customers. Monitoring customer activity and churn can enable companies not only to identify potential problems for example late payments of bills, but also what messages to communicate and how which can aid customer retention.
“Managing churn rates and building customer relationships is essential for every business,” explains Delahay. “To find new ways of earning income and to keep customers happy, companies have to differentiate themselves from their competitors and to do so in a way that makes a customer feel valued and not just a number – simple but effective customer communications can be this differentiator.”
A segmentation, churn and customer management strategy that is integrated within customer services will allow companies to deliver an appropriate customer experience based on the individual’s value to the organisation. Using a churn management model such as that offered by DSTi, enables clients to track customer trends by monitoring patterns in data using systems such as Algorithms.
Delahay explains: “Lessons have been learnt from companies competing in more mature markets not least is the realisation that churn needs to be addressed early on in a customers lifecycle, so that it does not escalate when falling numbers really begin to flatten growth.”
It is a big task for consumers to actively find another company to meet the needs that their existing company presently fulfills. If businesses correctly monitor and manage their churn levels, they can ultimately reduce the risks of customers leaving and by targeting their communications correctly will inevitably make each customer feel valued, and should lead to a prospering business.
Understand, monitor and act
In this confusing climate of choice, even a great product or service isn’t making the real difference to business growth. What customers are looking for is a business that can understand their preferences and ultimately tailor its services to give them what they want, when they want it.
The message to businesses is that to survive, prosper, retain and grow their customer base they must learn to understand their customers, monitor their activity and focus on providing a superior service.
Too many businesses stop listening and learning from their customers. Too many businesses stop proactively engaging with customers and don’t talk to them in the right way. This will be to their detriment as in the current economic climate brand loyalty is diminishing.
Retention is vital to business success and customer relationship and churn management is key to retention.