Customer retention programmes have historically had insufficient priority in most sectors, but then the forces affecting customer churn, and therefore the need for retention focus, have never been so great. The idea is not new. What is new is the approach. What is now being witnessed is a market increasingly commoditised and far more susceptible to competition – from other players and from new media. Customer knowledge and confidence have had a significant impact: it has become so much easier to compare and to swap products. Changing sales structures and wearing away of face-to-face interaction have helped to dilute or eradicate conventional ‘loyalty’.

What direction does this give the services marketer? It leads the way to a re-examination of profit drivers and a critical evaluation of current programmes. The business relationship with the customer has changed and is still changing, becoming far more complex. So too are the communications matrices within that relationship.

Customer retention is not easy but it is rewarding and far less daunting if it is broken down into manageable, measurable programmes which demonstrate their effect quickly and unquestionably. So, if large-scale, top– down, budget-busting ‘CRM’ initiatives are not reaping the necessary rewards quickly enough for an organisation, the available resource should be channelled in a different direction.

Start by understanding the drivers to customer satisfaction and therefore retention. Arguably this is simply good marketing but few have had sufficient success in this particular area. Seek not to measure satisfaction but to manage it, and to understand the relationships between different factors of each product or its support and the propensity to brand loyalty. This will only be achieved through dialogue and by comparing what customers say they will do with what they actually do.
When or while understanding satisfaction, focus should be turned to churn management to stem the growing tide of customer defection: the expensive, disruptive and inefficient `leaky bucket’ which, left unchecked, will defeat the organisation. Tease out those customers with the greatest potential to impact on profits and concentrate all available resource here.

Finally, do not assume that a customer lost is a customer lost forever. Renew the relationship with customers likely to have a high-quality ‘second marriage’, a partnership which will be built on greater understanding and appreciation.

Chintan Bharwada

Chintan is the Founder and Editor of Loyalty & Customers.

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