Well in this article I would suggest that Customer Retention should be a key focus area for most companies and that there are a number of tactics under the banner of customer retention that you can employ.
Studies show that even in good times acquiring new customers can be 2 to 3 times more expensive than retaining old ones. In bad times like these with sales cycles lengthening as people give any potential expenditures more scrutiny, this difference in cost of sale is becoming even more significant.
Clearly this isn't a great epiphany for most people as the market statistic's show that IT spend in support of improved customer retention is increasing or at least continuing. For example one of the fastest growing products for Microsoft last year was Microsoft Dynamics CRM 4.0. Microsoft's latest release of their premier relationship management product grew more than 30% in Australia last year and was one of the top three fastest growing products for Microsoft globally.
So if you buy into the fact that Customer Retention as a strategy to recession proof your business is something you should be focused on then here are some tactics that you can employ to achieve that end goal...
- Establish a 360 Degree View of Customer: the more you know about your customers the more proactive you can be and the better service levels you can provide. The better the service the more reluctant they will be to try and cut costs by going to another supplier;
- Proactively develop recession sensitive Service Offerings: your customers are being hit by the recession like you are. What can you do to help them through it. What new products and/or services might they be interested in during this period? For example if you are a service firms perhaps there are some lightweight offerings that you can provide to help a customer cut costs? If you a distribution company then what can you do to help them reduce their investments in inventory and improve cash flow? Better service offerings that recognise that times have changed will not only retain existing customers but attract new ones.
- Differentiate Your Service Levels based on Customer Value: If you are forced to cut costs and reduce the services you offer then make sure you are prioritizing the services to those customers that are critical for you to sustain your business. Inversely many customers don't want premium service and actually value lower costs. So by understanding their needs and wants and selective reducing the services that they are not using and becoming more cost competitive this tactic also retains those lower value customers as well;
- Improve collaboration: put tools in place to communicate with your customer more quickly and effortless. Improve your business intelligence so you see the signals earlier. If a customers demand is dropping then be quick to reduce your supply. If they are having financial issues then understand this early and respond accordingly let. If they are fighting to keep their customers by being responsive then be more responsive and proactive to them; and
- Simplify your Service Experience: I'm sure that you wouldn't be surprised to learn that a customers overall perception about a supplier either positive or negative is often heavily influenced by how easy they perceive you are to do business with. When they call you do they get the answer they want quickly? Is it easy for them to find things? Do you shield them from endless paperwork and bureaucracy? These are all process issues which if you address customers will perceive you to be easier to work with and therefore will value you more highly.
Anyways... some things for you to think about as you continue to do battle with this recessionary environment. Whether you are a pessimist or an optimist about where the economy will be in 6 months to 1 years time keeping the customers you've already got is always a good start down the road to business success.
For those of you interested in more information around Customer Retention please go to www.esavvy.com.au/cr for more information on future training and webinars that we will be running on the topic.
Posts
