Marketing Maven Test:

Q: According to the most recent ACSI survey, which industries had the greatest increase and decrease in customer satisfaction?

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The ABC'S of Customer Retention - The Critical Components to Getting it Right

by Paul Schwartz

You have invested a significant amount to acquire your customers.  How do you know you are keeping them?  Customers may be telling you they are unhappy and leaving, but if you don't have the right measures in place you may not hear them until it is too late.

Many companies focus their retention programs on measuring customer satisfaction.  A logical place to start - right?  Well, it may be a place to start but as a single measure it usually gives you little actionable information.

There are four critical components to getting a significant return from your retention efforts. Anything less will give you an incomplete picture and can lead to a false sense of security that all is well with your customers. I call them the ABC'S of Customer Retention:

Attitudes

Behaviors

Changes

Segmentation

Attitudes are a place to start - a baseline measure.  In addition to customer satisfaction, it can also include how well customers believe your products fit their needs, how committed they are to you, or their willingness to refer you to others.  They give you insight into what customers think and feel about your company - their attitude at the time you ask them.

Attitudes don't always predict what a customer will do.  A customer can tell they are satisfied and then switch to your competitor tomorrow. The only way to really know is to measure their actual behaviors.  Behaviors worth measuring include such things as how much a customer spends, what mix of products they purchase, how often they purchase, or how long they have been a customer.

The combination of attitudes and behaviors only gets you so far because all you have now is a baseline, or a snapshot in time.  A really critical step to getting retention right involves tracking the changes in attitudes and behaviors.  Often customers don't switch abruptly, it is a process that happens over time.  Measuring changes in both attitudes and behaviors alerts you to what is happening over time and can give you a chance to save customers who may be getting close to leaving.

Finally, if you can measure attitudes, behaviors, and changes within customer segments or down to the individual customer then you are really ahead of the pack.  See our last issue for more on segmentation. The ability to do this will give you a really clear picture of what your customers are doing, and not doing.  

Combining these ABC'S provide an effective early warning system for problems, and tells you if you are actually doing a good job of keeping the customers you have worked so hard to acquire.  

Need help designing and implementing a customer retention or loyalty program?   Please contact us for an introductory discussion to see how CONGRUITY can help provide insight into your customers and improve your business's profitability.  Visit us on the web at www.congruity.biz

Copyright © 2005  CONGRUITY.

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