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AN
EXERCISE IN CUSTOMER RETENTION
My 12-year old
son is a bona fide pitching ace in his youth league. But his hitting
suffers because, in the parlance of baseball, he "steps in
the bucket" or "bails out" when he hits. What that
means is when he strides forward as he's preparing to swing the
bat, instead of stepping straight ahead, still in the same parallel
line to home plate, he steps away from the plate, moving his front
leg far to the left (he's right handed) as he swings.
This does two bad things. One, it shifts his weight and reduces
his power. Two, it moves him farther away from home plate, so he
can't reach good outside pitches.
The analogy applies to customer retention. Sales and marketers are
good pitchers. But at the plate, they're bailing out on their customers.
ABANDONING
YOUR CUSTOMERS
Once someone become a customer, companies start stepping away from
them instead of toward them. They're losing their power with them.
And they're no longer able to connect with those outside of the
main circle of customers. That's where attrition comes from.
And what that means is that they're losing more customers than they
should, year after year. (You know the numbers: a company loses
between 20 to 40 percent of its customers each year.)
Let's find out if your company is stepping in the bucket.
Here's a drill I developed to answer that question—it's one
of many similar drills I've formalized for the marketing coaching
program I've just established for Markitek (you can read about that
here if you're so inclined).
IS YOUR COMPANY STEPPING IN THE CUSTOMER
BUCKET?
Ask your sales and marketing people— your whole company if
you've a mind to—to send you a list of your top ten customers.
(Tell them not to cheat or discuss it with anyone else. Assure them
that you're not looking for the "right" answer, just their
"real" answer.)
What did you receive?
1. Did a lot of them not know . . . or not know all of them?
2. Did they list different customers, or the same customers ranked
differently?
3. Did they list companies instead of people's names?
If you're like most companies I work with, the answer is all of
the above. And if that's the case, you've got some marketing mechanics
to work on.
Your top ten customers are not a mystery, they're a financial fact.
There should be no wrong and no varying answers for questions 1
and 2. Your top ten is your top ten. It's on the spreadsheet.
If sales and marketing organizations don't know who the top ten
customers are, they certainly don't know who the mainstream customers
are. Nor do they know who the least valuable are. And those are
the ones that companies generally lose. Customer retention isn't
just about keeping your key accounts happy—in fact, most companies
do a good job with them. It's about keeping the other customers
happy, and it's about growing value out of your least valuable customers.
WHY WE BAIL OUT OF THE CUSTOMER
Everybody has their own take on the cause of customer attrition.
For me, the answer finds its root in my third question.
The right answer to question three is a list of people's names,
not a list of companies.
Companies that hold on to their customers see their customers as
individuals, not as companies.
Your customer is the person you sit with, the person you
help understand the depth of your product, whose questions you answer,
whose needs for information you satisfy.
Your customer isn't Acme, with 2002 revenues of such and
such, and offices in such and such, who spends so much each year
with your company. Your customer is Susan, who lives in Fort
Worth, and who needs to be kept up to date on trends in her industry,
and whose career is helped by being first to the CEO with market
knowledge, and whose work effort is streamlined by being kept up
to date on best practices. Even whose anniversary as a customer
needs to be remembered.
STRIDING FORWARD TO OUR CUSTOMERS
This is (to my knowledge at any rate) the most gaping of many holes
in CRM. In addition to an analysis of total spend and share of wallet
and linked account information and so on, CRM should carry a continually
growing wealth of information about the customer as person. Which
industry is she in? What's her job function? What areas of business
did she display a particular interest in during your ongoing dialog
with her? What is her personal career direction?
With this in place, when any member of your company discovers something
that might have value to the customer—a research report, a
press release, a white paper, an emerging trend and, yes, a new
product—you can deliver that to Susan based on her profile
in your database. Done well, you position yourself as a company
that provides broad value to her, value that she doesn't want to
lose. That value becomes part of her overall perception of your
product, and that perception makes it much less attractive to walk
away from you—even if your price is higher or the competition
offers attractive incentives to switch. (And of course, you don't
have to have a CRM system in place to do this.)
In baseball,
pitchers are supposed to be lousy hitters. No one cares whether
they step into the bucket, or much else about what they do when
they come to bat. But in marketing and sales, we're all pitchers
and hitters. The researchers report that increasing retention by
5% increases profit by sometimes 50%. Striding forward toward the
customer as individual, maximizing your sales and marketing power,
and reaching all of them is the best way to start this happening
for you
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