Organizations should always be focusing on customer retention because it is the fastest way to accelerate growth. Your existing customers already know your organization and what you offer, so it is easy to offer them new products and services as well as help them become ambassadors to help you attract new customers. But how much effort are you putting into retaining customers you don’t want? My guess is, too much.
This means you are taking time and effort away from retaining the customers you do want.
Maximizing overall customer retention is not always good. Not all customers are good customers and not all business is good business. It’s only effective if you are retaining the customers you want. I call this concept purposeful customer retention reduction. This is the act of NOT retaining certain customers because they are not your ideal customers. They take time and resources away from your ideal customers so you let them go. Yes, that’s right, you let them go.
Review the chart below and ask yourself (be honest) in which quadrant your organization fits. Do you have deliberate retention efforts focused on your ideal customers (top right quadrant)? If not, you are losing growth opportunities and wasting time. You are putting resources into retaining customers you don’t want, while the ones you do want are walking down the street right in front of you (figuratively speaking).
But have no fear, if you are anywhere but in the top right quadrant, you can get there quickly by answering these questions:
- Who are our ideal customers?
- What value do we offer them?
- What deliberate strategies do we need to employ to attract and retain them?
To what extent are you inadvertently losing important customers while retaining unimportant customers?
If there is only one thing you do this week or this month to improve operational excellence in your organization, this is it. Are you ready? Review the three questions below and choose at least one of them to take action on:
- Are there any areas of our organization where the way we operate has not been reviewed or assessed in more than two years? If yes, then I guarantee there is a dramatic opportunity to improve performance and profitability in that area.
- Are there things that our customers are doing that we could be doing for them that would add value? If yes, then there is a new product or services in the making that you can commercialize and offer to customers.
- Do we have the right people in place for the future needs of our organization (NOT the current needs)? In order to answer this question, you need to know in which direction you want to take the organization. Are you launching new products? Moving into new markets? Changing your customer acquisition strategy or your pricing model? Regardless of the direction you want to go, you need to ensure you have the right people to get you there.
By tackling even one of these questions, you will find dramatic improvements to performance and significant increases in profitability.
One of the greatest opportunities organizations have to increase performance and profit is to improve their adoption of new ideas. If you can maximize the impact of your ideas, then you will be able to achieve better results. There are four levels of adoption you need to master in order to maximize results from your own internal best practices:
- Level 1 – One department. This should be the easiest result to achieve, ensuring that the best practices are replicated across the department where the idea was generated.
- Level 2 – Across multiple departments. At this level, you are able to successfully implement these best practices across multiple departments across the organization and are seeing results from those best practices.
- Level 3 – Across the organization. At this level, you are able to replicate the best practices across the entire organization.
- Level 4 – External appeal. At this level, you are able to commercialize those best practices and sell them to others.
Organizations that make it to Level 3, share these common traits:
- They have common criteria to determine the ideas and practices that will have the greatest impact.
- They formally manage the idea process.
- They encourage productive failure and reward behaviours, not just victories.
- They are able to articulate the value and impact of their best practices.
- They aggressively break down silos to share best practices.
At what level is your organization?
In a recent post, I outlined the 10 key factors in maximizing customer retention. One of those factors was loyalty. When we look at organizations like Apple or Lululemon or Google, they have created such loyalty with customers, that those customers may never switch away from their products.
But what about creating disloyalty? Many organizations are doing that every day. Here are just a few ways organizations create disloyalty:
- By not resolving customer issues quickly and to the satisfaction of the customer.
- By offering new customers a better deal than customers who have been with the company for a long time (think cell phone providers).
- By offering an inconsistent experience every time a customer enters your store.
- By having product not available.
- By offering products that break down well before they should.
- By having employees who ignore customers when they enter your store, or even worse, have a rude facial expression.
- By not having anyone available to help when a customer is looking for guidance.
Are you doing any of these things? If you are, then it won’t take you long to figure out why you’re having trouble retaining customers and creating the loyalty that you seek.
When putting together strategies that will maximize your customer retention, remember these 10 factors:
- Consistency – offering customers the same experience regardless of with whom they speak or where they are.
- Loyalty – creating an emotional connection to your organizations and its products and services.
- Innovation – constantly bringing new offerings and ideas to customers
- Value – offering products and services that meet a customer need.
- Quality – offering products and services that meet the quality expectations of your customers.
- Convenience – being easily accessible.
- Prestige – customers feel good about being associated with your organization.
- Service – resolving customer issues quickly and effectively.
- Habit – customers buy from you because it’s become a part of their regular routine.
- Benefit – offering real or perceived benefit to customers.
How many of these 10 factors are you doing effectively?