Businesses that do not focus on customer retention and do not manage customer relationships fully are always managing churn and focusing on replacing the customers that got away. In these uncertain and difficult times as the pandemic is hovering around prospects of consumption, the first priority really should be to retain customers. It costs several times more to acquire new customers than to retain existing ones – so, economics too is supporting this.
As we move through a recovery in general, or slow or negative business growth, business owners and managers should undertake four activities to ensure the best return on both customer and shareholder equity.
First, make sure that they understand the business climate and the effect it is having on their customers. Then, they need to use this knowledge to set strategic direction that focusses on customer retention and create value-added products and strategies to help their customers meet their goals. Next, they must arm their sales force with the most up-to-date information about customers' needs to make sure that mutually beneficial, targeted solutions are presented. And finally, senior executives must make sure the analyst community recognises the company's strategies and business results so that they are translated into increased shareholder equity.
Maintaining stability in business relationships is one of the most important goals of most companies. Many organisations have spent millions of rupees on the CRM promise, capturing information about customers, their buying habits and needs, in order to customise their marketing and sales approach. Yet, more than 75 percent of enterprises are incapable of combining a comprehensive view of the customer with inter-actionable, personalised advice to customer or sales/service agents.
Undertaking interviews produces the tools and information one needs to set the business direction, and project revenue and profit targets. One also will have the information the sales force needs to capitalise on the profit potential of major accounts, including the following:
- A qualitative analysis of the specific issues, objectives and business strategies for each account.
- An understanding of the internal and external metrics that will influence buying decisions and capacity.
- An understanding of existing, or historical, issues that affect strategy and client culture.
- A specific account plan based on an independent business analysis of their current and future communication needs.
If the company develops a solid picture of the quality of its customer relationships, then they are positioned to support the emerging needs of their existing accounts. The management's role is to create the focus and to provide the tools and products for success. Once marketers have focused on aligning their strategy to customer retention, marketers hope this will translate into meeting their own company's revenue and profit projections.
Marketers also have worked to develop a positive image in the marketplace, which would enable them to attract new business through referrals and contain customer acquisition costs.
Picture making this statement to stock market analysts: "In light of current conditions, we have performed an independent audit of our best customers to determine their needs, their general propensity to buy and propensity to buy from us. We have also identified necessary changes to our strategies and value propositions – changes that are currently being deployed. We are confident that we understand customer needs and what's required from us to fulfill those needs in order to hit our forecast. And we're building a feedback mechanism to ensure that we stay on top of these crucial criteria."
In order for shareholders to profit from a customer-focussed strategy, companies need to make sure financial analysts recognise the results and reflect them in their view of the company's performance.
Although your company may be out in the marketplace talking to customers on a regular basis, marketers still benefit from having the interviews and pulse-checks administered by an unbiased third party. Still, many companies think they can eliminate this activity once the business climate improves – or worse, as a cost-saving initiative during tight economic times.
In order to sustain the competitive advantage gained through focussing on customer retention, companies need to continue to survey key account contacts. Such an ongoing temperature check also acts as an early-warning system, identifying emerging trends, personnel changes and customers at risk of attrition.
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