Retention

Retention

Companies acquire and communicate with customers for one specific reason ”they want to retain their business. Most companies have no idea when they lose a customer ”or why. They might guess at the why, but few have the time and resources to put in the effort required to grapple with the issue effectively, identify the event that caused the loss and contact customers about it. The companies that achieve this level of contact with their customers dominate their markets.

The wireless industry, for example, is notorious for its rate of churn. Getting a handle on customer retention can put a wireless company in the top ranks of its industry. But understanding the reasons for churn is only half the battle. Acting on the information is even more critical because the rate of information atrophy is startling, not only in the telecom industry, but every industry.

The customer retention battle is event-driven and requires quick and precise responses. Imagine a trigger event, for example, canceling a wireless account. If the wireless company wants to change its customer s decision it needs to make that contact within 24 hours. Approximately 75 percent of all positive responses to customer retention calls result from calls made within the first 24 hours after the trigger event. Three- quarters of all the customers who can be influenced will be influenced in the first 24 hours after they cancel the account. After 48 hours it s often not worth even making the contact.

Making contact with a customer as close to an event as possible is the key to retention. Many of the banks you ll see in these pages have, for example, built business rules that generate action prompts following specific trigger events on an account. The action prompts are followed up within the day.

Another retention approach favored by many companies is loyalty or rewards programs calculated to bind customers more closely to the company. Rewards programs traditionally have mixed results. It s not enough to simply offer customers the chance to accumulate points and redeem them for product or flights or other services. The most successful loyalty programs use the information acquired through administering the program to actually enhance the relationship with customers.

Harrah s

Harrah s customer loyalty program and tiered loyalty card enable it to keep very close track of its customers and precisely tailor its contacts with each customer to ensure the most benefit for both. Customers use the cards in slot machines where they are recognized and can trigger service experiences immediately. For example, Harrah s staff may approach a customer who has earned a free restaurant meal with the offer, while they are still playing the slot machine on which they earned the reward.

When a loyalty customer checks into the hotel, desk staff can see the Total Rewards information and act accordingly . They might see a customer prefers a non-smoking room, the Wall Street Journal at 7 a.m., or two queen beds instead of a king bed. They might see that a customer has earned cash to play or a free night at the hotel. With this knowledge at their fingertips, desk staff can personalize the service to the customer. Kiosks stationed around the gaming floor provide instant updates and information to customers about rewards earned and comps they can redeem right away. Unlike many other reward programs, Harrah s acts immediately on a customer s earned rewards and makes it simple for customers to redeem.

 

Retention issues take on a special twist in the retail industry where it s often impossible to know for sure why a customer abandoned a store. In the online setting, a retailer can trace a customer s behavior with more accuracy and analyze the cause of departure . In the store setting, the information that went into a customer s decision to leave simply isn t available to analyze. But a store can identify in-store situations, which may be contributing to retention issues.

Lowe s

Steven Stone, Vice President of Lowe s, a company emerging as one of the strongest competitors in its industry, knows that nothing upsets customers more than seeing long check-out lines and a bank of 25 cashier stations with only two open . Sensitive to customers attitudes and perceptions, Lowe s used the wealth of detailed information it always has at its fingertips to determine the optimal number of stations in each store. It analyzed store traffic, speed of check-out , line lengths, average numbers of products per purchaser and a host of other details. The result ” $7 million worth of cashier stations were removed from Lowe s stores without any negative impact on customer service. In fact, customer perception of service is improved, as they no longer feel frustrated by the negative image of unused stations.

 

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