Apparently not! Over the past year or so I have been chatting to business managers and friends on the topic of being smarter about servicing customers … not just giving customers online self-service, but really putting in the effort into making life easier for them to stay our customers.
In these conversations, I have been genuinely surprised by the focus on customer acquisition and the apparent lack of concern for customer retention. In fact, the more I looked into the issue, the more I realised that Australian businesses overall view customer churn as a painful reality of business and something they have little control over.
Basically, it’s been put in the ‘too-hard basket’.
For starters, there’s no one person or department stepping up and taking responsibility for customer churn. On top of that there a huge misalignment between sales and service in businesses. Sales people are rewarded for the customers they bring on board, irrespective of whether they are a perfect fit or not and with total disregard for their longer term prospects.
Sadly it is often the service team that is left to pick up the pieces when the sales team gets it wrong and customers are sold the wrong product or service!
Growing global groundswell to managing retention
Despite the somewhat gloomy picture I have painted I am happy to report that there is a growing global groundswell to more effective customer retention.
This has resulted in the emergence of a brand new practice area, ‘customer success’, and is seeing businesses increasingly focussing their attention on customer retention and systems and processes aimed at keeping their customers happy.
Think of the cost to business and the unnecessary effort for customers in the current ‘acquire – churn – acquire’ way of doing business. According to Harvard Business Review “If you’re not convinced that retaining customers is so valuable, consider research done by Frederick Reichheld of Bain & Company (the inventor of the net promoter score) that shows increasing customer retention rates by 5% increases profits by 25% to 95%.”
“In many industries, hyper-competition has eroded traditional product and service advantages, making customer experience the new competitive battlefield,” said Jake Sorofman, research director at Gartner…. The reality is that focusing innovation on new products — and even new business models — is subject to shrinking periods of competitive advantage.”
The big question is: are Australian businesses embracing this new thinking?
Are we moving away from ploughing millions into new customer acquisition and truly getting behind improving customer retention through better customer experience. More importantly, are we doing a better job holding on to them than we have up until now?
Complete our Customer Retention Health Assessment to determine where you are on your journey to reducing customer attrition and receive your personalised report.