Benefits of customer retention strategies

"Customer retention strategies include all front office interactions with potential and existing customers, including sales and marketing as well as customer care and help desk support. Rather than customer relationship management which focuses on managing customer data, a dynamic customer retention strategy allows a business to grow its revenue among existing customers," explains Lees.

Key to growth

The improving of business efficiencies using IT solutions is key to business growth. The coupling of IT with a customer retention strategy provides the next step in looking at an end-to-end solution for front office operations.

A customer retention strategy enables a business to better organise, update and use its customer information, as well as providing all staff with access to the same customer data to complete their tasks. This improves business productivity and does away with the duplication of effort and too many inefficient manual processes.

Yet cost may be a factor and not all businesses can afford the complete integration of their IT infrastructure with a customer retention strategy. According to Lees, there are customer retention solutions on offer that meet the differing budget and business requirements of emerging and growing businesses:

• The implementation of an end-to-end solution that extends a business' existing IT infrastructure. This type of solution offers user-friendly functionality to drive lead generation, the management of sales, the management of service and support, and business intelligence tools, as well as the integration with mobile, PDA and PC environments.

• Installing a customer retention management application that enables a business to work with a single, accurate database of customer records that can be continuously updated and used for sales campaigns and management reporting.

• A hosted solution. In this case, customer retention management is outsourced to an application service provider which supports a business' requirements via a web-base application. The business connects to the Internet to capture and update customer contacts or draw reports on customer and lead generation data.

No matter the solution chosen by a business, the benefits of a customer retention strategy need to add value to a business's bottom-line. The challenge for an IT vendor is to ensure that the solution deployed can grow with new business requirements. The question is not about spending more on IT but rather what IT infrastructure is required to grow the business.

"The return on service investment should be easily measured as a business's service levels improve as a result of the implementation of a customer retention management solution. Business owners have reported that their customer retention strategy has played a major role in increasing their turnover. One of our clients has attributed their substantial increase in turnover to their effective customer retention programme," comments Lees.

Attitude change

There is a need to change business owner and staff attitudes to adopting customer retention solutions. According to Lees, many business owners do not understand the concept of customer retention and the fact that it encompasses technology tools, staff training and defining business processes and structures.

Lees goes on to state that businesses view customer retention programmes as a cost rather than an investment in business. A high-level of commitment is required to implement customer-centric solutions which may necessitate change in business processes and staff attitudes. Many business owners and staff, however, lack the desire to change. In addition, some cost effective solutions on the market have not been user-friendly and have resulted in low adoption rates among businesses.

"What is required is an attitude change among business owners to share information and empower staff. There is a clear need to record all business decisions, sales leads and customer interactions in a system that is easy for staff to use. In relation to the cost of advertising and marketing in the hope of attracting new customers, the investment required to implement a customer retention solution is minimal," says Lees.

Business owners should consider the following to ensure the successful implementation of a customer retention strategy:

• The opportunity cost of growing the business: By how much should the business grow as a result of adopting a customer retention strategy? What benchmark will be used to measure how this technology solution will pay itself back?
  
• The need to ensure customer satisfaction: Does the solution provide business intelligence tools to tap into existing and identify new customer needs?
  
• The collection of data to determine customer trends: How many customers use email? Why did a customer not respond to an email marketing campaign?
  
• The adoption of the solution by staff: Is the system easy to use? Does it fit into systems, like MS Outlook, that staff are already using?
  
• The need for business owners and staff to understanding of benefits of a customer retention management system: Is there commitment from management down to all levels of staff? Does the organisational culture promote a mindset change to adopting new systems and processes?

"Fortunately, mindsets seem to be changing and it's clear that business owners are becoming more and more aware of the need for customer retention strategies to track customer interactions more closely. I truly believe that adopters of customer retention solutions will reap great rewards. Today, the most effective way to differentiate one's business from another is to sustain high service levels and a key strategy for raising service standards is to implement and monitor a well-planned customer retention strategy," concludes Lees.