Ideas for customer retention programs

Following up on last month’s post about scalable onboarding programs, this post discusses ideas for scalable customer retention programs. Of course, it’s a lot easier to retain customers if they were onboarded properly, but even if you are inheriting a boatload of customers that did not have the smoothest start, you can use the techniques described here.

Why bother with customer retention?

Well, it’s trendy ;).  It is, but the contemporary obsession with churn is nothing more than the reincarnation of much older concerns and ideas about customer loyalty. When I was a kid, my mother carried a small card in her wallet that got stamped for each purchase from various small businesses. After 20 stamps, there was a modest gift, which my mother generously gave to one of us kids, and is probably the only reason why I remember the scheme in the first place. It was a retention program (note the fact that it was orchestrated by a coalition of small businesses, probably defying every accounting rule in the book!)

Back to the present: customer retention matters because churn depletes renewal numbers, putting more pressure on custom acquisition, because many vendors find that they lose money on newer customers, including the onboard in program, so that only customers that remain customers for a year or two are actually profitable, and because departing customers will likely create bad press.

 

Let’s start with some basic processes for customer retention.

A Vibrant Online Community

Standard break-fix support is wonderful and essential, but online communities can provide the warmth and sense of belonging that support cannot, and scale much better. Apart from fostering lively online forums, online communities can feature blogs and online meetups that demonstrate best practices and expose executives to the customer base, which customers love (and which will, in turn, ensure that the needs of existing customers are taken into account in product and marketing decisions.

User Groups Meetings

Old-school user group meetings are still irreplaceable, and feature the same benefits as online communities, plus the opportunity to network face to face, and to party!

Customer Steering Board

Another old-fashioned idea, the customer steering board allows large customers to dialog directly with the executive team, especially about product direction. I like it because it’s a scalable model since it focuses on top-tier customers, and if you can renew the membership every year or two you can cycle through a number of the top customers without making customers feel ignored. Also well worth doing for partners, if you have partners.

Responsive Product Updates

I’d like to put this delicately but no amount of customer retention programs can paper over product that’s not meeting customers’ needs. Too often, new products, new features, and new releases target new markets, at the detriment of existing customers. It’s important to balance the needs of both groups. I’ve seen many long-term customers quit in disgust after some modest enhancement requests were passed over for new bells and whistles they did not care about, and I’m talking about enhancement requests that had their own political action committees.

 

But enough of the old-fashioned stuff, how about some more modern ideas?

Customer Journey Mapping

Customer journey mapping consists of identifying the steps customers go through to select and use your service or product. Journey mapping can lead to improvements in the various “touchpoints” of the experience as well as streamlining over-complex processes. It’s usually done via personas that represent different kinds of customers.

If, like many readers, you sell to enterprise customers, it’s extremely useful to do journey mapping for various roles within the organization. For instance, for a CRM vendor the roles may include support engineer, support manager, escalation manager, IT help desk, IT administrator, and tool champion. The various journeys will translate into many ideas for monitoring and enhancing customer retention.

(I like this description of journey mapping, if you are new to the concept.)

Usage Tracking and Reporting

It is possible for a customer to defect abruptly without any decrease in usage preceding the defection, but good strong usage is typically a positive sign of future retention. To reprise the example of the CRM system used earlier, if your customer is tracking 20,000 support cases a month using your product, every month, with a slight increase every month, chances are that the trend will continue — but if usage slows down, especially brutally, it is a non-subtle sign that some part of the business is experimenting with other solutions. Create your own reports or use a vendor such as Totango.

Big Data Churn Analysis

Even better, use consolidated data from all your customers to identify likely candidates for churn. For instance, you may find that customers who adopt your solution for a single business unit are likely to churn, or that customers who use a particularly “sticky” feature of your solution are not likely to churn. That will guide your efforts in reaching out to customers that fit the profile.

Big data analysis is demanding and complex. When I work with clients on these issues I often find that the data they have is not comprehensive enough to properly answer questions about churn. For instance, vendors rarely capture their customers’ business goals for using their product, when of course the achievement of the business goals will determine retention or churn. But don’t be shy: use what you have, and build up.

Apart from generating actionable data for specific customers, churn analysis also yields interesting insights for intra-company action. Don’t shy from it. Churn analysis may well reveal that pricing could be improved, that the quality of a particular module is causing defections, or (gasp!) that customers who buy at the end of the quarter are over-promised, all situations to be exposed and addressed.

Automated Reachouts

A great way to enhance retention is to suggest useful features or best practices to the users. You may be able to automate this process if you can capture specific behaviors that suggest a particular recommendation. Test well, though: users are ticked off when they get seemingly irrelevant suggestions, especially if they are repeated.

Targeted, Personalized Check-Ins

Anytime we say personalized we venture into non-scalable territory, but I’m talking here about check-ins that are targeted, based on usage reports and other metrics. In other words, if we see a drop in usage or a lack of use of a popular feature we will call and inquire. We do not call because it’s been 6 months and it’s time to call, without an agenda. (For the record, I have nothing about scheduled calls, but they should have a basic agenda, if nothing else review past usage).

 

OK, but what about “standard” customer success programs, with Customer Success Managers and all that?

Customer Success Managers

I hope I’ve shown that there are many customer retention approaches possible beside the standard idea of assigning Customer Success Managers (CSMs) to customers, but CSMs continue to be very effective — albeit costly and not very scalable.

There are huge differences between CSM programs, but generally speaking CSMs are assigned to particular accounts, with the mission to get to know the account from a business angle, not just the technical side, and with an emphasis on a proactive approach, not reactive. In other words, they are not, or not only, support engineers: they may resolve technical issues for customers, but rarely do they own the resolution of every technical issue, if any. They are not escalation managers: they may coordinate the management of escalations when they come up but they spend the bulk of their time thinking of ways for customers to get a better benefit from their experience with the product or service. All CSMs should know:

• The business goals of their customers. What are they selling? to whom? For non-profits, what are their success criteria?
• Their current initiatives. Are they trying to improve revenue? Cut expenses? Expand into Asia? Change their sales model?
• How the vendor’s product or service fit into the initiatives.
• The key decision makers and their personal goals, preferences, and biases.
• Any obstacles to continuing to use the product or service, or to increasing its use.

CSM programs are usually tiered, with larger customers getting more attention and smaller customers getting less, or none at all. Explicit tiering is very useful, as it helps set expectations for the customer and guides the activities of the CSM. While the CSM activities are not very scalable, the processes behind them are. For instance, a CSM would need to identify the business objectives of a particular customer, but the method for eliciting the objectives, the manner in which they are recorded, and the tool in which they are stored are all sharable and scalable.

Health Checks

I’m a great fan of health checks, which consist of periodic, usually weekly, audits of customers’ setup and usage, with appropriate suggestions and recommendations issued that both improve the customer’s experience and make life easier for the vendor. Health checks are very useful for on-premise tools, of course, but they are also useful (and easier to perform!) for cloud offerings.  Health checks can be partially automated and are appreciated by customers.

Joint Action with Sales 

I’ve kept a focus on customer churn so far, but I find that it’s much more satisfying to also focus on revenue expansion — and all the ideas above fit well in either camp. CSMs are ideally placed to make recommendations for customers for additional seats, features of products, as they become trusted advisors and customers judge them to be “on their side”. Being able to foster a close relationship with the sales team is an important talent for  CSMs and a strong CSM will orchestrate sales actions and CSM actions seamlessly.

 

What programs do you have in place for customer retention?