I was recently in Singapore and met with a colleague who works for a large government agency there—one that just received a few billion (yes, billion!) dollars from Singapore’s government to roll out new programs. As we walked and talked, I asked about utilization and if their current programs were being adopted. After a long pause, I realized that tracking usage and adoption wasn’t something their team focused on. Instead, they tie success to new programs and attracting new people into them versus getting folks to maximize their use of what’s already there.

Like a lot of companies and organizations, teams tend to be intoxicated by the newest frontier. A client’s customer told me a few years ago, “Solution providers live with an eye toward the future, but we’re just trying to survive in the present.” Yes, every company needs to be forward-looking; but it’s also true that adapting to new, new, new is a challenge for most customers and their organizations.

Study re-confirms the importance of retention

A small, recent study put out by an organization called DemandGen highlighted, as we’ve said for years, that retention as a corporate strategy is essential to profitable growth—not only because retention gives you the ability to get more from existing customers, but also because it gives you and your customers a better ability to absorb change. The study, which took into account the responses of 200 sales and marketing executives, focused on the sales and marketing aspect of being “new-market focused.” Two key takeaways for you:

1. The majority of sales and marketing executives said that their companies’ top two growth strategies for the coming year are “new product/extensions” and “change focus on customer/segments,” at 76% and 62% respectively. This is shocking because “deepening customer relationships” and “growing existing accounts,” two of the other answers, are known to be key to rapid growth and yields but were not noted by respondents as top priorities.
2. Constant “innovation” is becoming hard to digest. Sales organizations, marketers and customers often are not ready to receive new products and services, new models for engagement, new… new… new…. DemandGen’s study pointed out that 58% of respondents said their greatest challenge was “implementing strategy,” while 34% said they were only somewhat prepared to deliver on their customers’ biggest demands.

Is retention in your plan for the next fiscal year?

What are you doing in your plans for the upcoming fiscal year to connect with and segment your customer base and put into place a retention strategy for your value segments? As part of your new fiscal year plan, do a simple exercise of valuing the new versus the existing base: what is the potential value of your current customers versus the value of the new market (taking into account the cost required to enter that new market or attract those new customers)? If you consistently do this exercise and implement a retention strategy as par-for-the-course, you’ll be able to better put your current versus new market opportunities into better context and capitalize on the breakthrough growth that retention as a strategy provides.

Promise Phelon, CSO and Founder
Promise.Phelon@phelongroup.com

Labels: corporate strategy, customer retention, customers, growth, marketing