Our experience working with companies of all sizes and in multiple industries tells us that when companies neglect having a separate budget line for voice of the customer, when controls and methods, guiding principles and accountability are lacking, and when insights are not gathered holistically from the customers’ point of view, then money spent on gathering customer insight is a cost, not an investment. It is flushed down the proverbial drain each and every year.

See my previous blog which discussed how to retool your customer listening from the customer point of view. However, knowing how to structure your customer listening is not enough. You must have a master budget and build accountability to the budget in the areas of customer retention, repurchase, and referrability.

If you want to become a truly customer-centric company, if you want to be able to measurably tie corporate actions and decisions to customer insight and back to what matters most – investing every dime in growth and keeping your team focused on the dials that create value – you will also need to institute methods, controls and accountability around the dollars your company spends on gathering and leveraging customer insight.

Start by asking yourself, who on your management team is staying up at night when a customer defects, does not renew or only buys in piecemeal? Who’s on the frontline when a customer de-positions your company or detracts from its brand with negative word of mouth? You already know that sales to existing customers are faster and more profitable. Retained customers not only contribute to growth; they co-invent and co-innovate. Your very reputation and ability to enter accounts, let alone new markets, is contingent upon the building a foundation of credible customer advocates.

To drive the correct investment and organizational behavior, retool your budget so that there is a master line item coupled with centralized ownership for capturing voice of the customer. Make voice of the customer a corporate versus a departmentally driven mandate. The net is that if voice of the customer is to make a difference in retention, repurchase and referrability –the three essential, revenue-driving customer metrics, it needs a formal line item in the budget with executive ownership and accountability across the management chain.

David Ambler, Vice President of Client Services David.Ambler@phelongroup.com

Labels: accountability, customer advocate, customer retention, customers, reference, repurchase, revenue, voice of the customer, word of mouth

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