Three Steps to Increasing Customer Retention

Customer retention is more important than ever to organizations, given the current economic situation. Here are three areas that each organization needs to look at to improve its customer retention levels.

1. Foundational requirements: these are the "pay to play" requirements for your organization and industry. What things must an organization deliver on in order to be (and stay) in business? For example, the foundational requirements of a restaurant may be to:
   
   a. Ensure that the customer's meal order is prepared correctly
   b. Deliver the meal to the table in a timely manner at the right temperature
   c. Provide prompt and courteous service
   d. Have clean eating areas and restrooms
   e. Ensure that the bill is correct.
   
   Any restaurant that consistently did not deliver on these basic, foundational requirements would soon find itself out of business. What are the foundational requirements for your organization? And, how well is your organization consistently delivering on them?


2. Branding and positioning: how is your organization different from the competition? What does your brand convey to the marketplace? What type of experience promise do you make and deliver to your customers?
   
   Using our hypothetical restaurant example, the restaurant may be the only Mexican restaurant in town, which differs it from the Italian, Japanese and pizza restaurants. The restaurant may further position itself as a healthy, authentic Mexican-food restaurant that delivers food quickly in a relaxing, family environment. These attributes then become the basis for the Mexican restaurant's marketing program, the menu, decor and ambiance in the restaurant, and the planned experience (authentic food, relaxing family environment) for its patrons.
   
   Take a look at your organization's branding and positioning. Are they clearly understood by both your employees and customers? Are they consistent across all customer touch points and interactions? Do your customers "believe" them, or do they have a different image of your organization?


3. Customer relationship management : finally, once an organization has consistently delivered on the foundational requirements and determined its branding and positioning, then, and only then, can the organization begin to build relationships with its customers. And, only if the customers give the organization permission to do so.
   
   Think about it: if you went to a restaurant that couldn't get your order right, had dirty tables and restrooms, and rude wait staff, would you want to have some a relationship with that restaurant? Would you even want to go back?
   
   That's why it is so important to get the foundational requirements right. Many organizations overlook this - it is just not sexy to say that you're allocating part of your budget to keep the restrooms clean, for example. But, if these are the things that are causing your customers to defect, then these are the top priority things your organization should fix. And, if your customers - or even your employees - are confused about who you are, what you do, what you stand for, and how you are different, they are not likely to want to invest the time and energy to have a relationship with your organization.
   
   By building customer relationships, an organization can change the rules of the game and transform the industry. I firmly agree with Don Peppers and Martha Rogers that the only true source of competitive advantage is customer data and how that data is used to create customer strategies and experiences. Any other perceived source of competitive advantage - a product, service or offering; a unique brand positioning; or even a patent - can, eventually, be copied by a competitor. However, your customer data (and insights gleaned from that data) is the one thing that your organization has that your competitors do not. I'm not talking about data that can be purchased, although that type of data can provide some additional insights about your customers. I'm talking about the behavioral, motivational, and needs-based data that allows your organization to truly understand each customer. Using these insights to build lasting, relevant relationships with your top customers increases customer retention.
   
   Our Mexican restaurant, for example, can begin to capture information about food requirements, seating preferences or life events of its top customers. They could then use this information to revise the menu or even create a "custom" birthday experience complete with preferred seating and a tailored menu based on a customer's favorite meals. Credit card numbers could be stored (with approval) to streamline the payment process for those customers that want to minimize that part of their experience. Special marketing promotions based on the primary reason(s) a patron visits could be sent out: for example, for those patrons that are motivated by the authentic food, they could send out a twitter update about a new menu item; for those that like the health benefits, a different campaign could be created. How the Mexican restaurant leverages its customer insight is unlimited.
   
   What data does your organization capture today about its customers? How is that data being used to transform the relationship you have with your customers? Are there ways your organization could begin creating customized interactions based on that data to maximize customer retention? How will you test and measure the impact to ensure the greatest impact?

Feel free to share your experience increasing customer retention levels.