"The vendor community has only recently [been] getting to the point where it understands that if it doesn't do something to attract and maintain customers, long-term prospects aren't going to be what [companies] want them to be," says Denis Pombriant, founder and managing principal of CRM market research firm and consultancy Beagle Research Group.

Regardless of the industry, keeping attrition at its lowest level is a cornerstone of a company's success. Consider these process-oriented approaches to make the drive along Low Attrition Lane smooth.

Three High-Rate Reasons
A portion of the culpability for customer attrition rates rests with the state of today's marketplace--competition is tight. "Today there are multiple competing products in any category, so customers have more leverage. They can choose one over the other," Pombriant says.

Consumers' savvy also affects companies' ability to retain them. "The average consumer today has more information at his fingertips with which to make informed decisions about a relationship with companies than he has had in the past," says Jonathan Trichel, principal of customer and market strategy at Deloitte Consulting.

The most serious culprits behind retention and loyalty problems are tied, however, to many companies' lack of awareness of the importance of the customer experience, their short-term focus, and cost cutting. "There's a conflict between short-term results and long-term results," says Phil Bounsall, executive vice president of customer and employee loyalty management firm Walker Information. "Sometimes short-term results win out, and that can make companies do things that might result in short-term profits, but may not result in long-term loyalty or long-term sustainable value in their customer base."

See It, Solve It
Every business vertical has a unique set of loyalty issues, but financial services and telecommunications are two of the better-known sectors that struggle with creating and nurturing customer relationships. Of course, each industry--including financial services and telecommunications--has companies that have very loyal customers. But according to Trichel, low switching costs and ease of movement between competitors in the financial services and telecom industries--and the sheer amount of transactions and volume that these companies do with customers--"leave them open to a lot of dissatisfaction and churn."

Many companies in the retail and travel/hospitality industries also suffer high customer attrition rates. Retail companies, for example, often stumble when it comes to integrating online and offline channels for a more seamless customer experience. As more customers leverage the Web to research items and then purchase them in physical stores, or in many cases, buy items online, relying on siloed information can impact retailers' ability to level customer defection. Trichel adds, "In general, there's not very good tracking of customer loyalty and attrition rates in the retail industry." Travel/hospitality companies, specifically airlines, must contend with customer experience issues like seating comfort level and food and beverage service. Also, airlines operate under tumultuous business circumstances, such as heightened M&A interest, increasing fuel costs, and labor disputes.

Some customer churn is inevitable, and not all reasons that trigger customer defection are within a company's control. Customers may move out of a company's service area, essentially defecting by default. Confronting attrition motivators that a company can decrease, however, will help it enhance its go-to-market products and services and help it to more effectively compete. "We see increasing activity around the propensity modeling that companies do to try to understand what makes customers leave and what those patterns are," Trichel says.

The sooner a company can spot red flags, the stronger the possibility it has of identifying the source of customer frustration, tweaking the problem area, and retaining the customer. "Notice the signs of attrition before the customer quits," says David Rosen, executive vice president of Loyalty Lab, a provider of on-demand relationship and retention marketing solutions for consumer brands. "Proactively engage the consumer when she or he falls into the danger zone."

Customer defection can be anticipated--to a certain degree. Substantially lower usage patterns, missed payments, or often-placed service inquiries are solid indicators that a customer is not content with a product or service and has a higher probability of ending the relationship.

"If I've got an 80 percent satisfaction rate, the focus needs to be on the 20 percent of dissatisfied customers," says Bob Furniss, president and founder of CRM and contact center consultancy Touchpoint Associates. "If I can understand what's occurring in the 20 percent, then my impact is much more profound than being satisfied with the satisfaction rate."

Rather than writing off a canceled account as a lost cause, maximize the cancellation process; ask customers why they've decided to break off the customer-provider relationship. Leverage that garnered intelligence by incorporating it into marketing and support strategies and offerings portfolios.

Money Isn't Everything
Many companies rely heavily on pricing initiatives to get consumers to bite. For instance, when a company's rival tenders a cheaper price for a product or service, the traditional approach has been to match the rate or make an even lower offer. Similarly, when sales reps fall short of meeting their quotas, they usually tag the price of the pitched good or service as their primary deal-closing hurdle. But price, according to Lior Arussy, president of customer experiences research and consulting firm Strativity Group, is the excuse, not the reason, why customers turn to other providers. Arussy argues that once competition has been reduced to price, it's an admission that a company cannot add more value. "When you counter to them an offer they get elsewhere you have just validated for them that there is a way to do it cheaper," Arussy says. "You sometimes raise more suspicion."

The cliched one-size-fits-all approach to customer interactions and strategies simply doesn't work. Demographic characteristics like age, race, gender, and geographic location, and financial markers like average spend, are some of the traditional elements companies use to more precisely segment their customer bases and craft targeted, relevant messages with the hopes of ultimately driving additional sales. These characteristics provide organizations with valuable, deeper insight into their customers, but they do not deliver enough.
Take segmentation strategies even farther by considering attitudinal, behavioral, event-based, and lifestyle factors as primary drivers for creating more personalized experiences. "Dollar value helps you with profitability and business planning," Arussy says. "But it will not tell you much about the attitude of the customer. It will not tell you how they emotionally consume your product. You really need to have a deeper understanding of how they [know] your product."

Taking a more dimensional approach will help companies realize that there's a fine line between a satisfied customer and a loyal customer. "We look at loyalty as being a measure based on how the customer feels about the company and how the customer intends to behave in the future," Bounsall says. "A truly loyal customer has a very positive attitude about a company and intends to continue that relationship with a company."

The more deeply you understand your customers, the better your chances of tailoring offers and experiences and generating more revenue. One company that realizes the importance of targeted experience is Bell Canada Enterprises (BCE), one of North America's largest communications providers. BCE needed a way to present the right offers at the right time to avoid pitfalls like repeatedly presenting the same offers to customers who may already have the service being pitched.

For Bell Mobility (a division of BCE), in particular, having disparate applications and databases and no standardized practice for cross- and upselling made it difficult to craft more gainful customer interactions and drive additional revenue from existing customers. Bell Mobility implemented an inbound marketing system about six years ago in its call center locations from Infor subsidiary Epiphany's inbound marketing system--now known as Infor CRM Epiphany Inbound Marketing. Following the division's success with its deployment, BCE launched the inbound marketing solution in the call center locations of its other lines of business like ExpressVu, its digital satellite TV service; the company plans to launch Infor CRM Epiphany Inbound Marketing within its call centers catering to Sympatico, a high-speed Internet portal offering.

The system helps BCE more efficiently field incoming calls and manage offer presentment; the solution identifies callers based on their phone numbers, analyzes customer characteristics like transactional, demographic, and usage data to provide reps with a fuller picture of the customer, and provides CSRs with the most appropriate offers for customers at the right time. "When you have a company the size of BCE...everybody's trying to get their piece of the pie from each customer," says Owen Sonnenschein, associate director of CRM development and enablement at Bell Canada. "Having one tool being utilized by every front-end CSR all looking at the same customer was a big win for us."

Since the deployment the communications company has on average realized a 50 percent offer response; 15 percent uptake in average revenue per user (ARPU), with users tallying $1.04 higher ARPU than nonusers; and an 18 percent rise in CSR sales per hour. BCE increased its ability to distribute promotional campaigns by 75 percent, substantially lowering time to execute campaigns from four days to four hours. The company can also dive deeper into how well individual offers are performing.

"We are not pushing the same offers to the same customer over and over again," Sonnenschein says. "With the targeting of the offers to the customers they're happier, and of course they're going to stay longer if they're happier with the offers that we're providing to them," he says. "We're able to save customers more based strictly on their profiles and who those customers are--that's really helped us a lot."

Deep Marketing
Any company serious about creating and sustaining customer loyalty must do a better job of researching and capturing customer needs, wants, and sources of dissatisfaction. There has been "a renewed focus on improving measurement of the customers' voice," Trichel says. The emphasis must be on "having their voice heard on what's making them happy, what's increasing their loyalty, and what's destroying the value for them and their relationship with a company. We see a lot of investment in active mystery shopping, employee focus groups, customer panels, and in some cases actual live intercept interviews with customers. In the past we've seen an overreliance on just static surveying."

Pombriant notes the concept of customer communities, an online approach to culling customer information. Vendors "can test ideas, do conventional surveys, and ask questions of the population," he says. "Also, this is key--observe the interaction among the community members, observe what they say to each other, how they take an idea and change it, modify it--basically, kick it around. That's the real learning that enables a company to say 'I think I understand my customers' needs for this kind of product or service.'"

When a company can leverage its customers' ideas and input to the extent that it drives product development, it has a substantially better crack at coming to market with products that customers want to buy from that company, not its primary competitor. Pombriant calls this approach deep marketing. "Conventional marketing might ask what colors you like for kitchen appliances--white, stainless steel, avocado, et cetera," he says. "Deep marketing would ask things like, How do you feel about cooking every day? What are the things you like most and least about your refrigerator? Are leaky trash bags a problem at your house? It's that part of the process that hasn't been totally missing, but it's been dormant for quite a while. The difference between success and failure is in researching customer needs, customer attitudes. The companies that do this kind of information gathering the best are the ones that are most successful."

Deep marketing starts with collecting information about what customers think, feel, like, and hate, and more. "It drives creation of actionable knowledge that informs marketing messages and product development," Pombriant says.

Strengthen the Service Experience
Commoditization creates a serious problem for companies. Customers are often left with no way to differentiate offerings based on functionality and features, so companies must put more weight on the service experience. Unfortunately, though, it's the postsales part of the customer service life cycle that many companies do a poor job of dealing with. Delivering more desirable customer interactions as part of a company's efforts to mold a contact center into a competitive differentiator must place significant emphasis on the importance of front-line service reps and ensure that CSRs are well trained, provided with detailed customer histories, and can immediately access a thorough knowledge base.

Trichel says that with eight of 10 clients he talks to saying they've got a problem with the customer experience, "a big problem that they're facing is that [strategies pursued] by company leadership are not being executed at the point of interaction with the customer. Those front-line employees don't have the reason to care about whether a customer stays or goes. I don't think there's been enough focus on enabling front-line employees to do what's right for the customer."

So don't be difficult to do business with. Forty-six percent of the more than 1,000 U.S. consumers polled in a 2006 Accenture survey revealed that they stopped doing business with a company as a result of poor service. Avoid processes that hamper the ability to deliver a seamless service experience across channels. Responding quickly with accurate answers, stripping any barriers that make it hard to reach a live agent via phone or Web, and making it easy to locate information are three steps to take to ease customer frustration. If interacting with your company is a challenge, take note of the correlation between the service experience and word-of-mouth marketing. Consumers typically tell their friends, family members, and coworkers just how good or bad customer service with a company was.

"The biggest thing right now is service," says Dianne Durkin, president and founder of training and consulting firm The Loyalty Factor. "Unless people can really do a stellar job of satisfying the customer's needs, they're not going to keep customers."

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