W601 – Where Did My Customer Go? · 2007. 3. 1. · Customer Loyalty by Jill Griffin, published by Jossey-Brass The Loyalty Effect by Frederick Reichheld, published by Bain & Company

Summit 2007: Get Connected

W601 – Where Did My Customer Go?

Betty HelpaCustomer Care

Companies lose 20 to 40 percent of their customer base each year. Does your company have a strategy to track lost customers? Find the reason why they left? Have a win-back program? Is it worth saving a customer? This session looks at each of those questions, discusses financial rewards for winning back customers, and provides practical steps for creating win-back programs.

Pre-requisites: None

Wednesday, 3:45 p.m.

© 2007 Activant Solutions Inc. All Rights Reserved

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Session Objectives

Discuss the cost impact of customer retention Discover what your company is doing for customer retentionDiscuss win-back program and which customers should be includedDiscuss who is responsible for customer retention

Fun training exercise

Share what we have learned in building a program through 8 step action plan



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Top CEO Management Issue

2000’s – Customer retention has become the top management issue (source: “The CEO Challenge,” a survey by The Conference Board)

Customer Loyalty & Retention was ranked #1 Global Issue42 percent customer loyalty and retention (US 46 percent)38 percent reducing cost29 percent increasing flexibility and speed

The move from attract, develop, and then retain customers to retain customers, then attract new ones, and develop bothWharton School study published in Harvard Business Review: A reduction in 5 to 10 percent of customer defection can yield up to 75 percent in profitYour best customer is your competitors most sought-after prospect


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Questions

Do you know how many customers you lose each year?Do you identify a customer as lost?Do you conduct defection interviews among lost customers?Does your company have a system for identifying customers who are at high risk of defection?Do you know what percentage of your customers you are able to win back?



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Why Don’t We Focus on Retention?Retention rate is misleading

80 percent retention rate – 100 customersOver four years – 51 customers (100 x .8x .8.x .8x .8)

Unaware of the loss associated with customer defection and the profit recovery from a Win Back

Frederick Reichheld, The Loyalty Effect, six economic effects of customer loyalty

Acquisition costBase profit (long time profit)Revenue growth (more product lines)Cost savings (less service)ReferralsPrice premium (not as price sensitive)

Lost customer not seen as an opportunity (20-40% chance to sell to lost customers vs. 5-20% for a new)


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Make it a Company-Wide Initiative

Build a fiercely loyal staffCostcoTrain, train, trainCareer pathClimate of trustRecognize and reward initiativeHave fun



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Make it a Company-Wide Initiative

EMBRACE the BaseLeaders – CzarsEmpower every employeeTrain every employeeTraining exercise


8Training Exercise: Understanding What Customers Want

Problem solvedEffortAcknowledgement and understandingChoices and optionsPositive surprisesConsistency, reliability, and predictabilityValue (not necessarily best price)SpeedConfidentialitySense of importance



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10Why Customers Leave –Rockefeller Foundation

14% – Complaints not handled9% – Competition9% – Relocation68% – No special reason



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Win-Back Potential

Segment and grade lost customers by valueCalculate value

# orders X average order-cost of order-Win-back costGross profit

Segment and grade by reasons for defectionSegment by quick win-back or longer term win-back


12Action Plan: 8 Recommendations to Track Lost Customers

1. Identify exit points – How does your customer say goodbye?

AR/CollectionsInside/Outside SalesDecline in salesManagementJob siteCustomer tells you or surveyCustomer network – Loyal customer tells you




2. Set up action plan to centralize communicating with potential loss customers

Who is responsible? Establish e-mail group



3. Establish types of types of defection, actions, and responsibility

Moved away: Out of business/mergers – accountingUnintentionally pushed away: Looking – sales teamPulled away or bought away: Decision made –managementIntentionally pushed away: Financial – collections




4. Set up exit interview – Marketing metrics found that 50% will participate and 30% will tell you what to do to win-back

Listen – get both sides of the storyTrack reasons for defectionMake necessary operational adjustmentsKey questions to ask

Why did you stop buying?Quality of material? Service?Attitude of employee or organization?Location?A competitor had better price?Mishandled complaint?Did you inform us of the problem before you left?If we fix the problem, would you try us again?



5. Establish potential loss action plan and team(s)Sensitive customer list (by department/branch)Potential loss (executive)Lost customers (top executive)



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Customer Care Dashboard



6. Develop at-risk customer profileDrop in sales volumeDrop product lineChange in trend of orders/callsAR issueIssue at beginning of business relationshipMultiple service issuesBilling/invoicing issues




7. Track reasons for defecting – source from exit interviews



8. Develop a win-back programRate the customers valueDevelop different levels of programsListenMeet the customer’s requirements and communicate your changesStay in touch with the lost customerMake it easy to come backWhen they come back, earn their business everyday



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Additional Resources

Customer Loyalty by Jill Griffin, published by Jossey-BrassThe Loyalty Effect by Frederick Reichheld, published by Bain & CompanyCustomer Winback by Jill Griffin and Michael W. Lowenstein, published by Jossey-BrassThe Ultimate Question by Frederick Reichheld, published by Bain & CompanyWho Stole My Customer? by Harvey Thompson, published by Pearson Prentice Hall


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Summary

Reduction in 5 to 10 percent of customer defection can yield 75 percent increase in profitIt is a total company effortNot every lost customer should be in a win-back programNeed to define the types of defections each with their own unique action planExit interviews are important to learning the real reason for the the defectionIt is important to develop at risk customer profiles



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Thank You for Attending

W601 – Where Did My Customer Go?Betty HelpaPlease submit the Session Feedback Form

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Documents

W601 – Where Did My Customer Go? · 2007. 3. 1. · Customer Loyalty by Jill Griffin, published by Jossey-Brass The Loyalty Effect by Frederick Reichheld, published by Bain & Company