Louis Columbus has over 20 years in the IT industry, specializing in product management, sales and marketing. Immediately before joining Cincom, Mr. Columbus was a Senior Analyst at AMR Research. He earned his MBA from Pepperdine University and completed the Strategic Marketing Management Program at the Stanford University Graduate School of Business. He has published 16 books on operating systems, peripherals and integration technologies.

Retaining and Growing Loyal Customers in a Down Economy

Let’s face it, the projects getting funded faster than any others in marketing, operations, and service are focused on more fixing big complex problems than they are on getting to know customers more individually.  Trying to bring order to chaos right now is important; yet more critical is taking the time to define customer-by-customer strategies for enriching, adding value to, and ultimately getting your customers to their goals. 

Being a major contributor to getting your customers to their goals right now is more important than any low-price leader strategy or doing bundling of services.  What customers need more than anything else right now is results.

Time to Start Leading Your Customers’ Results Revolution

It’s not easy for a director, VP or even a CEO to not panic and start spending on the areas of their companies that dissatisfy customers. From the case studies completed for courses taught in International Marketing and International Business however, this is exactly the wring thing to do.  In the panic of troubled strategies, company leaders lose track of why their customers trusted them in the first place.

If there is a strong, resonating lesson to be learned from the case studies completed of General Electric, IBM, Proctor & Gamble and Schindler it is this: transforming marketing, selling and service strategies to over-deliver results and guidance to customers in difficult times is a matter of the company doing the serving surviving.  Here are the lessons learned:

  • Create webinars, seminars, and conferences aimed at giving your customers insights into their industry.  Taking this step, even if it is small and a webinar which can be inexpensively done is critical.  It signals that a strategy of helping your customers get to their goals is what’s on your agenda. Bring in an industry expert if you can afford it and give your customers insights into how they can be more efficient. Think of this as an investment in staying more relevant and valued by your customers.
  • Sales need a new mission, and it involves creating account-by-account retention plans that concentrate on their unmet needs. Instead of just sending your sales reps in to buy lunches and schmooze just to keep your company’s name in front of clients, take the time and make productive use of it instead.  Start by mapping out where clients’ goals are relative to additional services, knowledge, and expertise your company can provide. If incremental services revenue gets generated, that’s excellent.  The point of this is to develop retention work-out plans on an account-by-account basis so your company stays in the role of serving your clients.  Making contributions, even if they are over and above what is paid for, is what needs to happen on these account-by-account retention plans. 
  • Develop service, product and development strategies that align with account-by-account retention plan needs.  Taking this approach groups the top priorities by account so that when a single strategy, say for example creating programs for enabling them to take better advantage of your products to generate new business, so it can be done once and delivered many times over your customer base.  Taking this a step further, consider how important of a time it is right now to get the knowledge in your company organized so it can be delivered to customers needing to get more from your products.   
  • Staying on target with retention plans is even more important than being tactically efficient right now.  In the case studies we’ve gone through in my classes this is the hard part, the area where company cultures really get tested on their commitment to be focused on retention and not fire-fighting.  What needs to happen in this step is to concentrate on retention plans, aggregating together plan requirements and executing on them fast. 
  • Customer-defined outcomes are all that really matter in retention plans, so stay clear of overcomitting.  This is one of the lessons learned from P&G and their turn-around several years ago.  Retention plans involving their channel worked because they focused not on the internally-derived project plans but on the timeline that made the most sense for their customers, despite the challenge this put P&G through.  It was worth it however.  P&G held onto their channels in the midst of a major re-organization and also had the ability to launch products globally at the same time with greater accuracy than ever before. 

  • Transaction-driven sales reps must embrace the role of teaching over selling for customer retention to work.  This is the really hard part of any customer retention strategy.  Good sales reps are wired to exceed quotas and spend every waking second thinking about how to accomplish this. Retention plans need to be rolled out so that sales reps see the long-term value of holding onto these customers.  Only then will the hard work and little immediate gratification of commission earned work.  Also, there needs to be a VP Sales-level ownership and support of the program to make such a big cultural shift in a sales organization.

Bottom line:
Retaining customers isn’t about pricing, bundling or gimmicks.  It’s about getting your company so engrained into their unmet needs through the use of retention plans and the excellent execution that your company becomes essential to their success. As rewarding as companies at times find firefighting because of the “quick fix” satisfaction it provides, does nothing to actually hold onto customers.  Investing time in tailoring specific retention plans that deliver results does.

Keywords and Customer-centricity

JT in Berkeley very small By John I. Todor, Ph.D., author of Get with it! Practical Ways to Use Web 2.0 in Your Business.

Alvin Toffler, the futurist, coined the term ignorage to define something that was once true but, due to change, is no longer so. The problem comes when people suffering from ignorage continue to make decision based on the old logic.

Here is a good example. A company in the environmental technology space decided to build their brand around the phrase “clean technology” and upper management explicitly directed marketing not to use the word “green”. Consistency is a fundamental principle in the building of brand recognition.

Marketing hired an AdWords consultant to run a campaign for them. They set a daily budget and told the consultant to go forth and generate leads. If you are not familiar with Google AdWords, here the gist. You select the keywords that you think will attract customers (people doing web searches) and put them in your adwords advertisement. These ads are the results that show up on the right hand side of search pages. Google places your ad on the page if the searcher uses the keywords you have selected. When you set up your AdWords campaign you bid on the keywords. The higher your bid and the higher the ad’s relevance to the customer’s search, the higher your ad’s position on the page. Every time someone clicks on the ad, Google charges you the price of the bid. When you have spent your daily budget, Google stops placing your ads.

In this case, one of the keywords the consultant bid on was “green technology”. He also put the phrase “green technology” in the ad. This attracted customers and their clicks quickly used up the daily budget and, of course, generated leads. When management discovered that the word “green” was used in the ads, they strongly objected and told the consultant to take it out or lose their business.

Without “green” in the ads the number of clicks by customers searching declined so dramatically that they never spent the daily budget and the number of leads generated dropped to one-half of what it was when “green” was included. The consultant had to double the bid so the ad would be placed higher on the page in order for the daily budget to be maxed out. But, this still generated half the number of leads.

Here is where ignorage comes into play. People search for the phrase “green technology” nearly twice as often as they do “clean technology” when looking for environmentally friendly products. This means that the keywords you choose need to be the ones potential customers use, not the ones your company decides will represent you brand. Customers dictate what works in online marketing and one way they do so is through the words they use (think keywords).

The terms potential customers use and look for in ads reflects what is relevant or meaningful to them. The company-centric thinking that tries to define the terms that reflect their brand in today’s marketplace is wrong-headed and expensive. Customer-centric thinking requires an outside-in perspective. They should be asking “what are customers thinking about, what terms do they use?”

How can you get an answer to this question? Here are two free online tools: www.google.com/trends and www.blogpulse.com. Both will let you compare the frequency that terms (keywords) are used. A comparison of “clean” and “green” clearly shows that “green” is the term of preference—nearly two to one.