The Client Retention Lifecycle - The Role of Each Department
Client Retention is a company concern and should not be delegated to a single department. We discuss the client retention framework and each department's role.
CLIENT RETENTION STRATEGIESCHURNCLIENT RETENTIONMARKETING DEPARTMENTSALES DEPARTMENTCUSTOMER SERVICE DEPARTMENTOPERATIONS
Customer acquisition was once considered the holy grail of metrics that would determine the success of your company. All the time, effort, talent, and resources went into figuring out how to get a hockey stick growth curve. Unfortunately, companies took too long to figure out that client retention was equally important. By the time they came to that realization, all their marketing and sales efforts were gone. Not only lost but the bad experience these former customers had, turned into the brand reputation being damaged forever.
In our last blog, Customer Churn the Struggle is Real, we discussed the devastating impact that customer churn can have on a business. Today, we are going to discuss the role each department must own to improve customer retention. In our next blog, we are going to share proven strategies that can reduce churn to the lowest possible level.
Every business will always lose customers, that is inevitable. Your customer’s business is always evolving and often in a direction that will not involve doing business with you. Companies often change vendors when they merge with other organizations or have a management change. The new managers prefer to use vendors with whom they had prior experience. Of course, when a company goes out of business, they no longer have a need for any vendors.
Losing a client, for these reasons, cannot be helped. But if your attrition rate is over 10%, you are losing clients for other reasons. In our last blog, we pointed out that over 70% of the time, a client churns due to a bad experience or that they feel underappreciated by a company. Trying to replace clients, who have churned, costs a lot more time and effort than simply implementing strategies that will help retain them.
Most companies charge one department with the responsibility of ensuring customer satisfaction and for keeping them as clients. The Customer Support or Service Department is expected to meet the needs of a client through a timely resolution of any issues or problems that arise. This philosophy, of just dealing with the problem, is a 1900s mentality and will result in a loss of market share.
Today, it is critical that every person who interacts with your product, or service, feels they are valued, and their voice has been heard by the company. They need to be engaged before any problem or issue arises. They need to be nurtured and cared for with the same degree of intensity that was shown when they were a prospect.
In short, a company needs to implement a growth management philosophy, where every person in every department is responsible for nurturing and committed to retaining the client. When this becomes the standard of care by a company, the problems and issues lessen, client retention improves, and revenue and profitability increase.
Before we delve into client retention strategies, it is imperative that we examine and discuss the role of each department in the retention lifecycle framework.
Retention Lifecycle Framework
A growth management philosophy means that the retention lifecycle framework is owned by every person, in every department, from product development to customer support. Each individual has a duty to take proactive measures to enhance the customer experience. Everyone is accountable for identifying any issues, problems, or concerns that may impede a customer’s experience. They are empowered to act as advocates of the client to ensure a resolution of these issues; hopefully, before the client is even aware there was one. This approach values the current client as much as the next prospect.
The customer support discussion needs to be elevated in each department and given the priority that will change the mindset on how customer relationships are seen. First, there should never be a time when the customer or their representative is spoken about in derogatory terms. I have seen companies that had an internal Slack channel that spoke horrifically about customers and their employees. While a customer is not always right, they always should be respected. Every person in a company needs to use the Golden Rule (treat others as you wish to be treated) when speaking or dealing with any customer, both in direct and in internal communications.
NOTE: Having a customer who is disrespectful, or intolerant, of your own employees is never acceptable either. If that occurs, the senior management of the company needs to be made aware. If the problem is not immediately corrected, fire the client.
The customer experience needs to be elevated in each department and given the highest level of priority. While any issue should be immediately addressed, each week each department should have a stand-alone meeting to discuss any customer issues or present ideas on how to improve customer engagement.
Each department head should have a stand-alone meeting each week to discuss any customer issues or present ideas on how to improve customer engagement.
Do not try and add the customer support discussion to any existing meeting, as it will never receive the attention or importance that a stand-alone meeting demands. At both the department level and company meeting, every person must contribute. There is never an occasion where a person has not seen something that can improve customer engagement. All points that are raised at these meetings need to be tracked for resolution and, where possible, identify the benefits the company obtained by implementing them.
Before we can examine the specific strategies that can be employed, let’s examine each department's responsibility from the ground up.
Product Development – Often, the Product Development Department operates in a vacuum. In the early stages of a company, the founder expresses their vision of the product and implements features believed to be useful to the end client. As the company matures, that vision is often shared by a Product Development team who are adding their visions to the mix. It is critical to the survival of the company that the marketplace, and your customer's influence, help determine product features. If your product does not serve their needs, it will soon be replaced by something that does.
We are not suggesting that every customer's whim be part of the product roadmap. Such an approach would lead to an unwieldy product that would soon be dropped by everyone. However, if competitors are introducing new features, it is incumbent on the Product team to stay competitive. If several clients are all expressing a change in UX/UI, or the need for an additional feature set, listen to them and determine if that should be included in the product development roadmap. I have had far too many clients who refused to listen to either the marketplace or the collective needs of their clients. The results were always a diminished market share.
Marketing Department – Marketing’s role cannot just be attracting and nurturing leads to become sales qualified, and then turn it over to the Sales Department. Marketing must own the entire lifecycle. This chart illustrates the concept that Marketing must take a company from the attraction stage to becoming advocates and evangelists on behalf of your organization.
We have previously discussed Growth Enablement with respect to sales where the Marketing Department stays involved in helping close a prospect. The Marketing department's role must extend to also owning client retention. It starts with determining what messaging each buyer persona needs to see at the customer stage, first to ensure retention, secure upsells, and finally become an evangelist. They must create the collateral and the experiences that will resonate with the customer stage of the journey.
Sales Department – During the sales process, the salesperson has created a bond with the customer and built a relationship of trust. That should not be discarded simply because they now become a customer. The Sales department must continue to build upon and expand that relationship and be a constant presence in the customer’s business. To squander that, simply because they entered a new phase in their journey, is short-sighted. We will discuss the Sales department’s exact role further in the next section, but for that to work, it is critical that management properly compensate Sales for this expanded role. How you are compensated will dictate your behavior. If a sales professional is only rewarded for bringing in a new customer, they will make little or no effort to help retain current customers. The compensation plans need to reward Sales for client renewals and upsells, so they have a vested interest in ensuring the client remains a customer. Far too often, they are not compensated for these, and as a result, the company loses that bond created between them and the salesperson. The customer feels adrift having to speak to an unfamiliar customer service person or worse a bot. When the salesperson reemerges at contract renewal time, they are seen as simply the salesperson and not as a trusted advisor or advocate.
Operations Department – Operations is often the nerve center of every business. For B2B SaaS companies, it is the department that thinks, plans and optimizes workflows, technologies, and efficiencies across the organization. For manufacturing facilities, it is responsible for getting the product produced and delivered to the customer on a timely basis. They often have the most contact with customers after the sale has occurred. An operations department that actively listens to a customer’s needs and concerns will have an instrumental impact on customer retention. They can learn how to better streamline processes, eliminate friction, and deliver a more consistent and reliable product and service to the customer.
Customer Service Department – The Customer Service Department has long been the sole remedy a client has when they are experiencing a problem with the product. By the time they reach out for support, they are already frustrated and even the best resolution is never quick enough or serves to mitigate the ill will that has developed.
With the advent of bots, even AI-assisted bots, clients feel less valued, because they are literally speaking to an uncaring machine. In most cases, the responses they receive are insufficient and just add another layer of frustration to the already tense situation.
It is almost unheard of that Customer Support has proactive outreach to clients to determine if their needs are being met, if the product is serving their needs, or other ways we can make their engagement better.
Customer Support needs to be a proactive organization to ensure that any customer who has an issue can quickly speak (yes on the phone) to a representative. Those who prefer not to speak on the phone should have the ability to communicate by chat or email. The key is they can engage with Support in the manner they choose and are able to quickly connect with a real person. I am not suggesting that bots be eliminated, but a company needs to recognize that the current technology does not replace the need for a human interface.
Customer Support also needs to have proactive outreaches and check-ins with clients to initiate conversations and build a relationship with them. People prefer to do business with those that they like, so become friends with your customer’s representatives. When issues do arise, you will find these representatives become your advocates within their company.
C-Suite – The buck stops at the C-suite. Every department and every person within those departments will only take customer engagements as seriously as the C-Suite demonstrates that they do.
The C-suite often has no ongoing role with a customer unless a serious issue has occurred. By the time they get involved, the damage is done, and the customer is usually looking for alternative solutions. Every member of the C-suite has a critical role in ensuring customer retention that goes beyond making sure their subordinates are fulfilling company policies and initiatives to serve the customer's needs. They must lead from the front by actively engaging with the clients through webinars, events, and phone calls. Imagine the boost in a customer’s feeling of worth if they received a call from the CEO who just wanted their insights on how to improve the product or the company’s engagement with them. The value of that outreach can’t be measured directly but will help the customer’s representatives feel appreciated and more likely to have a positive impression.
To improve customer retention, it is imperative that every person in the organization and every department makes a concerted effort to make their customers feel valued and appreciated. They need to look at every engagement and ask if that will have a positive impact on customer satisfaction. Internal processes should be redesigned to focus around customer needs.
When customers feel valued, they are more likely to become loyal and repeat customers, leading to increased revenue and business growth. Moreover, satisfied customers are more inclined to spread positive word-of-mouth, which can attract new customers and enhance the organization's reputation. Additionally, making customers feel appreciated enhances their overall experience, creating a sense of trust and loyalty towards the organization.
In our next articles in this series, we will discuss actual strategies that should be adopted by EACH department to facilitate the customer experience. We will examine how companies can use advanced analytics to gain customer insights, monitor customer satisfaction, build customer loyalty, and reduce churn.
Come back for part three!