Customer Retention - The Priceless Measure
How to measure the impact of customer retention and satisfaction on your business so you can maximize profitable and sustainable wealth.
The vast majority of senior executives and corporate leaders are making a dire error when measuring the happiness of their customers. They focus on worthless customer surveys and on new client acquisition to measure their ability to serve customer needs, rather than focusing on the most important measure of customer satisfaction: Customer Retention.
Improving your customer retention rate is quite simply the fastest and easiest way to create a massive positive impact on your profitability. Customer retention gives you two critical pieces of data for analyzing your business:
- It tells you precisely how good you are at understanding what customers need and delivering customer value.
- It provides you the input necessary to calculate the average customer lifetime of your customer, which in turn, allows you to calculate net new customer growth, lost revenue from customer attrition, and how much new revenue you can create by focusing on customer retention improvement.
In this video, I demonstrate and explain these concepts more fully...and provide you with step by step instruction for using my Customer Retention Rate What-if Strategic Growth Calculator™. When you use the calculator, you will discover the three-step system for analyzing your ability to create and deliver the value your customer base is looking for.
Understanding your customer retention rate, average lifetime customer value, and the levers you can pull to create more revenue from existing customers can secure your business growth and profitability during these fast moving, non-linear times.
Consider the difference between Blackberry and Apple.
Blackberry was a powerhouse of the early 2000’s when they came out with a handheld device with a QWERTY keyboard and easy access to email. However, as smarter and smarter phones became the norm, Blackberry focused on maintaining its leadership with corporate clients, rather than risky innovation.
By focusing on the wrong questions about customer satisfaction (that of the corporations and not the users), Blackberry did not notice the lifetime of a customer was declining. The company simply did not realize how many customers were falling off...and how much more quickly they were moving toward smartphones. Even the corporate clients, which were Blackberry’s bread and butter, began to buy iPhone as employees demanded the latest technology. As iPhones introduced apps that allowed employees to access any email service, fast search, and even windows programs, corporations began to change their buying habits as well.
Because of the focus of Blackberry on maintaining the status quo, they did not realize they were leaking customers at a very high rate...as Apple focused on customer wants for sleek design, lightweight phones, color and touch screens and apps.
As Blackberry shows us, managers and CEOs must first focus on client retention. You must know how well you are serving your current clients before you focus on new customer acquisition. Most corporations have this wrong…
The corporations focusing on client service and satisfaction, on pivoting quickly to meet client demand, and on providing clients the greatest experience dominate markets in fast-moving, non-linear times.
In an era of social sharing, ease of consumer reviews, and fast-paced technological advances, customer happiness is even more profitable than ever before. According to a 2016 Nielsen survey, 82% of Americans cite referrals as the #1 criteria when choosing a product or service to purchase.
Customer Retention Rate is now more urgently important than ever.
Once you complete the exercise with your team, I invite you to schedule a call with me to discuss your results and gain further insight as to how my advisory services can help you drastically improve your customer retention and profitability in these turbulent times.