The MONEY is in Retention. Start there.

Spend time and money where there is the greatest payoff. Although you could map and track the Customer Experience across the continuum of Acquisition, Closing, and Retention, the practical place to begin is Retention. It’s the sweet spot for competitive advantage and profit.

  • Few companies have anyone in charge of Retention. Perhaps, a new Retention function needs to be created.. (See our Innovation blog post: 10 innovative ways to optimize customer value.) National account teams in sales organizations may be the closest thing to what is needed now. But, here’s the difference. Focus on retention means a culture change. This change in perspective will help keep all profitable customers close.
  • What passes for Retention in most companies is Customer Service, which is generally considered a cost center, not a revenue and profit generator.
  • In the Relationship Age, re-imagine Customer Service. Move from reactive to proactive mode and from cost to profit. Proactively cultivate customer relationships and market to and through customers—for repeat and increased business, cross-selling, and for referrals and influence.

In the Relationship Age competitive advantage goes to the companies who can optimize customer behavior and profit patterns better than their competitors. Here’s how to begin:

1. Shift your focus from customer acquisition and revenue to customer retention and profit. On average, seven times as much is spent on acquiring customers as is on retaining them. Work backwards over time to acquisition and revenue. Some 80% of revenue comes from repeat business and referrals; only 20% typically comes from new customers. (In reoccurring revenue businesses, the Retention percentage is even higher.)


2. Know how value is created—or destroyed—for top priority customers like key accounts or franchise customers. Understand the effect of gaining or losing a key customer has on business profit metrics such as risk adjusted return on capital.

  • Another 80/20 rule. 20% of customers account for ~ 80% of revenue and often 100% of profit.
  • These high profit customers cost more to engage, but the payoff is HUGE. (In our starting benchmark, 3X the cost, but 16X the revenue.)
  • These high profit customers behave differently than other customers. They want to engage. They want a relationship.
  • With our new metric Relationship Value we can capture their behavior patterns to tie the patterns to profit and to optimize value creation.

3. Build more exceptionally profitable customer relationships. First, know who are your most profitable customers and why. Then map and track what it is like to do business with you. Get your distributors on board. The confidentiality of their relationships is protected with our breakthrough metric Relationship Value, while still giving both of you vital intelligence. Relationship Value is a numeric proxy for the underlying Interactions that develop the relationship. Distributors will care about this. Your sales team will appreciate not being second-guessed as well.

4. Leverage your customer relationships with Retention Initiatives in your Stakeholder Community to profit from referrals, to get support and collaboration help on your offering and to influence the conversation in Social Media. (See our Community blog post: Where are you on the Collaboration Maturity Curve?)

Customer Experience Wisdom: Profitable customers cost more to engage, but the payoff is HUGE.

Question: Are you optimizing customer behavior and profit patterns better than your competitors? Want to? Be In Touch