Customer Retention – What is it, Really?

It wasn't so long ago, when people said "customer service," it meant a group of fairly low-salaried people in cubicles, wearing headsets, struggling to answer questions and complaints from customers.  Then came a period of enlightenment, when someone said "Customer Service is NOT a department!  It is a business philosophy and part of everyone's job!"  This is when businesses started realizing that service wasn't a nice-to-have, but something that customers expected as a baseline for engaging.  Businesses started seeing customer service as a differentiator.  This is not to say that the execution of customer service has gotten much better, but at least there is more of an understanding of its role in the business equation.

So now, in the midst of the Great Recession, the new (and misunderstood) buzzphrase is "customer retention."  And guess what?  History is repeating itself!  Surprise, surprise.  "Customer Retention departments" are popping up everywhere.  But they are often used like relief pitchers in a baseball game, brought in to "save" a situation.  This is NOT what customer retention is all about!

When a customer is irritated, frustrated, unhappy, or downright angry, he or she is now frequently transferred to a "customer retention specialist," whose job it is to placate the angry customer, perhaps throw him or her a bone, and salvage the business relationship.  Technically, I suppose, this does define customer retention in some sense.  But in reality, giving an employee a script on how to try to keep a customer from leaving your business is a far cry from what customer retention is all about.

Like customer service, customer retention is NOT a department, but a philosophy.  It is not about "salvaging" a business relationship.  It is about solidifying one.  It's not about having a closer in your bullpen; it's about having an entire great pitching staff who participate in every game.

Customer retention is the combination of things your business does for customers on a regular basis to make them not want to leave you.  Customer retention makes your business impervious to sales, discounts, deals, introductory offers, and the like from your competitors.  Customer retention is a combination of excellent customer service, regular and valuable customer communication, the anticipation of customer needs, and creating and maintaining an enjoyable customer experience.  Customer retention is something that is done all day, every day.

If you do it right, then your business won't need the "customer retention department," because customers will not be trying to close their accounts.  You may want to pick up a few more service-oriented personnel, however. Your staff will have their hands full, taking care of all the loyal, happy customers you have!

   — Chuck Dennis

3 Comments

  1. Posted July 2, 2009 at 11:48 AM | Permalink | Reply

    Chuck,
    Well said. In IDC sales engagement research, buyers tell us that while sales teams can win an opportunity through their salesmanship, many lose future opportunities based on what happens after the contract is signed.
    The good news is that it’s not the fault of the sales person or sales team. The bad news is that the problem is systemic — based in compensation practices, sales metrics and other measures, and the focus on the thrill of the hunt.
    Sales people don’t get awards for keeping accounts. They get awards for winning new deals.
    In today’s market, with the pressures of sales productivity and profitability, a renewed emphasis on customer satisfaction and customer retention is critical. It doesn’t take significant investments in new people and technology, just a shift in mindset and processes…and it’s quite amazing how a little red ink will cause this to happen!

  2. Posted July 2, 2009 at 2:07 PM | Permalink | Reply

    Congrats on the upcoming book! Let me know how I can help get the word out!
    Jeanne

  3. Dominick Branigan
    Posted December 17, 2009 at 10:32 AM | Permalink | Reply

    I completely agree with this and I really see myself working in the future within a customer retention department. My lecturer in college once told us in our marketing class that the companies of the future are those that are customer focused and those that understand the importance of customer retention. I also believe this completely and I have always developed the relationship with my clients from day one and continue providing the service they require. I also believe the product or service you provide may not be the market leader but if you can provide a customer focused service (No 1) to your clients you will continue to win there business.

Leave a Reply to Dominick Branigan Cancel reply

%d bloggers like this: