One of the prerequisites to creating a successful customer partnership is to manage and eliminate the need for external reinforcement. This helps both you and your customers to take positive actions.
Two key drivers of attrition for products and services are:
- Incorrect fit
- Insufficient education
An incorrect fit arises from acquiring a customer who is not best served by your product or service. In other words, you should never have gotten into a relationship with them in the first place.
Insufficient education is when a customer does not fully understand the benefits and features of your product or service provides. For example, do they know when you will charge them and do they know why that charge is more than reasonable?
The need for external reinforcement is a customer activity that is aimed at maximizing the available knowledge on both these dimensions from external sources. And if you let the customers do this themselves, then you’ve already lost the battle for conversion and engagement.
Higher attrition has been proven to be very expensive when the full initial costs to acquire a customer are factored in. A customer centric approach drives both attrition rates and acquisition costs down. I call this approach that of “informed acquisitions”. This technique helps evaluate fitment and benefits while providing insights into the retention strategy as well.
Think about it, on one hand, marketing and promotions are aiming to become more targeted. On the other hand, in an age where we are just getting bombarded with information, it is challenging to even secure a customers’ attention to evaluate and buy your product. We developed product selectors to meet this need but how do we get customers to use them? What if the customer doesn’t need the product at all? Or when the product is a fit but not as beneficial considering the broader customer relationship?
The potential for great customer interaction and engagement is maximized when the customer knows that parameters such as existing relationships and usage patterns are being considered. That means that we are not starting conversations from scratch every time. We must provide value maximizing alternatives to achieve differentiation. In addition, the developing of trust in the selection process also leads to generation of additional and valuable customer information – we might get to know what they have today, why they didn’t choose us before, what their friends have, and the list goes on. This information can be further used to mutually maximize the relationship value, eventually triggering a positive reinforcement cycle.
When companies take action to help a customer decide and mitigate the risks of buyer search and decision fatigue, they win. Salient examples are Amazon’s product recommendations and partner platform, Apple’s iTunes ecosystem, Wal-Mart’s site-to-store program, P&G’s Pampers community and the OPEN & Take Part forums by American Express. All of these have knitted the most common user interaction needs under a common fabric. The resulting ecosystem gets stronger as it executes, and drives the very user behavior that is needed to strengthen them. There are indeed several other examples and many others are evolving in the right direction of developing an integrated customer ecosystem. Identifying the right approach, resolving to create customer value, and identifying partners that will help create the ecosystem is the important first step. While short term metrics cannot be ignored, developing a plan for the ideal to-be state is a must.