ISO Practices Committee Insight: Customer Retention – Three Keys to Consider

Jenn Reichenbacher
August 1, 2013 – Did you know that it’s six (6) or seven (7) times more costly to acquire a new customer as opposed to retaining an existing one? In fact, research from Flowtown notes that by increasing retention rates by as little as five (5) percent, businesses can realize anywhere between a five (5) and 95 percent rise in profits. These statistics may be shocking to some, especially as the drive to acquire new customers continue to demand much of the focus in most businesses, but the facts don’t lie – customer retention strategies are key to success!

For ISOs and their merchant customers, retention strategies should be a key element of your annual business plan, whether executed through sales, operations or a dedicated account management group, accountability around retention needs to be quantified with specific campaigns dedicated to keeping the customers you already have.

As you set forth on establishing new plans or refining existing ones, following are three keys to consider.

Establish Goals. I mentioned it earlier, but setting quantifiable goals and metrics is key. And, in order to do this, you have to know where you are today in terms of number of customers, retention/attrition rates, and what your leadership team feels are success goals. This is not an area where you a) want to pull numbers from thin air or b) make them an unattainable reach. After all, these goals are great drivers for performance based incentive programs or even internal contests to recognize key contributors from the staff, so know your data and set progressive, yet attainable goals.

Measure Progress. For small businesses, this may be a simple spreadsheet with customer names, contact, sign-up date and length of time as a customer. For more sophisticated businesses, key customer data and communications should be centralized in a customer relationship management (CRM) tool, giving you a holistic view of your entire customer base in terms of who they are, what they buy from you, how long they’ve been with you and how your organization is communicating with and supporting them. Additionally, most CRMs offer integrating reporting, so metrics can be established and tracked seamlessly in one place. As a business owner or key stakeholder, who would not want to see a daily report on retention (or attrition) automatically delivered to their inbox each morning – this is easily doable with many of the CRM tools available today.

Know Your Customers. Regardless of what type of tracking system you employ, know your customers. Look for commonalities in terms of personas and/or buying trends. Leverage sales, customer service and other staff members to ask engagement questions during any and all interactions and then take that feedback and use it to drive product innovation, operational changes and even marketing strategies. In this area, data is power and the organizations with the most usable – data does no good if it’s not integrated to and supporting/driving other initiatives – will win in terms of both customer satisfaction and retention.

Customer retention comes in many forms – for many of us, as consumers, it’s in the form of loyalty programs and incentives or rewards. In the world of B2B, customer retention is just as important and must be an area of focus and accountability for the entire organization!

[spacer height=3] [divide] [spacer height=3] Jenn Reichenbacher is Director of Communications of Merchant Warehouse and a member of the ETA ISO Practices Committee

The views expressed in the posts and comments of this blog do not necessarily reflect those of ETA.