Sanity check: have you got what it takes to keep your most valuable customers?

By Stephen O'Reilly, SAS Ireland

It’s often said the definition of insanity is doing the same thing over and over and expecting different results. That’s certainly true when it comes to customer retention. Many companies continue to bombard existing customers with new customer offers – and are then surprised when they defect to the competition.

Here’s an example. Over the past month I’ve received direct mails, emails and texts from companies of every kind. One of those is Sky, who put significant investment into talking to me; one direct mail even came in a nice plastic wrapper to keep it dry. Unfortunately I can’t avail myself of these great offers – they’re aimed at new customers…and I’ve been with Sky for 7 years. Yet when my subscription is up for renewal, can I expect the same overtures as new customers receive? I think you know the answer.

Of course, it’s not just Sky and it’s not just me. We’re all deluged with messages offering us free stuff and rock bottom prices if we sign up to a new account. Or there’s a plethora of offers from our current providers that we could take advantage of, if only they weren’t completely irrelevant, and so we ignore them.

As a result, many companies are not achieving the optimal customer mix they so desire. They attract low-value, prolific switchers – who take off at first sight of a shiny offer elsewhere. I’m not being cynical: a recent survey by the National Consumer Agency found that a whopping 43% of us switched at least one product or service provider in the past year, and 80% saved money doing so.

It seems that existing customers have little incentive to be loyal. In the Sky example, the best-case scenario is that I cancel my account and get my wife to sign as a new customer. Meaning Sky has thrown marketing spend down the drain: the very definition of insanity.

So here’s the sanity check: companies already have the data they need to understand their customers better than the competition do, identify which customers they most want to acquire and retain, and design relevant messages and offers to ensure success.

Companies have been collecting information about customers and their households for years: how they use their services, when and how they get in touch, how they navigate the website, what complaints they’ve made etc. And they aren’t limited to internal data. McKinsey recently pointed out the abundance of available external data – from social media, smartphone applications and industrial devices – that are a rich source of behavioural insights.

It’s being able to integrate, access and get meaningful insight from all the information that gives one company advantage over another. Held in all this data are nuggets of gold: early indicators of the likelihood of churn, potential for upselling, what offers and promotions might entice customers to stay etc.

But for many companies this data still languishes in separate systems: customer call centre data in one, Facebook interactions in another, transaction data in yet another. The secret is to bring all the data from across every customer touchpoints together and use analytics to make sense of it, to create an accurate, 360-degree picture of customers that lets you talk to them in a relevant and timely way.

Analytics is like a data-drill bit, letting you mine all that info to reveal nuggets that will help companies:

• Identify valuable customers: understand who will stay longer and spend more.
• Design relevant communications: send offers that make customers feel they’re valued.
• Reduce churn: gain insight into who is most likely to leave, and take preventative action.
• Reduce wastage: stop sending irrelevant communications that will irritate or alienate.
• Identify levers: get insight into customers’ perceptions of value, what matters to them.

To return to Sky, what if they had a customer retention strategy based on a multi-channel view of the customer? They would know I’ve called customer care, and asked questions on their website and Facebook page – and received no satisfactory answer. And they’d know it’s likely that my next interaction will be to cancel my subscription. That would enable them to call me, thank me for my 7 years of custom, and ensure I’ve got the best offers available. And they’d be able to make that call in time to stop the churn.

If you’d like to get to know your customer, you need to get to know analytics – so why not get to know SAS? Contact me on email or Twitter to find out more.