The components of loss and retention

Posted by Dave CollinsDigital Marketing

Retaining customers has a lot in common with getting more exercise. We know how important it is, we sometimes feel powerless to affect it, and it often takes a crisis to make us actually do something constructive about it.

One of the reasons for this is the apparent lack of tangible data points for us to latch on to.

Every Wednesday evening I go climbing, and I admit that it sometimes usually takes a lot of willpower to get myself there. For instance I might have to weigh up the pleasure of putting my feet up and watching TV with my wife, with driving half an hour in the rain to ignore the screams of my muscles and tendons while I haul my body up an abrasive, cold and very unfriendly climbing wall. If things have been busy (they usually are) and I’m feeling tired at the end of the work day (I usually am), then the couch makes a far more compelling case than the climbing wall.

If, however, I knew that every minute I spent climbing improved my quality of life by X and extended my probable lifespan by Y, while the couch-and-popcorn option decreased them both by the same amount, the decision may be easier. In theory at least.

Many people take exercise and a healthy lifestyle a lot more seriously after a health scare, yet the benefits of doing so remain the same. Only the perception of the value changes.

Losing a customer may be based on any number of possible factors, and every product will have its own unique mix. Yet most products would see an overlap of common reasons that would include need for the product, performance, price and support.

Crucially, these are not of equal importance. Let’s consider an example.

As a long-time user of Evernote, I can’t imagine switching to a competing application, even though there’s no shortage of options to choose from. This doesn’t mean that I would never switch – far from it.

If I were to assign a value from one to five for each of the above aspects of Evernote, where one is the least happiest and five the most, I would probably apply the following:

Need for product – 5

Performance – 5

Price – 5

Support – 3

If I were then to combine these to produce a happiness index, I wouldn’t simply add the figures together, as I believe that my need for the product is by far the most important, and the performance is of greater relevance than the price and support.

So my happiness index formula might look something like this:

The formula for happiness

The interesting aspect of this is that provider of the software, in this case Evernote, has the potential to directly influence any of these factors. So when it comes to retaining me as a customer, they’re as far as you can get from powerless, and in face are in almost complete control.

If Evernote take the time to understand me – my needs and how I use their software – they can clearly identify that all things considered equal, it makes the most sense for them to focus on my need for their solution. Note that this doesn’t necessarily involve adding more features – I’m already happy with what I have.

Assuming I’m consistently happy with the software – how I use it, what I can do with it and how it performs, then a small (reasonable) price raise won’t push me away from the product.

If, however, the performance of the software plummeted dramatically in a future release, this could turn into a far more significant issue for me, especially as I don’t rate their support too highly.

Being able to identify and quantify the happiness factors for the majority of your customers is of immense importance. It allows you to not only focus on retaining your customers by directly addressing their needs, but also in effect provide a road map for expanding your customer base by building on your existing strengths.

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