While companies work hard to acquire new customers, they do not put the same amount of effort into retaining their existing ones. Whether that is due to a lack of customer data sharing or a failure to maximize their current relationships, the bottom line is economic loss.
Business Gain From How You Retain: Addressing the Challenge of Customer Churn & Marketing Burn, a new thought leadership study undertaken by the Chief Marketing Office (CMO) Council in partnership with CSC, IBM and Dun & Bradstreet (D&B), identifies what deepens, solidifies and perpetuates customer relationships. More than 450 marketing executives worldwide, along with CMOs from 19 leading international brands, contributed to the findings.
"Beyond making intuitive sense, retaining customers makes economic sense," says CSC’s
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Alexander J. Black, Senior Partner, Strategic Services Group. Regardless of whether a company sells to businesses or consumers, what’s most important is the ability "to measure retention and churn, identify root causes and either proactively intervene or reactively try to save or win back customers."
Even when marketers can identify the necessary steps to retain customers, they simply do not have the means to implement those plans. While the study shows that nearly 50 percent of respondents report that improving front-line customer service helps them retain customers, only 55 percent acknowledge access to real-time customer data. And once a customer is lost, say nearly 67 percent of executives, there is no system for getting that person back — even though acquiring a new customer can cost five times as much as retaining an existing one.
According to the study, all companies share the same goals: to improve efficiency, grow revenue and increase profitability. But lack of customer knowledge, combined with a dearth of customer data sharing policies and practices, results in costly customer churn.
"Companies must build knowledge about their customers so they can understand which are valuable and which are not," says Black, "and then offer them the most appropriate sales and service treatments." Unfortunately, most companies have no formal Customer Data Integration (CDI) or Master Data Management (MDM) programs, according to 75 percent of CMOs.
Black lists three areas in which companies must excel: Customer Information Integration, Customer Insights and Insights Operationalization.
"The CMO should own the customer intelligence agenda of the business," he says, "since they are responsible for customer acquisition and, to a large degree, retention."
