A Customer Retention Strategy Built on Best Practices


  • A customer retention strategy improves short term revenues and creates a multiplier impact to long term company growth. Keeping your customers is an imperative to achieve a sustainable growth business.
  • Customer churn can be a perplexing topic. However, research brings clarity to the problem and the most direct and effective solutions.
  • Lowering customer attrition requires a holistic process to identify the specific reasons customers leave, detect the underlying root causes and swiftly deploy proven methods to eliminate the causes at the source.
Johnny Grow Revenue Growth Consulting

How the Best-in-Class Improve Customer Retention

My mother sometimes quoted the adage, "Make new friends but keep the old. One is silver the other is gold." I think this quote also applies to customer retention strategies.

For many companies, lowering customer churn is the new business growth model. Here's why.

  • Research from Earl Sasser of Harvard Business School and Bain & Company found that increasing your retention rates by 5 percent can increase your profits by 25-95 percent, due largely from the two-fold effect that existing customers spend on average more than new customers and require much less costs to serve.
  • Bain & Company research also found that a 10 percent increase in customer longevity results in a 30 percent increase in company value.

But systemically keeping customers longer is easier said than done. The causes of customer churn are complex. That's why we apply research to quantify the problem and organize a simplified and accelerated response.

To achieve lasting improvement, you need to know both the customer stated reasons and underlying causes of customer attrition. Only then can you implement methods that directly solve the problems.

The Johnny Grow research report, Customer Service Excellence; What Best-in-Class Leaders Do Differently Than Their Peers, identified the top reasons customers leave vendors, and the customer retention best practices applied by the Best-in-Class leaders (the top 15 percent).

Customer Retention Best Practices

See the reasons customers churn, and the customer retention best practices to reduce attrition.

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Johnny Grow applies a precision approach to helping clients keep their customers longer. We identify the specific reasons for customer churn by industry and then leverage the preventative methods and best practices used by the Best-in-Class leaders. Below are some extracts from the research and our methodology.

Poor Customer Service

The causes of customer loss are generally symptoms of underlying problems. 60 percent of customers that left vendors cited poor customer service. However, customer service is a response to an underlying problem, not the source of the problem.

Nonetheless, customer support is the backstop to customer turnover. Good customer response solves the customers problem and routes the problem back to the origination point for root cause analysis and resolution at the source.

Really good customer response solves the customers problem on the customers preferred device and channel, operates as a profit center, offers fee-based premium services (i.e., concierge, SLAs, entitlements) and measures the financial impact to customer lifetime value and company revenues.

Poor Business Outcomes

54 percent of customers that left a vendor cited poor or declining business outcomes. When a company's products or services do not deliver results for their customers, attrition is inevitable. Below are a few of the factors and resolutions to remedy this situation.

  • Market fit. Poor business results are often due to poor market fit. When companies acquire customers outside their target markets it's not unusual that their product effectiveness or value declines.

Selling to the wrong customers will increase cost to serve, drain company resources, damage the brand and incur attrition. The solution to reducing customer loss from poor customer-product fit is to identify and acquire only those customers who will benefit from your solution.

Understanding your customers' needs, clearly communicating the problems you solve, pursuing customers that align with your ideal customer profile and properly qualifying leads are steps to acquire customers that will be successful, buy additional products and refer your company to others.

  • Onboarding. If customers become overwhelmed, are not sure where to start or cannot figure out how to benefit from your product or service, they either use a reduced scope or won't use it at all.

Customer onboarding programs deliver clear and often prescriptive steps to achieve customer objectives. These programs may be automated with welcome emails, product tutorials, self-service knowledgebases or community forums.

Or for a more personal touch they may be delivered by an account success team, customer service staff or other folks. When done well they are instrumental in accelerating the customers Time to First Value (TTFV), increasing customer lifetime value (CLV) and lowering customer churn.

Poor Quality

Haphazard or siloed retention methods are like pouring water into a bucket with holes. You can keep filling the bucket, but a better approach is to patch the holes. For companies with high customer attrition, product or service quality is quite often one of bigger holes.

There's no magic bullet here. The solution is likely to include better quality management programs or more rigorous quality assurance and testing. While an investment is required, the payback of quality improvements is quick and significant. Defects resolved during the development process cost an average of 8X less than resolving them once the product is in the market.

Techniques to identify and measure quality problems include quantitative measures such as customer health scores and customer satisfaction (CSAT). You should also gather qualitative feedback such as Net Promoter Score (NPS) and Voice of the Customer (VOC) programs.

Superior Competition

While only 19 percent of customers cited a better vendor alternative as their cause for defection, this factor is still a cause for concern as you can do everything else right and still lose the customer. Here are two most powerful methods to stave off competitors.

  1. Continuous Innovation. If you are achieving customer expectations but still incurring turnover, it is likely your products or services have been surpassed by competitors. Customers expect and will pay a premium for innovative products and services. Give serious consideration to more formal innovation programs.
  2. Customer Relationships. Another extremely successful backstop to keep competitors at bay is to grow customer relationships. CRM software is essential to automate, measure and improve customer relationships at scale. However, CRM software is only a tool. It does what it's configured to do and no more. A CRM strategy designed for customer retention is needed to prioritize customer relationship objectives and apply prescriptive methods in the CRM software for execution. Without CRM strategy, the software is largely aimless and relegated to little more than a customer data management system.

Other techniques to aid this challenge include top of mind awareness programs such as customer engagement strategies, nurture campaigns and loyalty programs.

Poor or Declining Value

There's often a knee-jerk reaction to cite price at the cause for customer attrition. However, the research shows otherwise. Only 9 percent of customers cited value or price as the cause of their departure. That kind of makes sense as if the price was not acceptable the customer would not have made the initial purchase.

Nonetheless, product or service value is too often vague. It's up to the vendor to deliver a clear and compelling Unique Value Proposition (UVP) and assure that value does not become fleeting over the life of the customer relationship.

Price and value still count but once the customer is acquired, they take a back seat to other factors that are much more influential.