More Thoughts on Customer Retention

January 19th, 2016
Steven Howard

Time to make CRM mean Customer Retention Marketing

Over the years, I have written about customers being hidden assets of an organization.

Hence, you can imagine how aghast I was recently when walking through an airport and coming across a poster for a software company that read:

“Customers are an investment. Maximize your return.”

Not surprisingly, this company was touting its CRM (customer relationship management) software solutions.

Customers are not an investment!

Customers are the lifeblood of your organization. As Henry Ford once said, “it is not the employer who pays wages, he only handles the money. It is the product that pays wages.” If I were to paraphrase Mr. Ford, I would say that “it is the customer who pays wages.”

To me, this whole approach to CRM has been wrong. So I was not surprised to see a company that sells CRM software thinking of customers as an investment, rather than as an asset.

Think about it. Customers do not want their relations with organizations “managed” by the other partner in the relationship.

“Managing” a relationship seems like a contradiction in terms. Do you “manage” your relationship with your spouse? Do you “manage” your relationships with your children, your best friends, your colleagues? I should hope not.

Equally as important, do the other parties in these relationships “manage” their relationship with you? I should doubly hope not.

Rather, in each of these personal relationships, you engage in (hopefully) mutually rewarding, forward-looking activities based on two-way, interactive communication.

Why should one’s relationship with an organization be any different?

Customer Relationship Management is a misnomer.

Which is why it is not surprising that CRM initiatives at many companies have failed. According to an article in CIO magazine, “an AMR study shows that, to date, only 16 percent of CRM initiatives have returned value. The balance has been unable to show returns or failed outright.”

In the past, most industry articles about CRM talked about the benefits of using this technology to cross-sell existing customers new products and services, in order to “deepen the customer relationship” with the organization. What companies have apparently started to learn is that customers do not define their relationships with organizations based on the number of products or services they purchase from each institution.

Instead, customers define their relationships with organizations on how they are personally treated and by how the products and services delivered meet their individual and unique needs, wants, and desires.

Recently, I have noticed more industry articles discussing the benefits of CRM software and technology as enabling organizations to “sort good clients from bad,” as one recent headline in the Australian Financial Review stated. As one article in the AFR’s review of CRM software said, “Companies want technology that ensures a flag goes up in customer service when a high-value customer comes in to ensure red-carpet treatment.”

With this approach, it seems that some companies are starting to recognize customers as an asset, not an investment on which to maximize returns.

CRM technology should be used to build, earn, reward, and keep good customers loyal to your organization.

Perhaps it is time to change what the acronym CRM stands for. Hence forth, let’s forget CRM as we have known it in the past, and start thinking of it as Customer Retention Marketing.

After all, Customer Retention should be the art of keeping good customers.™

CRM technology should be used to help you develop and practice this art by being a tool of your Customer Retention Marketing focus and philosophy.

KEY POINT:  start thinking of CRM as Customer Retention Marketing.

TAKING ACTION:  what tools do you use for CRM programs? How can these be used better to encourage greater customer retention of your good customers?

Are you trying to manage the relationships with your customers? Why? Do you really think customers want to have their relationships with your organization managed?

Ask your staff, “Who pays your wages?” If they answer either “the company” or “our products” it may be time for a corporate culture change that embeds an attitude of “customers pay our wages.”

This article is partially excerpted from my book The Best of the Monday Morning Marketing Memo, available at Amazon in both Kindle and paperback formats.

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