Preserving a Healthy Customer
This is a multi-part series presenting eight simple rules for preserving a
healthy customer base. This issue discusses two rules, with more to follow
in future editions.
Conventional wisdom has always held that keeping or renewing customers
requires fewer resources than landing new business—assuming basic service
needs are met. In most cases, that still holds true in terms of pure
dollars, but the gap between the cost of new sales and the cost of
retention is narrowing. At the same time, companies are finding it
increasingly difficult to preserve the base of customers they have. Over
time—a short time for some internet-based companies—the erosion of the
customer base severely weakens a company, damaging its market credibility
and threatening its ability to maintain operations.
By no means, however, do companies need to look at the erosion of the base
as an immutable law. Certainly some variables will be out of their direct
control, but many are not. By being aware of your customer base and
implementing a few simple tools and rules, you can begin to stave off the
erosion and build a strong customer foundation for your future.
Forecast the Customer Base
The typical CRM tool or company database will track customer contracts and
milestones and often will provide a tickler file to Sales and Customer
Service to alert them to upcoming renewals. That provides useful
information, but it usually doesn't mobilize the troops. Instead, you need
to build a customer forecasting process that becomes as critical as your
financial forecasting. The basic contract data needs to correlate with
field information—from Sales, Customer Service, Finance and Operations—to
provide a truer picture of the state of the customer. For example, are
they about to file for bankruptcy, is an acquisition looming, or are they
about to face lay-offs. The benefit of this approach is that it not only
gives you visibility into contract dates and issues, it will show where
intervention is needed to keep customers on-board, sometimes ahead of
contract end dates. The outcome of the forecast update and review should
be a set of actions designed to keep customers on board.
Avoid the Free Agent Dilemma
Use the forecast to establish a program for starting the renewal process
3-4 months ahead of a contract's expiration. Waiting until the last minute
causes you to lose any advantages you may have had as the incumbent and
virtually guarantees that the bid will be competitive. Also, customers
feel that the wait indicates, "You don't care" or "don't want our
The next article will present additional rules for preserving a healthy
customer base. If you want help preserving your customer base, feel free
to contact us.
Bug Fix Promises?
I recently visited the web site for the Association for Service
and found, in their ASP Forum, a question whose answer I thought would be
relevant to our readership. An ASPOnline member asks the following
question, to which Customer Centricity provided an online response:
Question: "My support team would like to give customers a firm date when a
new bug will be fixed. However, our developers say they can't make
promises and may decide that some bugs just aren't worth fixing. How can
we persuade them to be more responsive?"
Answer: At its core, this is a management problem.
As hard as the customer service (front-line) personnel and supervisors try
to establish "relationships" with development to obtain this information,
this is only effective on an individual case basis. What is required is an
over-arching management process that ensures consistency in delivering
service to the customer.
The first step is for senior management of Operations/Service and
Engineering/Development to agree that it is important to be able to set
customer expectations for bug fixes. With this agreement established, they
then need to co-sponsor a project to create a process for managing bug
fixes. They must create a team, made up of a few subject-matter-experts
from Operations and Development, and identify a qualified change
The scope of this project would include, but not necessarily be limited
- How bugs are logged by the service organization
- How priority/severity is set by the service organization
- How bugs are "handed off" to the development organization
- Establishing service level agreements for how promptly development
will provide a "commit date"
- Defining management reporting to track the performance of the
development organization at fixing bugs
Finally, it must be realized by the service organization that:
- Where there is software there are bugs. Customers understand this
too. They simply want to feel comfortable that when bugs do occur, their
expectations are properly set and met, and the software provider is
continuously improving its practices to minimize the occurrences of
- Not all bugs will be fixed. Each bug requires some level of
investment. To the extent that the service organization demonstrates
customer or revenue impact, the more likely that the development
organization will invest precious resources to fix the bug.
The above process can be defined and put in place within 30-45 days,
but only if the senior managers of the organization are committed to
resolving this SERIOUS customer satisfaction and retention issue.
If you should have any questions related to this topic, or would like to
learn more about how Customer Centricity can help, feel free to
contact us. To review all responses provided by members of ASPOnline,
to the question "Bug Fix Promises?" you can visit:
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Preserving a Healthy Customer Base
Bug Fix Promises?
Past Customer Centricity
In past newsletters, we have discussed several ways
to approach cost-cutting while maintaining or improving customer
satisfaction. In the Call Center Magazine article
"The Contradiction in Every Call Center"
Keith Dawson discusses this issue in the specific context of a call
Read full article
About Customer Centricity, Inc.
We strengthen overall company performance through
better service delivery and management.
We boost efficiencies in front-line customer service and technical support
teams, order processing, fulfillment, field service, logistics and other
key operations functions.
In short, we align the resources of your organization to exceed your
customers' expectations in the most effective and efficient manner
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