Perfecting Service Management

Issue #32

Tuesday, November 25, 2003

Preserving a Healthy Customer Base

by Will O'Keeffe

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 business."

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?
by Craig Bailey

I recently visited the web site for the Association for Service Professionals ( 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 agent/project leader.

The scope of this project would include, but not necessarily be limited to:

  • 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 bugs.
  • 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?
Recommended Reading


Past Customer Centricity Newsletters

Recommended Reading
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 center.
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 possible.

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