You’ve done it. The customer is sold. Now all you have to do is keep that customer happy and move on to finding the next new customer, right? It sounds simple, but why then do so many companies battle with attrition? They no sooner have signed on the customer than they’ve lost him to a competitor’s lower-priced offer or latest bell and whistle. How can companies do better at creating customers for life when they’re struggling to hold on to them after the first three to six months? Therein lies part of the answer.
There’s an old saying: “As the honeymoon goes, so goes the marriage.” One could look at customer relationships in much the same way. The “honeymoon,” or first six months of the relationship, is when a company has its best shot at establishing a firm foundation with its customer, one strong enough to build and expand upon year after year. But to win the heart and mind of your customer from the start, it takes a far more personalized and better choreographed approach than traditional efforts.
On Boarding. One industry that has felt the pain of customer turnover most acutely in the past decade is retail banking. As a result, many retail banks have focused on the concept of “On Boarding,” experimenting with ways to bring new customers more fully into the fold and, therefore, making them less likely to leave. Banks have recognized that the first six months represent a crucial, distinct window when they “make or break” their customer relationship.
According to research from the Bank Administration Institute, more than 80 percent of cross-selling happens in the first six months of a checking account being opened. Banks learned that when they converted new customers into multi-line users within those first 180 days, they were far more likely to stay with the bank for the long term. Attrition rates rose drastically among customers who did not buy in across product lines in that time.
Other industries are making similar discoveries. Companies in telecom, travel and hospitality as well as online retailers are finding that it’s simply too easy for customers to switch. Fed up with spending twice as many marketing dollars to keep attracting customers than what it takes to upsell existing ones, companies across industries are looking at the On Boarding practices of retail banks to improve their early cross-sell capabilities and long-term retention rates.
Running aground. On Boarding programs have been around for some years, but results have been mixed at best. Why? Anyone who’s been a new customer of a bank, phone or cable company will tell you that in those first months they’re inundated with offers – some relevant, others not. Every product line manager in that company wants a piece of the best customers. What results is the “dump truck” effect, where multiple offers are pushed out indiscriminately to these customers along a set corporate timeline. Tier-two customers often are ignored. In either case, customers inevitably tune out all of the company correspondence because experience has shown that most of what they get doesn’t apply to them.
Unique 180-day programming. But marketers have learned from these experiences. They are creating nightly-run programs that combine customer behavior, life cycle and preference data to deliver unique communication that speaks to the individual customer’s needs and wants. Assisted by new, on-demand technologies that enable triggered, versioned communications, companies can deliver a different communication to each customer. What’s more, the communications can be delivered over various channels based on customer preference and time sensitivity. These programs tell the customer, “Hey, we know you, and here’s how we can help you specifically.”
To capture customer preference more accurately, many companies are adopting Web customer preference centers to let customers specify their product areas of interest and their preferred channels for contact – even their preferred frequency of contact. Customers who take the time to input and update their preferences have an enhanced sense of satisfaction and loyalty.
Companies implementing the new generation of On Boarding programs typically see results in as soon as 90 days. These programs improve attrition up to 15 percent, improve the product ownership ratio up to 20 percent and improve customer response rates by three to five times.
