Recap: As customer success director for Strategic Technology Corp., Damon Thorogood is responsible for STC’s retention marketing efforts. One of the engagement strategies Thorogood enjoys is gift giving. He sends tokens of appreciation for customers’ business, participation in the advisory board, referrals, and the like. With a 92% retention rate among high-value customers, Thorogood is doing something right.
STC’s new CEO, Stan Wilson, introduced a no-gifts rule that Thorogood is ignoring. Unfortunately for Sherry Nolan, STC’s CMO and Thorogood’s boss, this causes a problem. She doesn’t want to demotivate Thorogood by insisting he stop gift giving, but is saving corporate gifts a discussion worth having with the new CEO?
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November winner: Derek Lackey, CEO, e10 egency
The CEO has made the no-gifts decision. He has a right to know that his CMO and head of retention believe it will cost the firm. At the same time he will learn whom he can count on and who is committed to the success of the company.
My advice: Nolan should state her opinion without being emotionally attached to the outcome. And make it clear this is only about business results; she’s in no way challenging Wilson, but is simply stating what she believes the cost of this decision will be, based on history and the facts. Nolan should suggest a solution that helps Wilson get what he wants (no gifts) and doesn’t cost the business in terms of customer retention. She should recommend a transition period to a no-gifts policy somewhere down the road. Have Thorogood stop the gifts to the customers that most likely won’t care, and wean the others off the practice. Finally, she should work with Thorogood to create incentive programs that will make customers forget his current practice of gift giving and will provide them with yet another reason to stay with the company.
Other responses:
Lawrence A. Tillinger, Proprietor, SFLI
Thorogood should be informed by Nolan (his boss) that the no-gifts rule is new STC corporate policy set by STC’s new CEO, and that it must be adhered to. It’s up to Thorogood to find new ways to engage customers.
It should be made clear to Thorogood that the success of the previous gift-giving policy, despite a 92% retention rate among high-value customers, isn’t a factor in the new CEO’s decision. Perhaps Wilson can be persuaded that his new policy might not necessarily be productive, or have the same sterling results as Thorogood’s engagement strategy.
It’s definitely worth having a conversation with the CEO, but not about gift giving.
Carlos Miranda Durand, Revenue Science Fellow, FedEx
CEO Wilson is signaling that this matter is important to him and his orders are clear, so I wouldn’t bank on this issue going away if ignored.
Ultimately, the new CEO will have to be convinced if the practice in question should continue. I suggest Nolan explore the following avenues first:
- Seek to better understand the CEO’s reasons for the new directive. Understanding the reason for it may convince Nolan that the practice needs to be abandoned. And if she isn’t convinced, knowing Wilson’s underlying interests and concerns may help Nolan reach a compromise, one that pleases Wilson and allows marketing to use gift giving under appropriate parameters.
- Consider what’s driving the excellent customer loyalty that the company currently enjoys: Is it the product itself? Is it a service experience that delights customers? If the value proposition is solid, one could argue that customers are going to stay even without those gifts that “surprise” them. Encourage Thorogood to develop the case for his idea but convey that he should refrain from the practice until it can be sold to the CEO.
- Brainstorm creative alternatives to strengthen customer retention in a world without gifts. What would customers love to receive from STC to be successful in their role (e.g., faster response times)? This exercise may help the team to visualize new options and feel comfortable with the change.
After looking into all of the above, if the CEO’s concerns can be addressed appropriately, then the idea can be re-pitched to him. But if those elements are not present, then it’s not worth a CEO-level discussion.
Michael Smith, Marketing Designer, Tri-Win Direct
It’s time to talk to the new CEO.
Customer retention through solid, ethical business practices is important, but the CEO has forgotten a critical part of sales and retention: the human factor. People are emotional and it’s important to remember that behind every brand there are human beings making decisions.
Nolan can try to make the case for Thorogood by reminding Wilson that simple, thoughtful gifts add a personal touch to business relationships. That personal touch can be the difference between a decision maker choosing company X or staying with company Y when each company’s products and offers are similar. Even the most logical people often rely on gut instincts when they’re trying to make a final decision between two similar choices. By asking for purely business-oriented retention practices, Wilson has discounted the importance of the human factor of STC’s top customers.
Bill McKenney, Senior Consultant, Global Insight Group, DST Systems Inc.
Nolan and Thorogood should first understand the basis for Wilson’s policies, especially in light of corporate ethics and the increased general scrutiny of employee behavior. While Thorogood believes his clients value and find delight in his gifts, they might be accepting them reluctantly.
There’s another reason to get in front of CEO Wilson: Understanding his reasoning will help set the stage to ask for his commitment to and assistance with making the change successful, gaining more resources for marketing, etc.
Nolan should also point out to Thorogood that high client-retention rates are rarely based on just personal relationships. The conversation should center on learning the real reasons why clients choose STC. The company likely has a lot of information on what customers love and what makes them leave. Based on a solid understanding of what clients really care about, Thorogood should then refocus efforts on other engagement strategies.
For Thorogood’s part, he should focus on 1) drafting an explanatory note to his clients to let them know of STC’s policy changes and 2) ask permission to engage with them on discussing the reasons why they chose STC in the first place (e.g. the value they see in the relationship) and what might dissuade them from renewing. Expressed genuinely, his clients will see a desire for fostering a real relationship based on listening to their needs and delivering real value, not just a superficial one.
