Analyze Your Customers

Here is our third installment of this weeks’ series focusing on Test-and-Learn methodology. Today it’s all about how to maximize the relationships you already have with your customers.

Idea 4: Grow Your Customer Relationships

Continuously test campaigns to leverage your relationships with your customers. Assess if each of your customers is using as many products as possible from you as they possibly can be. Ask yourself these questions:

• Are you their primary supplier of services?
• What are they buying from you?
• What are they buying from your competitors?

Again, by focusing on your customer database, you can determine the next best product to offer your clients. Plus, you can continue to enhance your relationship with them by recognizing their value to you by offering them loyalty programs that cause them to give you more business (making you happy) and give them a discount or reward for giving you the business (making them happy).

Cross-sell and up-sell programs are instrumental in making each and every customer relationship as profitable as possible. The added side benefit is that the more products that an individual has with you, the less likely they are to leave you. Which is a great segue to the next Test-and-Learn idea.

Idea 5: Evaluate Your Retention Program

How long has it been since you’ve looked at your retention program? Are you focusing efforts on the right customer segments? Do you consider life-time profitability when you are determining which customers to focus ‘save’ dollars on?

We’ve seen too many times that companies treat their entire portfolio the same. Perhaps it’s time to ensure that you are focusing retention efforts on customers who are likely to leave you, and who also are highly profitable. And, if you can isolate this group, think creatively about new and unique loyalty programs. It’s so difficult to get a new customer, make sure that you are doing all that you can to keep the good customers you already have.

The following chart is an excellent representation of how you can matrix profitability against likelihood to defect to help you figure out where to focus your retention budget.  We believe that the bulk of your retention dollars should be spent on the top right quadrant–those customers who are not only highly profitable, but who are also highly likely to churn.

Prior Test-and-Learn articles:

Idea 1: Evaluate Testing Strategies for New Customer Acquisition Programs

Idea 2: Get Your Analytical House in Order

Idea 3: Integrate Your Data to Understand Your Customer Relationships