by Joseph Fiochetta
There are several critical times during a customer’s relationship where a decision is made–by the customer–to continue or discontinue interacting with a company. This may be the first bill, a customer service call, a retail experience, a Web site…any event that helps clarify the relationship with a particular brand, product, or service.
We call these “moments of truth” and how a marketer interacts with the customers can significantly increase (or decrease) the long-term viability of that relationship. Identifying and anticipating those points of clarify is critical to maintain and grow a profitable customer relationship.
Staying Connected with Customers
For one telecommunications leader, economic and competitive pressures were making it increasingly difficult to attract and keep new customers in a highly competitive space.
New small-to-medium-sized business customers represent a substantial economic gain to this communications services provider because these customers generate a higher percentage of cross-sell opportunities and are one of the faster growth segments in business today. But new customers typically tend to be more vulnerable to competitors and generally churn at a higher rate during the first weeks and months of the business relationship.
Within the company, customer communications were siloed–in the same way that products often are siloed–and “touch points”–points of interaction–with small business customers were driven by regulatory and budget constraints. They were not based on each customer’s actual need. For example, within the company’s old business model, small business customers received multiple contacts from various channels (direct mail, e-mail, teleservices) across various products with no integration.
A customer’s first contact included an informational and legal document to confirm an order–traditionally a generic, off-brand direct mail piece with no offer.
This was followed by a number of different welcome kits from each product category that were sent up to three months after a new customer’s service activation. In addition, customer service was not integrated into the marketing mix so contact with the customer was conducted independent of other channels.
Senior management recognized that the more services a customer purchases from a telecom provider, the less likely customers will take their business elsewhere, but the move from a product focus to a customer focus was not an easy one and required a commitment from multiple stakeholders within the organization. The shift away from how the company was organized versus how customers engaged with the brand created an impact on the organization at strategic, tactical, and operational levels.
Developing a Plan to ‘Onboard’ New Customers
Critical to success was key stakeholder buy-in throughout the process. To combat the problem of new customer turnover, the telecom performed a number of qualitative and quantitative measures necessary to realign the new customer experience.
First, three guiding principles were established to focus the plan:
- All communications should generate a measurable response so that management may tell–at an individual level, as well as at the intervention level–what worked and what did not.
- Customer-centric communications must be frequent and consistent, targeted, timed, and delivered in a manner that is most appropriate for the individual customer. Tracking preferences and behavior is essential.
- Communications should be focused on increasing “stickiness”–which is the ability to keep a consumer coming back for more. Thus, each customer’s value over the time of the relationship is tracked.
The first step was to understand business priorities and analyze and document the telecom’s current state. Through customer focus groups, data analysis, contact mapping, impact analysis, and an environmental scan across multiple industries, a “best-practices approach” to prevent customer churn was developed.
As the company set out to develop best practices in developing new customer communications, it learned that:
- The first 90 days are critical – there can be as much as a 15% to 20% “take rate” of additional products and services during this initial period.
- The sooner one can engage a customer, the better.
- Messages developed early in the relationship should be designed to set and validate customer expectations.
- Personalization works!
- Using multiple touch points across a variety of media are preferred by customers – because channel preference is situational.
- Multiple response channels are essential.
- Surveying and data gathering are critical components for gaining customer insight. Programs that are data gathering stimulate: customer interaction, transactions (revenue), stickiness (retention), and usage.
- The velocity of customer communications and engagement should increase during “moments of truth.” Trigger-based programs, ones where offers and dialogue are built upon data-based business rules, can enhance an already effective new customer strategy.
- Consultative selling is a key part of any customer program and can help avoid negative “moments of truth.” Right-sizing and proactive account management can effectively stem high attrition during choke points in the customer relationship.
- A product-centric focus is not the key driver in new customer retention. Customer-centric programs that address the lifecycle of the customer through vulnerable periods are more profitable.
From this insight, the company set out to identify the critical milestones for each business customer through time-driven occurrences and data-driven activity. The customer’s “relationship” with the company was marked by five key lifestages: courting, honeymoon, newlywed, settling-in, and getting-the-itch. Within each lifestage, expectations were established and the metrics for success were developed to support the business case for this new change.
Implementing the New Approach
At the core of the company’s new strategy is a precise contact strategy that optimizes each customer interaction. Channel alignment, combined with predictive modeling and analytics as well as customer-centric messaging and creative, is the foundation of this evolving new customer onboarding process.
At each lifestage, the focus and intent of the communications change as a customer progresses from one stage to another. As a result, the telecom is able to identify each stage and allocate the right offer, message, and budget to that customer’s situation. This enables the telecom to communicate with customers when they are prone to churn.
Small business customers are contacted several times within the crucial first six-month period, not including billing and account information. Number of contacts, channel mix, message, and offer are determined by in which lifestage a customer resides. Further, each contact is treated as part of a continuity curriculum, where the conversation with the customer extends over a period of time versus the traditional single message approach.
For example, during the “honeymoon” period, a single welcome kit is sent within five to ten days from service activation (versus 12 weeks). This package establishes the one-to-one dialog with the new customer and thanks the customer for choosing the telecom, delivers product information, sets expectations for the customer experience, and validates the decision to interact with the brand.
While entering the “newlywed” stage, new customers receive messaging that acknowledges the products/services the customer currently has and offers additional solutions or offers based on how they migrate through the telecom’s solutions. The goal of this effort is to provide the customer with evolutionary products or services rather than the telecom’s focus product during that time period.
In the “settling in” period, customers can expect to receive loyalty-based packages with savings designed just for them–so the more detailed the information about the customer, the more dynamic the communication stream, and the more successful (and profitable) the customer interaction.
This right-message, right-time approach extends to other channels throughout the process. The sales and direct marketing channels work closely together to present a consistent and cohesive face to the customer.
Throughout the onboarding period–from service activation through month six, the telecom company is able to “right-size” a customer’s product and service mix through: account reviews, consultative-selling via inbound and outbound telemarketing, and rules-based triggers that can help identify and stem a potential churn event.
Of course, this new approach requires changes to infrastructure, budgets, and available resources that will be deployed over several phases. Although still in the first phase, early indicators point to the success of the new program. The telecom company was able to reduce customer churn, increase sales and revenue, and experience higher overall response rates as a result of the innovation.
By implementing customer-focused communication “best practices,” a marketer in the business-to-business space can optimize the profitability of new small business customers for the long term.
Joseph Fiochetta is director of strategy for Harte-Hanks, a worldwide, direct and targeted marketing company that provides direct marketing services and shopper advertising opportunities to a wide range of local, regional, national and international consumer and business-to-business marketers. He can be reached at (215)750-6600 or at email@example.com.