How customer experiences relate to retention

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By: Wise Marketer Staff |

Posted on September 17, 2008

There are several sound business reasons for the adoption of Customer Experience Management (CEM) programmes, including proven relationships between CEM and brand loyalty, increased customer retention and satisfaction, and increased sales and profits, according to a study by Aberdeen Group.

The study report explains how best-in-class companies have implemented periodic reviews of customer-facing business processes to help maximise their overall customer experience, and how they have implemented new metrics and enabling technologies.

The point of CEM
Data acquired from over 190 enterprises reveal a number of interesting points, according to David Boulanger, research director for Customer Management Strategies at Aberdeen: "At its core, CEM programmes dissect the customer experience to find the best, most profitable customers, the most effective leverage points, and then build long-term strategies to grow those customers."

The study found that there are a series of company leadership, process, organisational, measurement and technical factors that need to come together to make CEM programmes work effectively. Perhaps most important to the CMO (Chief Marketing Officer), the report suggests, is the disciplined approach that CEM programmes bring for finding and growing profitable customers.

No magic bullet
But Boulanger warned: "For those expecting a single 'magic bullet', CEM is not what they're looking for. What a CEM programme will do, however, is systematically determine how to most profitably service the most important customers and then grow the most profitable relationships over time. CEM programmes are journeys, not events."

The report showed a direct correlation between the implementation of CEM programmes by best-in-class companies and their performance in three critical customer-facing performance measures:
1. Customer satisfaction;
2. Customer retention;
3. Year-on-year change in profitability.

Where to begin
The survey found that best-in-class companies tend to start by identifying business processes with the greatest customer impact and then segmenting customers by both profitability and sales potential. As companies gain more experience in these programmes they can advance from simply being able to collect data about customer satisfaction, retention and profitability, to actually managing the whole business based on metrics which help drive sales, marketing and customer service programmes.

In this environment, the contact centre becomes a more critical component of the customer experience. According to Boulanger, "Our research shows that brand worth and equity is made or destroyed with every customer interaction. In this environment, the contact centre agent is the hub between the digital customer with a need and specific products, customer service, engineering and other individuals that need to be linked together to address a topic or problem."

Social media's role
"What has also been surprising," Boulanger added, "is the growth of internal customer service websites into externally facing customer destination sites complete with wikis, blogs and other social networking tools. It is no surprise that a good number of global CPG, consumer product and retail companies now perform a major amount of product development using social media technologies as part of a CEM programme."

The report has been made available as a free download for a limited time from Aberdeen's web site, thanks to the report's sponsors, Avaya and Aspect Software - click here (free registration required).

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