Customer retention is a hot topic in any industry, but especially in communications as it is easier today to switch providers than it ever has been in market history. As a result, companies must keep customers satisfied with products, service and the overall experience in the interaction and use of company offerings. Whether the company realizes it or not, every interaction represents sales and losses across multiple products for the telecom industry. Customer churn costs companies billions of dollars every year, which means the stakes are higher today in the effective management of customer relationships. At this time in the telecommunications market, it is essential to implement a proactive customer loyalty program or strategy to drive retention. The challenge is that such a program is generally not a priority in the establishment of overall growth and revenue strategies. Too often, companies measure success as a result of quarterly sales revenues, instead of the percentage of customer churn, failing to realize that happy and loyal customers pays off significantly in the long run.

To drive this message home, the American Marketing Association recently moderated a podcast: Building a Business Case for a Proactive Customer Retention Program, featuring Peter Brugnatti with Bell Canada (News - Alert), Don Peppers, a founding partner Peppers & Rogers Group and Infor.

The podcast included a focus on the use of good analytics in the retention of customers; understanding the difference between behavioral loyalty and attitudinal loyalty; relying on customer data to avoid churn and manage CRM effectively; creating personalized offers; and using CRM to better understand how customer lifetime are affected by current-period actions.

One of the first elements addressed in this podcast was a question about its title: aren’t all customer retention programs proactive? While it would be assumed that this should be a given, in reality, most programs are reactive as companies tend to react to responses from customers instead of anticipating wants, needs and actions. In taking the proactive approach, the company can anticipate customer reactions and design programs accordingly. It is important that these programs include customer analytics. The company must measure customer loyalty by measuring customer activities, wants and desires. By studying analytics, the company will be better equipped to design a program and subsequent offerings that meet the needs of the current client base. This includes the practice of examining customer behavior in general to identify customers who are at high-risk of churning. If the company has a full product line, customers who leave in one product are also likely to leave in another. The company can use this data and from an inbound or outbound perspective, offer something that is personalized for the customer and satisfies a need. The more the company knows about the customer, the better equipped it will be to drive loyalty. This topic is of great importance for the telecommunications provider simply because reactive retention is expensive retention. The business case for proactive retention programs suggest that it is a great way to counter to reactive retention, which is often the second-most expensive way to keep customers. (The most expensive is re-acquiring lost customers). A proactive program can help the company to reduce churn, producing long-term savings to the company that are significant. One example is to look at contracts before expiration and offer value to the customer for renewing early. This approach preserves revenue over the long term, keeps customer happy and keeps the customer loyal. Ultimately, keeping customer numbers from eroding is so much better than high acquisition numbers.

There is much value in a proactive customer retention program and to learn more about how much the company stands to gain, listen to this podcast in full.