by Leeya Hendricks (@LeeyaHendricks) Digital transformation is a must for continued survival, but Companies setting out on this journey must manage digitalisation in a way that will provide them with a competitive edge and not threaten their survival. One of its great risks is its potential disruption to customer relationships.
There’s a known link between healthy customer relationships and continuous revenue growth coupled with lower expenses. It’s simply cheaper to keep existing customers than to win new ones with every sale. Conversely, a sizeable portion of generating new demand must be from keeping existing customers.
While reducing churn is challenging, it’s a challenge worth prioritising: A 5% increase in customer retention may increase profits by 25% to 95%, according to research from Bain & Company.
Built to change
In short, companies should find ways to effectively manage the risk that digitalisation will disrupt client relationships. The alternative, not transforming, is unthinkable. After all, change is the only constant. Companies that don’t keep up with it or engineer themselves to do so should get with the programme.
Fortunately, just as digitalisation has upended companies and entire industries though enablement of new Business models, it has also enabled new customer models. When put to proper use, digital transformation may help companies engineer processes and channels for change.
Customers, too, change with pervasive digitalisation, requiring companies to keep up. Instant gratification and a wide range of choices mean they enjoy far greater flexibility to move as and when they want, so ensuring they’re fully satisfied at all times is integral to business performance.
Are your customers satisfied? Do you always deliver the right products for their needs? Is your business geared for change to capitalise on market opportunities?
How will you ensure you can answer all of that in the affirmative, to create true stickiness?
For years, customer satisfaction was measured in renewals and continued sales and, while this is still relevant, it leaves a glaring gap; these are merely symptoms of satisfaction and give no indication whether customers are indeed happy. Also, they don’t provide positive answers to the questions above.
Instead, the most-critical factor in preventing customer churn is by measuring customer engagement. Customers who engage regularly with your platform and brand are often the stickiest customers. They are the ones who simply won’t leave, even if a cheaper option shows up on the market.
Introducing customer engagement into the mix sheds a new light on retention — no longer is it merely an exercise in damage control; it’s an opportunity to dig deeper into your customer relationships. The way to get as many customers as possible to stick is by making it easy to integrate your product into their daily workflow. And therein lies more opportunity to win more customers — and keep them.
Are your customers satisfied?
Whether or not your customers are satisfied determines if they will renew or grow their investment in your products and recommend you to other customers. It also demonstrates your organisation’s ability to meet the needs of your customers and shows its worth and effectiveness to stakeholders, which is important for maintaining their support.
If avoiding churn is important to your business, from time to time you should ask your customers how satisfied they are and behave according to their response.
To respond to the competitive landscape and provide greater customer choice, many global IT organisations are further changing their internal processes and workforce structures and so making it easier for customers to switch to them.
Digitalisation provides altogether more-cogent answers to the modern challenges of companies operating in a digital world, enabling them to keep up and ensure their processes enable a quick and agile response to change. With new cloud technologies and subscription models, you may create the appropriate processes, products and structures to become a connected customer organisation and optimise customer value.
Put your customer first!
Leeya Hendricks (@LeeyaHendricks) is a designated chartered marketer, global marketing strategist, digital driver and a Women in Tech leader. She holds a BA degree in fine arts, a BA honours degree in brand marketing management, an MBA in general management and is completing her PhD in business management. She is now director of customer first marketing at ORACLE UKI, responsible for driving customer success through customer advocacy, and building strategic partnerships focused on emerging technology and the changed customers’ buying behaviour. Leeya contributes the monthly column “Gestalt”, about putting customers first for sustainable business success, to Marklives.
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