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A Marketers Approach to Retention: Part 1

February 13, 2012

By Lorrie Henry – Strategic Marketing and Retention Consultant – led marketing and/or retention efforts at three of the top five national banks after an earlier career path at three leading consumer package goods (CPG) marketing companies.

My colleague Lorrie Henry describes herself as someone who provides strategic marketing solutions.  And she does.  Her ability to understand customer motivations and needs and her perseverance in championing sometimes complex changes in the status quo has made her successful across different industries.  Her practical mind and disciplined approach led her to introduce new strategic marketing processes that have moved her businesses ahead as well as having been instrumental in creating and improving superior and long lasting products and services.  She was very successful in banking, despite the fact that, especially early on, bank marketing had not yet embraced consumer marketing techniques.  She was able to introduce them and found a willing but “prove it to me” audience.  Here’s her story of bringing a holistic, customer focused strategic marketing approach to bank product management to re-build the business, retaining both customers and balances.  – John Munce

 

A lot of executives talk about customer retention.  They know it’s many times cheaper to retain an existing product or service customer than to continuously acquire new ones.  They also know it’s cheaper to retain and grow existing customers through modification, customer satisfaction and cross selling than to churn, churn, churn and sell the same customer the same product again and again.  So why does true retention strategy and functional development frequently go on a back burner to acquisition?  Why have many financial services companies still not wrestled with this basic but 900 lb gorilla?  Perhaps it’s because it seems like one – really big and alien to how they do things today. And perhaps it needs the right people and the right funding to make it happen.  In this discussion I’ll hopefully help you cut it down to size.

Early in my career, working in the consumer package goods world of household name brand food, beverages and pharmaceuticals taught me to approach retention through “trial and repeat”.  Later, my financial services experience tended more towards “acquire and acquire and acquire some more”.  There were good but peripheral intentions of retaining customers through customer focused product development upfront* and, hopefully, top notch customer service on-going.  You trusted the sales force to get the customer into the right product, incentives notwithstanding, and hoped for the best.  But that was not enough for me in my Retention Leader job.  I now had a retention-focused mission.

For perspective, it’s important to tell you that the retention leader role at my bank was not in the marketing department. It was nestled into the product management group, which handled the pragmatic care and feeding of the product, such as pricing and processes, not including things like strategic positioning, advertising and direct marketing.  That’s where banks usually differ from consumer package goods (CPG).  Banks tend to keep marketing and product management defined more narrowly and separated into silos.

In consumer package goods companies like Quaker Oats, marketing and product management were synonymous and the product managers managed all of the 4 P’s (or sometimes expanded to the 7 P’s**) on a holistic basis.  My early training and it’s proven success led me to take a holistic marketer’s view of retention.  I took the customer experience on from the beginning (just after my business partner’s acquisition efforts) to the end of the relationship, via maturity or attrition and back again.  It’s also why I think of everything as a product.  Tangible or intangible, it’s my job to make it real for the customer, helping them make the right choice by helping them understand why it’s the best one for them, i.e. – through positioning work and identifying the motivating, differentiating key benefit and reasons to believe.  But that’s a story for another day!

So where do you start retaining customers?  You start by clearly defining the problems to attack before randomly attacking the problems of those who scream the loudest or rank the highest.  And today I will outline Mission 1 of 3 in achieving retention success.

Mission 1 – Define the Problems: Ask the Experts – Your Customer

Ask anyone in sales, product management or almost any other group why customers left, especially in a time of high rates and runaway credit offers, and they’ll tell you the problem is your rate, your price.  Just lower the rate, lower your price and retention Nirvana will occur.  But will it?

Step 1: Understand why you are losing customers

I’ve always worked hard to listen to my customers directly, without a filter, and when asked the right questions in the right ways, they spoke volumes to me.  So what did they say when we asked them why they were leaving?  Rate was only a fraction of the problem – a big fraction, but less than 30% of the reasons why people left!  And it was not the reason people stayed.  I developed the survey to compare customers who took their business and left the bank, to customers who stayed.  When we truly probed, beyond rate, we found we were letting our business walk out the door.  A large percentage of customers who left said no one had ever asked them to stay! This may have reflected the strong customer service culture – giving the customer what they asked for.  We could have easily stopped them through simple means as well as more comprehensive process improvements.  And we did not have to “give away the bank”.  This foundational research informed everything we did over the next two+ years.

Step 2: Find the source, or where you are losing the businessS

This step involved some fancy analytics by my teams’ amazing business analyst.  We needed to know where we were losing the most business, so we could focus on the areas that would reverse the most harm.  He discovered that the vast majority of our losses were coming from one source.  And it wasn’t the source we had been focused on before this analysis.

Step 3: Make improvements happen when it is or isn’t in areas controlled by your team

More on this to come.

Next time:  I’ll talk in depth about the holistic view of retention. Specifically, how to look at retention from the beginning of the customers’ relationship and follow-through with a long-term perspective.  This means making sure the people, processes and fit is right at every point in the relationship.

 

 

*The author had the opportunity to create Advantage Checking for NationsBank/Bank of America in 1992.

**http://www.entrepreneur.com/article/70824  — Interesting article on the 7 P’s of Marketing – while the distribution methods have changed since this was written, the basics are there.