Customer Retention is the new Acquisition

We have been hearing it for years… It takes significantly more effort to acquire a new customer than it does to retain one.

In fact, current estimates suggest that it can cost 5X to 25X more to acquire new customers, as compared to retaining them. Yet, a large majority of organizations are focused on “new business” (as in ‘customer acquisition’), constantly pouring resources into a leaking funnel. But, what they ought to focus on is retaining their customer base and engaging with them in a meaningful manner.

Here are some ways to do just that…

  1. Improve Relevance – Understand your unique “tribe” and get to know them better – their needs and wants, what they want from you. Establish mechanisms to listen to your customers – not just an annual C-SAT survey but on an ongoing basis. Then, work on providing relevant products and services that satisfy those needs and wants.
  2. Build Engagement – Is your customer buying a home loan or a home? Is he/she in the market for a medical insurance policy or for peace of mind? How can we make their journey easier? No, engagement does not equal spending big bucks on media buys, or counting likes on a social post. It takes effort to figure out what really matters to your target audience, and even more effort to give it to them. But the reward is worth it.
  3. Develop Partnerships – Build partnerships with distributors, channel partners and even other service providers. The world is one large ecosystem, if you’re willing to see it that way. If you are a ride-hailing app (Uber?) your scope of service doesn’t just include matching a driver with a passenger. Wouldn’t it be far more delightful if your regular customers popped inside the vehicle and had the option to play their favorite playlist (Spotify?). Partnerships are a great way to extend your base offering in ways that are meaningful to your audience. Again, relevance is key.
  4. Build Category before Brand – I can’t recall the number of times I have encountered organizations getting this wrong. Even in a category that is nascent, every brand rushes to build their own brand presence, instead of first building the category. Handhold your customers to help them understand what’s involved. Avoid jargon. Think from their point of view. Test your theories. Validate all assumptions. Simplify. Then, simplify some more. Now you’re on the right track.

The 5 Ps of CX

“Customer Experience” (CX) is quite the buzzword, these days. In corporate meeting rooms, and on industry panels – every one seems to be talking about it. However, many of the folks I meet grapple with how to prioritize their efforts around improving customer engagement.

Over decades of helping clients and employers bridge the gap between Business and what their Customers really need, I have come to understand that there are 5 Ps that impact CX. These are the levers at your disposal. These are the elements you need to influence, so you can strike the right balance…

  1. Product (or Service)
  2. Platform (or System)
  3. Processes
  4. People
  5. Pricing

Product/Service – Define your Target Audience clearly. Don’t build your product or service around what you think they need. Find out what they seek from you, then build your offering around their real needs. No more, no less. Competition does not matter. Customers do.

Platform/System – We are surrounded by Technology, and it’s here to stay. Your customers are probably embracing it faster than you are able to keep up with it. Don’t resist: Embrace it without excuses. Invest in what matters to your customers, be it Mobile or AI. Invest in creating a friction-less User Experience (UX). Good Design matters.

Processes – Customer Experience is built on a foundation of consistent delivery (of promises made), not found in pockets of excellence. Processes, therefore, form the backbone of a good CX. Stay away from ad-hoc and discretionary management. Strive to build an organization that outlives you and your key managers. Process Excellence is the key.

People – In any enterprise, people are an essential factor of success. Research shows that happy employees drive a 2x improvement in CX. Employee engagement matters. Hire right, then provide them with a clear vision of your business goals. Once they have understood what is needed of them, empower them to take actions that help them meet customer needs.

Pricing – Customer expectations change as the price changes. We expect much more from products and services that are sold at a premium. So if you plan to charge a premium for your brand, make sure you justify the outcome. In every case, think hard about the relationship between Price (you charge) and Value (you provide). Every Moment of Truth matters.

These 5 Ps are how you can ultimately impact the outcomes your customers experience. Of course, you can ignore this list if all you want to do is pay lip-service to the cause.

P.S. If you look closely, you will find that this doesn’t just apply to CX – these are also the attributes that can help you build a robust enterprise – one that outlives you.

What Really Matters

Every business acknowledges that the reason for their existence is the Customer. Every business wants to design products and services that are meant to address their customers’ needs. Yet, almost every business struggles to understand what their customers really want from them.

Is it any wonder that billions are spent worldwide in trying to gauge the truth of the matter, via interactions driven by focused groups and metrics like C-SAT and NPS? To make matters worse, in this Age of Digital and A.I., the “Customer” is also ever evolving!

How do you make sense of it all? 

Yes, customers do exhibit different personalities and needs. But, there are a few insights and common traits that can help most businesses get going.

Here are some of my learnings…

In the India context, it helps to keep in mind that the first 100 Mn Digital Consumers were Younger, More Urban, More Men, More Desktop, while the last 100 Mn are relatively Older, More Rural, More Women, More Mobile.

That said, customers all over the world are figuring out how they can leverage the abundance of Technology that now comes embedded in most platforms, products and services.

They want more and more to happen via Digital channels, so they can access it On-The-Go.

They want lesser clicks, faster page loads, shorter queues, reduced turnaround times, smaller forms.

They want more self-service options (Starbucks?), and want less IVRS interactions (Your call is important to us…?).

In other words, they want their interactions with your brand to be relevant, useful and enjoyable.

Oh, and thanks to online forums, reviews, ratings, and social media exchanges, they probably know more about your product or service than your Sales agent does!

Keep these factors in mind when trying to improve relevance of your offerings, instead of simply believing “you know what’s best for them”. And, don’t leave any opportunity to talk to a real customer – to listen to what really matters to them.

After all, there is just no substitute for a real conversation.

Survival of the Fittest

The headlines keep spewing out paranoia:

AI is taking over hundreds of jobs!
Uber and Ola have all but replaced traditional cabs!!
The hospitality industry objects to predatory pricing by Oyo!!!

So, what does all this mean for corporates, marketers and industry professionals like you and me? Should we become paranoid too? Should we be doing something else instead? Is it already too late?

Here are some interesting statistics compiled by HostingFacts:

  • There are 4.1 billion Internet users in the world (Dec 2018)
  • China has the most Internet users for any country (~802 million or ~20 percent of total), trailed by India (~500 million)
  • Amazon is responsible for more than 49 percent of all online sales and about 5 percent of all retail sales in the U.S.
  • There are 3.7 billion global mobile Internet users (Jan 2018)
  • About 75 percent of ecommerce sales in China are done via mobile devices
  • Mobile traffic is responsible for 52.2 percent of Internet traffic in 2018

The combination of super-cheap data plans (as in Jio) and super-cheap smartphones (as in Android + China) is already making a dent in India. With a plethora of payment platforms (PayTM, RuPay, etc.) that enable everything from micro-payments and P2P money transfers to mutual funds and ticket booking, Indians are also embracing newer ways of dealing with money. And, we are only at the nascent stage of this ‘perfect storm’, as it were.

Whichever way you look at it, the Indian consumer is doing more on their mobile phones today than ever before. Even without the local language content that millions of them want and need. Even without high-speed internet access in their semi-urban and rural towns. Even if it means that their first exposure to the world wide web (remember WWW?!) is on a 2-inch device in their pocket.

So, if you think “going digital” means creating a website and posting some brochureware content on it that gets updated every quarter, you’ve got another thing coming. If you already have a web presence but it doesn’t render elegantly on a mobile screen, you have a lot of catching up to do. If you’re a marketer who thinks all this “AI” stuff is for the geeks in your IT department (or even for your ‘Digital’ team), you may need to learn some harsh truths real soon. And, if you think your business is all offline, so you can continue to manage it the way you have been doing for decades – may be you do need some paranoia in your life.

Voice, Video and Vernacular (content) are going to be the success drivers of tomorrow. Add Velocity to the mix, and you will have a potent combination of forces at play. The environment is certainly ripe for disruption. The only question is will you be making it happen, watching in wonder as it happens, or wonder what happened?!

Engaging Smarter with AI

Last month, in suburban London, a delivery of a parcel was attempted by Amazon Prime.

The homeowner was out on a school run, but had a video doorbell from Nest Hello (Google) installed in the home. An Apple iPhone X received a live feed from the doorbell, and a 2–way chat soon transpired. It turned out that the homeowner’s Tesla was parked right outside, and was accessed via the Tesla app – thanks to its permanent cloud connectivity. The boot was remotely opened by the homeowner, who could see it live on the video stream. The delivery guy was able to leave the package inside, after which the car was remotely locked via the app, resulting in a successful delivery.

What is noteworthy about this story is that it involved four distinct services – Amazon, Google (Nest), Apple and Tesla – all of which were digital, but none were specifically designed to work together.

Yet, in many ways, we are probably in the first hour of the evolution of AI (think before the Internet happened).

Futurists like Kevin Kelly (Founding Editor of Wired) speak of a rapid “cognification” of the machines around us, giving them the ability to harness superhuman powers – minus the (human) distractions. But, they also augur that the most popular AI product that will be in use 20 years from now, hasn’t even been invented yet!

What is (or isn’t) AI?

The Merriam-Webster defines Artificial Intelligence as: “The capability of a machine to imitate intelligent human behavior.”

We humans possess a number of cognitive abilities that help us learn new concepts, apply logic & reason, recognize patterns, comprehend ideas, solve problems, make decisions, and use language to communicate. We call this intelligence.

This “intelligence” enables us humans to think, to be self-aware, to experience Life.

And, human intelligence is not just linear and one-dimensional.

Howard Gardner in his ‘Theory of Multiple Intelligences’ argued that there were a wide range of different abilities operating in the human mind. – ones that did not necessarily correlate with each other.

Gardner proposed that these distinct types of intelligences – including logical-mathematical, linguistic, spatial, musical and interpersonal – are what enabled people to become a plumber, farmer, physicist or teacher.

Modern machine capabilities typically classified as “AI” include successfully understanding human speech (as in voice-recognition), competing at the highest level in strategic game systems (such as Chess), and intelligent routing (as in Content Delivery networks or Military simulations).

But the scope of AI is disputed: As machines become increasingly capable, tasks considered as requiring “intelligence” are often removed from the definition, a phenomenon known as the AI effect. As a result, routine technologies like Optical Character Recognition (OCR) are frequently excluded from the definition.

In fact, we tend to think of AI as whatever hasn’t been done yet!

The fact is, AI is not just embedded inside Netflix algorithms or voice controlled ‘smart assistants’, it’s embedded in our lives.

The decades-old autopilot systems that fly our commercial airplanes is just one example of that. The humble “calculator” is already smarter than most of us in arithmetic, and the GPS chip in our phones is already better at spatial navigation than the average human – both being examples of machines exhibiting intelligence.

Growing significance of AI

Clearly, AI is relevant to any task requiring intelligence.

High-profile examples of AI include autonomous vehicles (such as drones and self-driving cars), powering search engines (such as Google), and improving spam filtering or targeted advertisements.

In Medicine, AI is being applied to numerous high-cost problems, with initial findings suggesting that AI could save as much as $16 Billion. In 2016, a ground breaking study in California found that a mathematical formula, developed with the help of AI, correctly determined the accurate dose of immunosuppressant drugs to give to organ patients.

In Financial Services too, there are several use cases for AI. Banks use artificial intelligence systems to organize operations, maintain book-keeping, and invest in stocks. AI-based tools help read documents, process cheque payments and respond to customer requests. AI has also reduced fraud and financial crimes by monitoring behavioural patterns of users for any anomalies.

Today, AI can even analyze “silence patterns” on Customer Service calls to infer insights from excessive hold-times about system delays, outdated CRMs, etc.

Engaging smarter with AI

However, in our quest for providing more bells and whistles, we may sometimes lose sight of what truly matters. We need to connect the dots… across devices, channels and teams. We need to listen to our customers, our distributors, our employees. We need to move from proposition to purpose.

Does Customers + AI have to equal chatbots?! Or can we use AI-based tools to actually improve outcomes for our customers?

Here are just a few examples where intelligent use of AI can help improve Customer Experience, regardless of the underlying business:

  • Design more relevant products and services for your customers by listening to your customers and putting those insights to work
  • Continue conversation threads in CRM systems, regardless of their initial entry point, so you can provide contextual help
  • Predict a lapse or termination, and intervene with appropriate measures, before you lose the customer

Technologists argue that in the not-so-distant future, if a task needs to be done efficiently, it will most likely be done by robots (as in AI with bodies), while humans will focus on activities that are typically inefficient – think exploration, innovation, science and art.

Ultimately, our ability to deal with what comes next will depend on our willingness to embrace a co-existence with machines and their intelligence. Only then will they become our partners, not just tools.

This post first appeared on YourStory.