Database : Preventing Breakups

Using dashboards as retention tools keeps customers from walking out the door

Why? Everyone who’s ever been dumped wants the answer. Many never know the reason.

But companies that use dashboards as a retention tool are not only finding out why; they’re figuring out when their beloved customers are showing signs of leaving so they can take the necessary steps to successfully woo them once again.

Keeping the ring on a customer’s finger is as easy—and difficult—as being the parts and service provider he chooses to install the tires on his Nissan or Infiniti, finds Franklin, Tenn.-headquartered Nissan North America (NNA). Because so many competitors are willing to make Nissan’s relationship with its customers crash and burn by providing oil changes, tires and brakes, that’s where Nissan needs to grease the wheels of change so its customers won’t stray.

“Those tend to be your highest-volume services,” says Bob Welby, NNA’s senior manager of sales and marketing manager in the parts and services division. “So one, they’re very high-volume services; they’re competitive out there where the dealers are fighting for that business very hard. Also, we learned through other, independent studies … customers are generally satisfied with their service provider. … So if we’re not competitive in these key volume services, customers are going to go elsewhere where they have them … And if they do that and if they’re generally satisfied, they’re going to stay for the shocks, the heavier work, the muffler work, the major service intervals. So it can be a key indicator to future service patterns for customers, and we want to focus our retail network on them.”

Extrapolating, Welby says Nissan and Infiniti owners who maintain their vehicles through the dealership are much more likely to buy new vehicles from that dealership. It builds a relationship of trust, he says.

Conversely, point-in-time marketing can backfire for businesses that really should be in committed relationships, says Niall Budds, director of strategy and planning for Charlotte, N.C.-based marketing and technology service provider Quaero, a CSG Systems company.

“In a relationship business like financial services or hospitality, that’s really too late,” he says. “You can’t wait until the customer’s walking in the door to close their account. You really need to be tracking retention in advance of that. And that’s one of the challenges, and that’s where we’re seeing our clients investing a lot.”

Investing in the Relationship
Nissan wasn’t reinventing the wheel when it decided to make retention the critical component of its marketing dashboard, Welby says. Retention had long been included in the company’s marketing mix when company officials sat down in November 2007 to create the organizationwide measurement tool for the marketing goal.

Months followed filled with measurement, efforts to acquaint the organization with the initiative, gathering and analyzing research, taking the industry’s temperature to figure out if others were viewing the retention challenge the same way, and then developing an initial solution and vetting it through the dealer network and dealer advisory boards.

“When you’re talking about leveraging a dashboard with huge amounts of transactional information, you have got to be buttoned-up on a database,” Welby says. “So if any kind of organization wants to improve customer response, and they don’t have good indications of how customers are currently responding, and they can’t break that down and segment it somehow, they’re going to be very limited in the amount of new intelligence that a dashboard like this will bring them.”

Finally, Nissan had an idea about what it needed to do to make its customer relationships last. So the auto company requested vendor proposals and, in mid-2008, chose its long-time marketing agency, The Marketing Store of Lombard, Ill., to spearhead the project. The Marketing Store worked with McLean, Va.-headquartered LogiXML, a provider of Web-based data software, including dashboards.

Together, the three brought the dashboard online in two phases. Dealership retention performance numbers fully poured into the tool in March, and customer lists joined them in May.

Now dealers can see their retention statistics online and download a list of targeted customers for direct marketing purposes. Welby says for each auto, dealers have a customer name, vehicle identification number, vehicle specifications, vehicle model, model year, last service date, last service mileage and how many service visits it’s had in the last 12 months. The information allows dealers to customize marketing messages.

But “they’re using it for more segmentation than for personalized communications of, ‘Hey, we see your car has this many miles on it and this is the last date you were in and, you know, we’re following you,’” Welby says, alluding to the line where personalization can cross over into creepiness.

Still keeping an eye on balancing good taste with personalized care, Nissan plans to continue to provide detailed information about customers to each dealership.

“Our goal as a marketing organization,” Welby says, “is really to deal with personalization. The better we can talk to a Nissan or an Infiniti owner in a one-on-one basis, know them individually, the better we will be successful at retaining them to the business.”

In one of its first retention campaigns after dashboard implementation, NNA dealerships spent February and March 2009 sending targeted messages to customers who had visited once during the past 12 months. (NNA defines two parts and service visits within a year as successful customer retention.)

Welby says customer response and overall spend exceeded expectations.

Courting 101
Much as two people in a relationship will define it differently, members of an organization may not agree on retention’s meaning. But they need to get in the same gear before finalizing that aspect of their dashboards, and furthermore, they should consider retention as more than an all-or-nothing proposition, Budds says.

“If you see, over time, that the balance in somebody’s savings account is trending downwards and that’s happening in … an unexpected way, that’s often called ‘balance diminishment.’ And that’s obviously a leading indicator of somebody that may be moving their funds elsewhere,” he says.

Clients like Wachovia watch this indicator closely, Budds says. Now that Wachovia is a Wells Fargo company, it’s easy enough to use the same sentence to discuss the companies that merged on Dec. 31, 2008, under San Francisco-based financial giant Wells Fargo’s umbrella—especially considering both have dashboards that track trends like customer behavior and other retention metrics.

“Wachovia … had done a tremendous amount of work on customer service and achieving very high levels of customer service, all with a view to improving their retention levels,” Budds says. “And that focus, I think it’s fair to say, has continued through their merger with Wells Fargo. And Wells Fargo is also a company that, historically, has had a heavy emphasis on relationship banking, building a relationship with their clients and using that to understand client needs and to assemble and maintain a customer base that becomes an asset over time.”

For Better or Worse
Ram Krishnamurthy, director of marketing automation at Quaero, points out that the recession won’t last forever. But companies should try to make sure relationships with current customers do.

“If organizations don’t take active retention measures, then it’s almost like a problematic thing for them in the future,” he says. “So I think that’s why, in these economic times, you’re seeing most organizations look towards the retention programs to ensure that they can have something in place that allows them to grow their existing customer base.”

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