Considering the competitive challenges 2009 promises, organizations must redouble their systematic customer retention efforts. Those tasked with building loyalty should make predicting and mitigating controllable attrition a top priority.
Three steps for staying in front of the attrition curve are:
1. Reassess your organization's attrition triggers. Recent changes in the market landscape have affected the operational definitions of attrition used by organizations in the past. Rather than defection or outright customer loss, does prediction of diminished spend or depletion better suit the organization's goals? Developing tighter modeling objectives and intervention windows for early warning efforts can stack the odds in your favor and increase save percentages.
2. Be honest about your ability to quantify key metrics. In even the best run enterprises, systems and silos can conspire to obscure attrition rates and trends. Many clients admit that one of their biggest challenges is accurately measuring where they stand in terms of attrition at any given point in time. The best predictive retention programs leverage two key metrics: true segment-level attrition rates (risk), and current and potential household profit (growth). Like any other marketing task, correctly assessing those benchmarks is a prerequisite to long-term loyalty improvement.
3. Prioritize attrition modeling and systematic retention strategies. Retention programs that leverage best-in-class attrition models consistently drive the highest ROI of our clients' direct marketing efforts. Improving the ability to identify changes in individual customer behavior, combined with multichannel intervention strategies rigorously prioritized by potential profit impact, can deliver transformational loyalty effects. Ultimately, executing against model-driven attrition risk scoring for every customer household should be on the short list of objectives for marketers this year.
The customer is truly a free agent now more than ever. No one can afford to let those who have telegraphed a potential change in loyalty slip away without a fight.