- Emphasis on customer retention
- Market research on improving product quality
- Behavior-based segmentation of current customers to better meet their needs
- Fewer customers due to increased competition and high turnover
- Perception issues with product quality
- Need for moving away from acquisition-only “filling the pipeline” strategies
Improving customer retention through market analysis and product quality improvement
Client is a large organization in the education industry which mostly focused on an acquisition strategy due to high customer turnover. Unfortunately, the last few years have been difficult for the Client and its industry. Not only has overall demand for its products decreased but there were almost twice as many new competitors that had entered the marketplace. At the same time, they had to deal with ever-rising advertising and acquisition costs. They needed to find a solution that would enable them to maintain operating margins even as new revenue sources were drying up and being diluted across a larger number of competitors.
After consulting with the Client on their goals, their strengths and their differentiators, we worked with them on a number of key retention strategies, rather than just focusing of different acquisition strategies. Customer feedback gave insights into why their turnover was so high (negative perception of product quality) which allowed us to address the quality issue with the Client. They agreed to reinvest some of their marketing spend towards quality control. They also redeployed internal employees to create a strategic team devoted to better understanding current customers based on their behaviors and buying patterns. From there, we were able to help them build a set of customer segments that targeted the right type of activities to the right customers at the right time.
Within the first six months of implementing our recommendations:
- Customer retention increased 21%
- Revenue per customer increased 23%
- Net Promoter Score (which gauges customer loyalty) increased 28%
- Acquisition costs decreased 15%