Newsletter - May 2008

Client retention will make or break you in a recession
By David Lovell, Sales and Marketing Director

“Client Retention” has become a bit of a marketing buzzword over recent years and during the recent economic growth, it has moved out of marketing departments into boardrooms (along with “think outside the box” and “push the envelope”). It is a good and important sentiment, but often one that often remains empty in practical terms. In a healthy market place, if customers leave, they are more easily replaced by new ones. However economic conditions have changed substantially over the last 6-12 months, and it is necessary for the majority of companies to ensure that customer retention becomes a reality. It seems clearly that, as a result of credit crunches, property price downturn, the fall of Northern Rock, the market turbulence and the repeated use of the word recession whispered at parties and headlining in the media, customers are starting to feel the pinch, or at the very least, a little uneasy about the forthcoming year.

It is important that companies learn the lessons from the last economic downturn, when many companies were too slow to stop focusing on customer acquisition, and quickly switch their sights to simply retaining and growing the customers and clients central to their business. This is when companies need to step back and ask themselves the following types of questions:

• How much true insight do you have into your customer base?
• Who are your most profitable group of customers? What do they look like?
• Is there any non-profitable customers? If so - is now the right time to drop them?

Many will be much quicker to do so, or at least say they are doing so. Just last week, HBOS said it was not looking to grow in terms of customer numbers, just the quality (i.e profitability) of those customers - "We will continue to favour profitable mortgage lending over market share,” said HBOS.

Even if customers are leaving, this is not necessarily the time to shrug shoulders and focus on bringing new ones in – there are vital clues and information contained in all data that will allow a company to learn, and adjust communications and retention strategies appropriately. If it is not there – companies should not be afraid to ask the customer themselves through questionnaires. Matrix does a lot of work in the find management industry and have helped several of our clients with redemption analyses of investors, in answering questions such as :

• Why did they leave?
• Who has sold their investments and closed their accounts?
• Do they have something in common?
• What could you have done to make them stay?
• Would they have invested in or bought another product from you?
• Who are their dependents – could they provide the key?
• Can we put in place marketing or retention “triggers” to alert us, when for instance, a customer asks for latest value of holdings?

If, like the vast majority of companies, you have an extensive database of customers, leads and other contacts, it is not always a very straightforward process taking all the data from different sources and extracting the information that you need in order to properly answer these and similar questions.

The first stage to achieving this is to identify and segment your clients so that you can properly identify those customers that you actively want to retain, because only then can proper business and marketing plans for doing so be put in place. Real and immediate insight into your customers, their needs and motivations enables you to make the right business decisions, whatever the market conditions.

Matrix-Data Solutions has the experience, technology and expertise to carry out cost effective customer intelligence analysis.

If you would like find out more please contact please contact David Lovell, through the website, via email dlovell@matrix-data.co.uk or by telephone on 020 7074 1200.