Customer Retention – Innovation or Die
Solving Customer Retention Challenges
Variations of the phrase “innovate or die” have been around for centuries, although Jack V. Matson’s book was one of the first to delve into a philosophy around failing fast. And yet, we continue to see businesses fail because their management did not anticipate their customer’s future desires.
It is no longer enough to just keep your eye on direct competitors or changes within your specific market and verticals. B2B organizations can learn a lot from the impact of customer empowerment on B2C companies. Uber’s introduction of a seamless payment experience changed how customers expect to pay for services. Amazon Prime changed the way we shop online. As consumers expect a different way of doing business, they expect you to provide it or they will find a company that will.
No market or business, regardless of size or original success, is immune to this business principle. Where is Blockbuster Video? Or MySpace? Kodak? Blackberry was the fastest growing company in 2009, but reported a $4.4 billion loss only four years later. These companies were all known for good customer service and for providing customers with what they wanted. However, they lacked the ability to adapt to changing market conditions that created customer retention issues.
It’s not that executive management did not see big disruptive changes coming. Nor did they lack the resources to address them. They lacked the ability to innovate successfully. They looked to address the challenges within its current organizational structure, which was designed to surmount the challenges of yesterday—not the challenges of the future. It is also no longer enough to simply meet the needs of your customers today. A culture of innovation is required in order to meet customer retention and customer lifetime value goals.
The book "The Essentials” by Harvard Business Review delves into how to meet the challenges of disruptive change. It offers a framework to address how to create a culture of transformation and innovation. The book highlights strategy, process and structure mistakes that many companies continue to make, such as:
- Only looking at innovation based on new products—and not innovating around new services or improved processes
- Rejecting innovations that are not "blockbusters", when small changes can have a big impact on revenue growth
- Launching too many minor changes that end up confusing customers and increase internal complexity
- Strangling innovation by using the same tight planning, budgeting and reviews applied to existing business offerings
- Creating two classes of employees—those who innovate (and have all the fun) and those who must drive revenue
And last, but not least…
- Listening to current customers can inhibit breakthrough innovation.
That’s right, your customers are not always right. If you focus all of your customer retention and success efforts on “delighting” current customers, you will miss out on opportunities to better serve them in the future. The goal is to better serve your customer by anticipating needs and challenges and finding innovative ways to solve them, while making doing business with you as seamless as possible.
Customer retention is ultimately dependent on your ability to adapt to ever changing customer expectations and desires. Creating a culture of innovation and agile processes that facilitate transformation will help you succeed. Learn more about how implementing a Revenue Lifecycle Management framework can help you with business transformation in "The Definitive Guide to RLM."
Authored by Michele Ballinger, Solution Marketing for ServiceSource.
In her role, Michele provides market insights and best practice advice to customers.
When she is not writing, you can find her hiking and photographing the breathtaking