"A deteriorating economy will make B2B customers more sensitive to price, less sensitive to advertising, and harder to win and keep... use "voice of the customer" efforts to make sure that the entire organization provides great customer service...."¹ - Alan Webber, Forrester Research, 2008

Companies need to focus on customer loyalty even more during a difficult economy to protect revenue and ensure the continuation of their most important customer relationships. Innovative organizations are even taking their Voice of the Customer initiatives another step by consolidating information about customers and their opinions from all relevant sources, providing cost-effective, customer-centric insight that gives all their customer representatives a complete 360 degree view of their customers to ensure they are providing the best service possible. And when the technology includes workflow and automated alerts, you can reduce costs in addition to improving service and increasing customer insight.

BETTER INSIGHT INTO CUSTOMERS IMPROVES RETENTION

In the current economy, most companies are focused on cutting costs as they anxiously watch revenues retreat. But it's important not to let cost cutting undermine customer retention and further erode revenue - especially since long-term relationships represent the highest customer lifetime value and the best prospects for cross-sell and up-sell opportunities. During downturns, it's more important than ever to focus carefully on improving the satisfaction and retaining the loyalty of valued customers because:

1. 1. Acquiring new customers can cost five times more than satisfying and retaining current customers

2. 2. A 2% increase in customer retention has the same effect on profits as cutting costs by 10%

3. 3. The average company loses 10% of its customers each year

4. 4. A 5% reduction in customer defection rate can increase profits by 25-125%, depending on the industry

5. 5. The customer profitability rate tends to increase over the life of a retained customer "²

And of course, once customers are lost, it's even more challenging and expensive to win them back. Instituting practices that reduce customer attrition protects revenue today and enhances long-term loyalty. Consider that:

• 62% of customer defections can be modified if discovered in advance³

• 68% of customer defections occur because customers perceive "an attitude of indifference."⁴

In other words, since most customers defect because of vendor behavior, you have the opportunity to reduce defection if you can detect dissatisfaction while there's still time to act — and in the process you can gather information that will help address the issues that erode the loyalty of valued customers. For intervention to succeed consistently, you need to:

• Ensure a complete and accurate view of the customer at each interaction so customer representatives can exhibit deep knowledge about the customer — including the relative value of each customer to your business.

• Show you know and value the customer by assembling this profile immediately — without expecting the customer to supply information you should already know.

• Arm customer representatives with a knowledge base and decision support so they can immediately find the optimal way to satisfy the customer they are dealing with.

If you have comprehensive, timely insight into the customer during each interaction - whether that interaction is live or automated - you're also able to detect additional business opportunity and propose up-sell or cross-sell offerings. But gaining that complete insight into the identity and voice of your customer is a challenge.

For a deeper dive on best practices to transform your approach to Voice of the Customer solutions check out our whitepaper:

Better Customer Insight, Better Bottom Line
Companies should focus on customer loyalty during a difficult economy to protect revenue and ensure the continuation of the most important customer relationships. Innovative technologies can consolidate information about customers and their opinions from all relevant sources, providing cost-effective, customer-centric insight that gives every customer representative the 360^O view of the customer that ensures excellent service. When the technology includes workflow and automated alerts, you can reduce costs and improve service and customer insight.

Download the Attivio Voice of the Customer whitepaper

FOOTNOTES
1. © Forrester Research, "B2B Customer Experience Priorities in an Economic Downturn Key Customer Usability Initiatives in a Soft Economy," by Alan E. Webber. February 19, 2008.
2. © Prentice Hall, Leading on the Edge of Chaos, by Emmett C. Murphy and Mark A. Murphy. 2002.
3. © SearchCRM, "Model modelers in predictive churn," By Michael Lowenstein. June 2002.
4. © 1000ventures.com. Data source: American Society for Quality.

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