developing a customer win back strategy

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"Developing a Customer Win Back Strategy" was a Lorman webinar presented on September 12, 2014.

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AM PowerPoint Presentation

DEVELOPING A CUSTOMER WIN-BACK strategy

September 12, 2014

Customer win-back strategies are all to often built on misconceptions

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It is more profitable to keep existing customers

All sales drive profitability

Targeting departing customers is the only focus

Understanding the customer lifecycle allows more effective targeting of customers before they decide to depart vs. accurate predictions of leaving customer numbers

Understand costs: customer acquisitions and other transaction costsFuture revenue: products taken, duration, likelihood of switches or cancellation, upsell opportunities

It is more expensive to acquire new customers

Retaining departing customers can be expensive if they have already decided to leaveUnderstanding the correct spend to acquire new customers drives profitability and limits over-spend in terms of opportunity costs (e.g. marketing or acquisition spend)

Individual contact points provide the solution

Customer churn is dependent on customer experience across the journey, not only single points of contactTo ensure full impact of churn reduction, there is a requirement for integrated solutions across the different parts of an organization

Not all (existing) customers are profitable and it might be better to lose unprofitable customersSome customers leave due to natural reasons caused by changes in the business and therefore their retention might not be cost-effective

To succeed, companies will need to build operating models and analytical capabilities that drive mastery of the entire Customer lifecycle

3

Clearly defined Customer Management Operating Model

Master Customer Engagement Across the Entire lifecycle

Customer Win-Back Value Proposition

Channel Strategy& Marketing Mix

Customer Management Operating Model

Customer Management Processes & Structures

Sales Force Effectiveness

Customer Insights & Analytics

Data, KPIs, and Performance Reporting

Customer win-back strategy planning

Develop framework to communicate the overall strategic objectives for a customer win-back program

Build the portfolio of initiatives and align to the strategic framework

Design a blueprint for the future-state Customer Operating model how does this all fit together?Initiative interdependencies across customer lifecycleHigh-level Structure, Process, Accountability, and Systems

Prioritize and sequence the initiative portfolioBusiness Impact (requires definition of initiative measures)Ease of Implementation (requires understanding barriers to implementation)

Baseline KPIs and develop benefits case for each initiative

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Develop framework to communicate the overall strategic objectives for a customer win-back program

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Overall objective is toimprove retention, reduce cost-to-serve

Objectives for Customer Win-Back Program?

Strategy

Measurement

Acquisition

Management

Conversion

Customer Lifecycle Management

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Adopt a customer level P&L that changes the way Customers are acquired and managed

Deliver highly targeted marketing campaigns that improve customer yield and retention

Refine treatment strategy and develop new value propositions for select segments

Improve the quality and management of the Sales Pipeline to

Measure the customer...

Align the portfolio of initiatives to the framework

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Strategy

Measurement

Acquisition

Management

Conversion

Customer Treatment Strategy

NPS Surveys

Leads routing to Sales

Alignment to overall growth strategy

Proactive Retention Triggers

Alternative Service Propositions

Key Account Management Planning

Contracting Policy and Mechanisms

Call only contracting

90 Day Rolling Contracting

Auto-renewal

Pay-as-you-go

Marketing Services

Sales Policy & Commission

Enhance Commission with quality metric

Discounting & Subscription Sales

Marketing Effectiveness

Measure read/open rates on Push Data

Operationalize Propensity Model

SegmentedProspects Database

Targeted Campaigns

Improved Bedding In Process

Enhanced Treatment Segments

Commission on inside sales handover to Acct. Mgmt. Team

Optimize Acct. Mgmt,Resource Allocation

Customer Lifecycle Management

Leads Scoring Methodology

IT Initiatives on critical path to execution

Migration of Product Tech stack to new architecture

Customer Segmentation

Customer Profitability Model

Propensity Model

Customer Lifetime Value Model

Competitive Intelligence

2

Payment policies by Segment

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A

B

C

D

E

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Build a blueprint for the future state operating model

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Invest and apply analytics

Carefully Segment Your Customer Base

Develop Customer / Account Journeys

Embed / Onboard Customers

Develop Proactive Retention / Win-Back Triggers

3

Customer journey map show the minimum contact points that customers can expect to have within a year

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3

Each wheel represents a different customer contact strategy, split by the age of customer. First year, high value customers have the most contact throughout their 12 month term, as they are the highest risk accounts.

The journeys are split into three stages, these are:welcome (blue)engagement (green), and renewal (pink)

Prioritize and sequence the initiative portfolio

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Pillar

#

Initiative

Owner

Lever

Ease of Impl.

Bus. Impact

CriticalDependency?

Operational KPI

Priority

Customer Strategy

1

CLTV Model

2

Profitability Model

3

Customer Segmentation

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Competitive Intelligence

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Alignment to overall Growth Strategy

Customer Acquisition

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Customer Scoring Methodology

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Segmented Customer Database

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Targeted Campaigns

Customer Acquisition

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Leads Routing to Sales

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Discounting & Subscription Sales

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Enhance Commission with quality metric

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Payments Policy

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Commission on Telesales Handover

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Key Account Management Planning

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Auto-renewal

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Call Only Contracting

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90-Day Rolling Contracts

Customer Mgmt

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Enhanced Treatment strategies

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Improved Bedding-In Process

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Optimized AM Resource Allocation

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Operationalize Propensity Model

As a first step in the process, capture for each initiative:

Owner

Improvement Levere.g. Process, Policy, Structure, Systems etc

Ease of Implementation: High/Med/Lowe.g. IT dependencies

Business Impact: High/Med/Low

Critical Dependency?e.g. IT Platform, CLTV Model etc

Impact KPI

Operational KPI: Conversion, Yield, Y1 Renewal etc

Use the above to generate an overall priority

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Companies often struggle to define and operationalize the right KPIs across the customer lifecycle

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One method in isolation will not tell the whole story or give a complete understanding of the business

WAYS TO MEASURE CHURN

PROS AND CONS OF USING METRIC

Includes CRR but adjusts for revenue decrease %Useful when focus is on revenue

Includes upgrades, downgrades, new sales etc..Focus on re-occurring revenueMRR existing standard reporting metric

Focus on customer retention: each acquired customer has an associated cost

Simple metric focused on customer churn

Focus on absolute number

Value could increase even if losing customersLack of focus on customer retention, low value could have important implications

Variations in items included in MRR: e.g. one-off feesChallenges in underlying MRR calculation: e.g. dates used for revenue

Variations in time period used and definitions of customerDoes not take into account value of customers

Different denominators used (start , end, average)Variations in periods and calculation methods

Does not take into account relativity

% recurring value

%recurring value

% Customers Retained

% Customers Lost

#Customers Lost

CRR

Customersat end

(

-

New customers acquired

)

/

Customers atbeginning

X 100

ChurnRate

Customersat beginning

(

-

Customersat end

)

/

Customers atbeginning

X 100

=

DRR

CRR

x

Decrease in value %

=

RevenueChurn

MRR beginningof month

(

-

MRR end of month

)

/

(

MRR of upgrades

MRR beginning of month

-

(

)

)

=

=

REVENUE / VALUE

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