Mungo Dunnett Associates: Management and Marketing Consultancy

Customer Retention

What Mungo Dunnett Associates delivered?

Identifying the lost customers: this entails database work, to identify specific customers who have closed their relationship with the company recently:

Identifying patterns in customer behaviour (e.g. they generally allow their account to go dormant, or with reducing purchase levels, prior to closing the account)

Identifying customer types: spotting particular types of customers who are more likely than others to leave you

Identifying the value of the lost customers: calculating the profitability of these customers, through a combination of their billings, the attributable costs, and the length of their relationship with the company

Identifying the comparative value of recently acquired business (which typically demonstrates that new business is less and less profitable when compared to lost business)

Identifying those key customers who are responsible for the bulk of the company’s profit – and who are also likely to leave: these become the key targets for the company’s retention activities

This analytical process is usually the single most cost-effective exercise a company can undertake

Improving communication procedures

Customers in all but the most commoditised industries indicate that amongst their reasons for leaving is a perceived lack of recognition and lack of communication from the company. This ranks highly, alongside and often above usual suspects such as ‘poor service’ and ‘poor price’, and even in commoditised industries can become a vital differentiating factor where the only alternative is often hurtful price discounting.

Critical to effective retention is the introduction of a properly controlled series of communications.

These are based on a close understanding of the types of communication that customers are most responsive to. Although these vary according to the company’s sector and product/service offering, the underlying patterns of successful customer contact are identical.

This will entail all the communication tools at the firm’s disposal: computer-generated ‘automated messages’; inbound customer calls; web marketing; direct mail; outbound sales and courtesy calls.

Implementation: creating cross-company focus

The most successful cases of customer retention have been, in our experience, those companies that based their activities upon solid fact, through undertaking the data analysis, and then ensured that customer-facing staff made active usage of the data in handling the ‘target’ customers in accordance with the specified procedures.

Implementation through interpersonal contact ultimately separates those who make small improvements from those who generate substantial increased profitability.