Understanding the role value plays in your customer retention strategy
What if I told you the price of your product or service is irrelevant to the future of your business?
I don’t know how outrageous that sounds anymore; the idea of competing on the basis of price point is largely passe now that your customers can easily search the world for a better deal than yours in just a few minutes. So the question becomes, what is the competitive edge on which you can establish a customer retention strategy?
Convenience is one such edge. Building a strong, personalized presence in “the Experience Economy” is another that has been well discussed in many venues, including the Harvard Business Review and Forbes. But today I’m going to argue that value is the third leg of the stool on which you can build success.
How Do Customers Define Value?
Inc. has said that the value customers receive is equal to the benefits of a product or service minus its costs. In other words, value can be defined as a measure of worth: If an item or experience is “worth it,” we’re willing to take on the cost (be it money, time, commitment or any other consideration) in order to add that value to our lives. Consider a vacation to attend one of Disney’s theme parks. While we parents often complain about the monetary cost or other considerations like time spent waiting in line, those complaints are secondary to how much we personally value what our families take away from the Disney experience.
The short answer to defining value is that each customer appreciates value when they experience it. Satisfied customers are more likely to retained, and customers who feel their experience was not valuable will move on, no matter how much or little it cost them. In addition to the direct value of the product or service received, this concept of customers’ perceived value can indirectly include:
- The sensory experience: The tiniest detail of sensory input gathered during a customer experience can do much, often unconsciously, to add or detract from the experience’s value. Does the scent just explode out of the bakery box when you open it at home? Did the retail beauty advisor have the most delightful French accent? Did the cab from the airport have clean upholstery? Good salespeople have understood this as long as there has been commerce, but it’s not mere hucksterism to strategically maximize it.
- Use of information: They learned something that will be put to practical use in their lives – the more unexpected the nugget of information, the higher the value is likely to be.
- Memory retention: They left the experience with a memory they will enjoy thinking about, and telling others about, in the future. Isn’t this, after all, the basis of the souvenir market and of marketing giveaways?
How to Build Value into Your Customer Retention Strategy
One of the simplest ways to demonstrate your brand’s value to all your customers is to simply show that you value them. Do this by making your processes easy, convenient and respectful of their time and effort. One such solution proven over decades is VHT Callback, whereby you gift back to your customers their own time by “saving their place” in the queue and allowing them to schedule a callback from your agents at the time most convenient to them.
Then there are the benefits of segmentation. While the concept of value is an individual thing, how your customers use and value your brand will likely fall into a few broad categories. Leverage your own customer data to pinpoint what’s really important to each segment: Do they want faster service? More product options, or fewer, better designed choices? More convenience? More consultative interaction with your service agents?
The recent focus on the customer experience has led to the emergence of good data analysis tools. One is the voice of customer (VoC) program. Another is customer journey mapping, where you learn from watching your customers’ actual actions, reactions and transactions throughout their experience with your brand. A truly omnichannel CX solution will harvest data from all your systems — legacy or new, hardwired or mobile — and consolidate it into an easily accessible dashboard where you and your agents can use it to get to know one customer or thousands.
Both of these tools will help you develop the predictive data to apply personalization and proactively supply your customers with the aspects they find most valuable. And don’t forget to continually reevaluate your data in order to systematically improve and refine the value you offer.
Now let’s flip it for a minute: When it comes to allocating your company’s finite resources, disproportionally allocate toward your high-value customers as identified through your data – those customers who find the most value in your offerings and have proven they will stay with you whatever the cost. These people (and those like them, for prospecting purposes) are the ones who are most valuable to your company, and they deserve this extra focus.