Customer Retention

There are two parts to customer retention. The first is how do we keep our customers, and the second part is how do we help them keep their customers.

Our software helps our client companies engage their customers and really create a good experience. If it’s a retail store, for example, their goal may be to provide a great in-store experience. Sure, they want people to buy things, but they want people to have a great experience when they come into that retail store – not just the salesperson saying, “Well, this one’s $100 more and I’m not sure why.” They really want that person to have a great experience, so they will come back to that store and say, “I bought a camcorder, now, in three months, I want a digital camera.” That’s important from a customer retention standpoint. Also, they want for those particular customers to tell friends so that more people come.

Some of our software helps follow up with a customer. Let’s say they bought a DVD player or a camcorder; if there were accessories that came out that were potentially valuable to that particular consumer, the corporation may want to contact them. They want to proactively use software to go out and contact customers on things that are specific. I’m not talking about an e-mail to all men in Georgia who are between 30 and 40; I’m talking about specific targeted offers or follow-ups that are electronic mail that are based on that particular person’s preferences or purchases. Success is based on four things: (1) conversion sales rate increases, (2) expense per sale reduction, (3) average selling prices increasing, and (4) customers buying multiple products.

From our standpoint, how do we retain our customers? It’s quite simple: We try to deliver value every day. We have measurement systems in place, and we continue to measure the value to our customers – everything from how many dollars they sell to additional products. And, certainly, part of the strategy at our company is to add additional products so that we deliver more and more capabilities to customers so they spend more money with us over the years. And, because we work on a hosted basis, our renewals are annual, although we have many customers who have signed multiyear contracts. The contract is only as good as your relationship. You can have many pieces of paper, but what’s really important is whether you are delivering value to the customer and whether they perceive that you are quantitatively doing so.

Our customers expect us to commit and deliver. We expect them to stay on track with us. One example of this surrounds the revenue recognition issue. In our business, most of our customers buy from us on a hosted basis, so we do not start to recognize revenue until they go live. If we do a lot of work and get the customer ready and then they don’t take it live, it hurts us. We have spent the time and money to support them, which is very costly in the sense that our costs are frontloaded. So we expect every customer to agree with us and then work with us as if we were on the same team and get the job done. We deliver and they deliver – success together. It’s really the only way things work well. Lopsided relationships break. Balanced, open, honest relationships succeed, and the companies that preach and practice that way are the winners