Use Service Personalization to Grow Customer Lifetime Value

Editor’s note: This is the second post in a two-part series. View the first post Use Service Personalization to Reduce Customer Churn.

Business author and management consultant Geoffrey Moore has called customer churn “the cholesterol of today’s business.” In the past, churn was viewed as a part of doing business; there wasn’t too much a provider could do to reduce it. However, those were the days of service and personalization were an afterthought to the initial sale; rather than being an integral part of the interaction between a service organization and their customers.

The Lifetime Value of a Customer

Forward-thinking service providers are now placing a priority on staying ahead of their customers and their competition by focusing on making service engagements both personal and “frictionless” for their customers. While making service easy is an important step towards increasing customer satisfaction, retention and reducing churn for increased Customer Lifetime Value (CLV), it is shortsighted to stop there. In fact, it all comes down to the customer’s perception of your service—and importantly—the communication that goes along with it.

Shortening an appointment window from 4 hours to 2 hours will help improve satisfaction, but only for those that learn about the change when they initiate a service call. It’s critical that service organizations ensure that their customers are aware of the investment they have made to improve their experiences in advance of their next service call in order to gain maximum benefit. It’s well known that a long-term customers of a service providers such as telecommunication companies, that provide nearly 100% reliable service, receive at best, ambivalent ratings about the quality of the service they receive—even if though that reliability means that they haven’t had a service call in years. Yet, when their provider comes through quickly and effectively after a rare outage, their service rating for their telco provider soars. This points to the need for promoting your service quality, tools and personalization capabilities well before the need for service arises.

Your customers should be aware if you offer a portal where they can record their preferences (preferred communication channels for mobile service delivery updates, etc.) that allow the customer to feel in control well before the need to for service arises. This requires promoting those capabilities across virtually all communication channels; from customer service reps, to IVR messages, to the web, to printed bills.

The ramifications of a quality service experience and the in-home DVR offer for a cable operator are substantial: increased customer satisfaction and retention rates for improved CLV, as well as the $60 annual gross revenue increase for each customers that chooses to accept the upgrade offer—with no marketing expenses, no shipping costs, and a professionally installed upgrade to delight the customer. The cable provider can easily have the correct DVR inventory onboard their vehicles by being proactive based on historic conversion rates for these types of offers.  When these types of service chain elements line up efficiently and effectively it greatly contributes to making your service professionals brand ambassadors for your company—further cementing the relationship with the customer—driving organic revenue growth.

Growing the CLV to Grow the Business

Exceeding customer expectations is one aspect of how staying ahead of the customer helps organizations stay ahead of their competition. In fact, positive experiences are a great catalyst for upselling.

Customers are much more willing to increase their service level (and CLV) directly after a positive experience with their provider. Think about how many customers would respond positively to the following recommendation if they just came off of a great cable TV service experience: “I see that you have an older model of our DVR. For only $5 a month I can upgrade you to our newest device with double the recording time. Would you be interested?” The numbers tell the rest of the story:

Setting positive expectations in advance can go a long way towards moving the dial into positive territory well before a service experience. Changing service providers is not a trivial activity, and providing a positive customer engagement takes away much of that risk of defection. Returning to the Bob Seger reference in the introduction of this two part series, no one wants to feel like number; and your business can benefit from the revenue numbers generated by providing excellent, personalized service.

Use Service Personalization to Reduce Customer Churn

Editor’s note: This is the first post in a two-part series. View the next post Use Service Personalization to Grow Customer Lifetime Value later this week.

Bob Seger’s classic hit, “I Feel Like a Number” aptly describes how many customers feel about their relationships with their service providers. In these days of personalized service experiences from providers like Uber and Amazon, it’s apparent that consumers want a more personal relationship with their providers. More often than not, however, you’ll hear people say, “My phone/cable/utility company doesn’t have the slightest notion of who I am.” The result: stalled growth, expensive marketing to back fill customer counts, and ultimately revenue loss.

The ramifications of those laments can be seen in the findings of the Rockefeller Foundation indicating that “68% of customer churn is caused by valuable customers who feel neglected.” This statistic was reinforced in Accenture global customer satisfaction report that states, “Price is not the main reason for customer churn—it’s actually due to the overall poor quality of customer service.” Obviously, that feeling of neglect leads to increased churn and revenue loss for organizations that ignore their relationships with their customers.

With the advent of CRM technologies in the 1990s, the concept of personalization was all the rage. Although personalization was an exciting concept it was initially extremely difficult to execute, resulting in missed opportunities that ultimately led to the abandonment of those efforts. However, technology has since caught up with the concept; companies can now easily personalize their relationships with their customers to slash churn rates—to the mutual benefit the provider and their customers.

Getting Personal

Mobile technology provides the flexibility to develop bi-directional communications with your customers. Even if an individual customer has not acted upon your marketing messages for personalization, your CSR can offer the option of receiving updates on their field service appointment at the time of the service call. Depending upon your call volume and adoption rates, your reps could even execute the customer profile settings when they are on the phone with a customer—providing a value-add service that will continue to pay benefits for years to come. Regardless, remember that you need to make the process frictionless.

The last thing a customer wants from a product or service that rarely needs servicing is another app on their device. This is easily avoided by texting (or emailing is that’s the customer preference) a web hyperlink when service is required that offers that same tracking capabilities as seen in the now-familiar Uber.

Even with an attractive two hour appointment window, customers still can feel frustrated when they don’t know when during those two hours the service professional will arrive. Not knowing the answer to questions like, “Do I have time to take a shower, put the baby down for a nap, or run out to get a sandwich?” can greatly affect their satisfaction even before the service professional arrives. And their frustration level only increases as that 120 minute service window begins to dwindle. These frustrations can easily be addressed by accurately and continually informing the customer of their service professional’s ETA.

Keeping It Real—In Real Time

Keeping the customer informed with service ETAs throughout the day can eliminate the friction and allows the customer to add specific, personal information back to the technician such as “Please don’t ring the bell, but knock because the baby is asleep.” A forgetful customer can respond that they inadvertently overlooked their appointment, or had something come up; allowing your schedulers and dispatchers to slot another task to the tech for further business efficiency.

If your organization doesn’t already have one, it is highly recommended that you bring on a seasoned Customer Success executive. It’s crucial that you have a senior, strategic leader in place to design, implement and quantify the results that an effective and personalized service experience program can have on your business.

A 2016 Aberdeen report on Service Excellence found, organizations that have a Customer Success Officer in place receive an 89% customer retention rate vs. a 52% retention rate for those that don’t.  In addition, service workforce utilization improves 11% when a dedicated service executive is in place. Improving performance numbers like these—on both sides of the service equation—are the kinds of numbers that your customers will appreciate; as your management and shareholders most certainly will as well.