Episode 25 - The Retention Power of Customer Centricity

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📰 Top Story: The Retention Power of Customer Centricity

Last week, I joined a fascinating roundtable discussion with a group of retention leaders organised by the good guys at 3Search. In the session, we discussed customer centricity and its power to transform customer retention. 

In episode 2 of this newsletter, I covered customer love, explaining how to calculate and correctly capture NPS. I also discussed the T-Mobile US case study, where the business grew from 35 million customers to over 90 million through a program of customer-centricity.  

In this episode, we cover the irrefutable evidence of customer centricity's impact on business value, my top 7 principles for customer love, and 7 case studies.  

The Commercial Benefits of Customer-Centricity Are Irrefutable

In his brilliant book, Winning on Purpose, Fred Reichheld outlined how NPS vertical leaders beat the stock market average between 2011-2020: 

The reason these brands massively outperform the market: customer retention. 

All these brands put the customer first, aiming to resolve service issues in a single call, empowering agents, ensuring they truly understand their customers' needs, and removing barriers to an excellent product and service experience. This meant customers stayed longer, spent more and referred others. 

7 Principles for Customer Love 

Based on my experience working with over 30 global brands to improve customer retention and deploy programs that drive retention-led growth, I have developed a checklist of 7 fundamental principles for customer love. 

Principle 1: Be on the Customer’s Side - Orange

Customers will love you if you look after their interests. There can also be a direct financial upside to this. Orange Australia ran an ongoing rate plan health check program with existing customers. This notified customers that if they moved from plan X to plan Y, they could save Z. Comparing the cohort exposed to the program vs those not exposed revealed a 57% reduction in churn. While this lost money in the very short term, over the medium term, it drove massive increases in revenue through reduced churn and enhanced CLV.

Principle 2:  Be Effortless  - FirstDirect

Being effortless means engaging the customer to tell their story only once, reducing the time the task takes and increasing simplicity and convenience. Although it has now become table stakes in UK banking culture, First Direct pioneered the Current Account Switch Service (CASS), which makes the hassle of switching simple - they switch everything for you, including automatic payments. 

Principle 3:  Create Great Expectations - Laundry Republic

Daniel Kahneman: "Memories are all we get to keep from our experience of living" (1). Since past experiences set expectations for the future, our memories of a brand's interactions with us are crucial for retention. Laundry Republic, the award-winning laundry service in London, models its experience on luxury retail, using packaging that makes the customer feel more like they are getting new clothes than their old ones back. 

Principle 4:  Solicit Feedback - Peloton

The act of asking for feedback shows you care. Following member questions about specific track names used in some workouts, Peloton created a love feature for tracks favourited by members. This feature allowed customers to sync the song to their Apple or Spotify playlists with one click.  

Principle 5:  Go The Extra Mile - Discover (credit cards)

Do way more than is expected in the moments that matter. Discover eliminated annual fees, removed rewards points breakage, used US call centres, put a massive focus on easy-to-use digital service solutions, made customer service available 24/7, proactively sent emails the day before late fees and waived the first one, monitored the dark web for misuse of customer cards, and more (2). 

Principle 6: Be Human - Paddy Power

Recognise that customers are human beings with human emotions, thoughts and feelings. The definition of a company is a collection of human beings, so treat your customers as you would treat a human being (love thy neighbour as thyself). Paddy Power social media and above the line is legendary, comedy creates human connection, and the brand's tone perfectly fits the target persona. 

Principle 7: Delight - Mastercard

Delightful experiences make you want to share your brand experience with others. Being delightful can also mean providing value beyond the core service. MasterCard's "Priceless Surprises" campaign offers customers random rewards (anything from free cupcakes to concert tickets and VIP meet 'n greets) just for being customers. 

Final Thoughts

Customer-centricity is not the only way to improve customer retention, but it can be one of the most effective ways to achieve sustainable long-term retention-led growth. Moving to a model based on customer love requires patience (it took T-Mobile 7 years), but the data backs up the impact: companies that prioritise customer centricity consistently outperform the market and their competitors.  

🤖 AI Feature

There are two critical issues with Generative AI right now: 

1. Poor quality prompting resulting in poor quality output

2. Massive market complexity makes it difficult for Martech buyers to know where to look. 

My friend Frans Riemersma does a great job assessing the Global Generative AI Martech landscape, aided by 500 volunteers. His overviews, like this one, are excellent. 

Even with these reports, it is hard to digest and review every tool, and they cover all aspects of marketing, not just Retention or CRM Marketing. 

And we are on the brink of enormous disruption and transformation in retention and CRM marketing. 

So we need to know where to look.

Think data, CRM / retention journeys, and content all created from a GenAI prompt, executing and operating across multiple platforms.  

The guys at High Touch do a great job of explaining what's coming (not affiliated with me).  

For Retention and CRM Marketers, this means three things:

1. Prompt engineering knowledge is fundamental. Learning how to write great prompts to get the most out of GenAI tools is crucial for career longevity. 

2. Retention and CRM Strategy is fundamental. Without a good grounding in strategy, you will not be able to write great prompts or assess AI output. And you don’t know, what you don’t know.

3. Creative resources will be critical in a world dominated by AI-built retention marketing programs. Creative folk must set guidelines defined in the martech content layer, contribute to prompts, and assess and edit creative outputs.

If you are a Retention or CRM marketer, as you head into 2025, the best advice is to focus all you can on writing great prompts and immerse yourself in how leading brands leverage behavioural science, build onboarding journeys, generate customer love, and become embedded in customers' lives to build great retention marketing programs. 

My new CRM Marketing Strategy 2.0 course covers: 

• CRM & Retention Marketing Strategy 

  • Moments of Truth  

  • Onboarding 

  • Creating Habit 

  • Customer Love 

  • Behavioural Science

  • CRM UX  

• Generative AI prompt engineering best practice 

• AI tools to be aware of if you are a Retention / CRM Marketer

• And much more

• Approx 100 minutes of bite-size lessons

Register here to be informed of early bird pricing at the January launch.  

Until next week,

Tom

“We don’t have time to waste, we need to improve retention now!”

My fast-track retention accelerator enables brands to improve customer retention in under 12 weeks.