Episode 27 - The Retention Maturity Curve
Tom Burrell
December 13, 2024
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Welcome to episode 27 of the Retention Blueprint!
In this episode
The Retention Maturity Curve: Where are you?
AI feature: What’s your take on where we are headed?
BIG NEWS: I am very excited to announce the launch of The Customer Retention Show, a podcast series with a difference. Every 4-8 weeks, I will gather a panel of at least two industry experts within a specific vertical, and we will dive deep into what drives retention in that vertical.
Episode 1 launches in the next few weeks and will focus on publishing. It will feature the CMO of L'Equipe and the Executive Director, Growth Marketing at the L.A. Times, accompanied by the CEO of Prosper Stack and the Editor in Chief / CMO of the Audiencers & Poool.
Future episodes will cover gambling, telco, streaming, fashion retail, subscription e-commerce, grocery retail, subscription mobile apps, wellness, B2B SAS, and more.
Are you a senior leader or consultant with deep expertise in a specific vertical? Email me at [email protected] if you want to take part.
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📰 Top Story: The Retention Maturity Curve
After 25 years of consulting major brands or working within them, studying and speaking with some of the most experienced leaders in the fields of Customer Experience, Retention, CRM, Loyalty, and Personalisation, I have started to form an opinion on what a retention maturity curve might look like.
In this episode, I outline my embryonic approach with the aim of sourcing opinions on what people believe is right, wrong or missing.
The Retention maturity curve looks at the practices you deploy in your organisation and your mindset towards retention as a source of business value, as well as how you approach customer relationships. It is, therefore, complimentary to the Retention Hierarchy of Needs (read more on that in episode 20).
Level 1 - Immature
You are likely to be a new business seeking growth via acquisition. You may have some rudimentary retention processes in place, like holistic measurement of churn and perhaps a welcome program, but efforts are minimal. Your business focus is on your value proposition and growth via acquisition.
Case study: Most start-ups spend several early months at this level.
Level 2 - Developing
You have started to understand the relationship between customers acquired and their retention profile, realising that low-value deals don't always equate to high levels of retention. You have started to understand churn across more dimensions, such as tenure, acquisition source, and avatar. You are on the path to maturity, but it is still early days.
Case study: Scale-ups can often be at this stage. They have proved product-market fit, they have investment, and they (or their VC backer) have started prioritising customer retention.
Level 3 - Evolving
You have evolved your acquisition strategy to acquire for value based on a customer lifetime value model and are applying ROAS to your media activity. This is improving retention in itself. You have a sophisticated lifecycle marketing strategy in place. Personalisation is not 1-1; in fact, some programs are one size fits all, but you are starting to address all moments of truth in CRM Marketing, product and service. You have also started to put in place business-focused retention strategies, perhaps adding friction to the cancellation process. Still, your overarching focus is driving business value, even if that is at the expense of the customer experience or NPS. You want to be data-driven, but you need to do more.
Case Study: Most telcos are stuck at this stage.
Level 4 - Maturing
You have all the features of level 3, except you are starting to focus much more on customers since you have realised that retention is the sum of all customer experiences with a brand. Your attitude to retention is maturing; you have deployed service differentiation such that your highest-value customer needs are prioritised while you manage low-value customers for cost minimisation. Your CRM Marketing lifecycle programs have started to mature and become much more heavily segmented; you are leveraging behavioural science across most interactions to drive mutually beneficial value. Your attitude has evolved from 'they will stay anyway' to 'we must protect our best customers at all costs'.
Case Study: Lots of financial services brands.
Level 5 - Excelling
At level 5, you use customer value management to deliver personalised experiences across multiple touchpoints. You understand your product does not have inherent value; rather, value is realised on customers' terms, and you tailor experiences based on your knowledge of how customers realise value with your service. You have a customer love program in place, seeking to delight your most valued customers and, as a result, you drive exceptionally high levels of earned growth, either via customers referring you or by existing customers increasing spend. Customer relationships are smooth (e.g. It's easy to join, easy to get issues resolved, easy to buy, easy to leave). Still, you don't leave money on the table because you help customers make informed decisions. You are extremely data-driven; you celebrate experimentation and a program of continuous learning and improvement.
Case Studies: Amazon, Apple, Netflix, Spotify, and Amex are all at this stage.
Amazon Prime
Amazon's business is built on a culture of experimentation. Amazon's service teams get rave reviews for resolving issues fast, offering refunds if needed, and removing friction. When Jeff Bezos launched Amazon Prime, he said, "I want to draw a moat around our best customers." Amazon launched Prime with the goal of protecting the highest-value customers and prioritising the moment that mattered most to them, the delivery window. Amazon is a brand that is excelling in customer retention.
Would you take part if I turned this framework into an assessment tool, with multiple-choice questions, a score, and recommended actions? |
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🤖 AI Feature
I'm frustrated and excited about AI. I was on a panel last week debating the impact of Gen AI on CRM Marketing, Marketing & Business in a room full of senior CRM Marketers. I only see a few people (aside from my professional close circle) sharing my enthusiasm for what AI will enable in terms of improvements to customer experiences. I have worked in Retention and CRM for 25 years and heard soundbites about 1-1 personalisation from vendors and practitioners for years. With Gen AI, entire journeys will be built across multiple touchpoints for specific users, meeting their specific needs and creating great customer experiences. It's the long-held promise of CX and CRM. I am excited, but I don’t see the masses embracing this.
It leaves me thinking, am I missing something?
What camp are you in? |
If you want to learn more about how AI will transform martech and personalisation, tune in to episode 1 of season 2 of the Hello $firstname podcast, where Rasmus and Frans break down the content layer.
Until next week,
Tom
P.S. What did you think of this episode? |
Retention Consulting & Training
When you are ready, contact me to discuss consulting, my fast-track retention accelerator, courses, and training. Or if you are interested in sponsoring this newsletter, get in touch via [email protected]
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