Episode 38 - Who’s Responsible for Retention?

Did someone forward this to you? If so, click to subscribe

📰 Top Story: Who’s responsible for retention?

Retention is the sum of all customer interactions across the retention hierarchy of needs. 

See episode 20 for more on the Retention Hierarchy of Needs:

Often, because retention is driven by the core value proposition (including pricing), who is acquired and how you handle retention at moments of truth, different departments can end up being responsible for various elements of the retention hierarchy of needs without actually having any focus on retention at all. 

This is undesirable because, of course, these teams can directly impact retention in unfavourable ways.

For example: 

• The performance marketing team may use promotions and discounts to attract large numbers of customers at the expense of customer retention. 

• The customer service department may reduce headcount to reduce costs, but the downside is increased wait times, which leads to churn. 

• The product team may unintentionally introduce a product feature or even seek to reduce friction, for example, in onboarding, in a way that negatively impacts customer retention. 

Then, sometimes, retention is left to the customer lifecycle or CRM marketing teams. These teams' sole purpose is to retain customers, but they are fighting against internal policies that negatively impact their ability to succeed. 

So, who should be responsible for retention? 

While at an event recently, I discussed this with a group of other retention leaders. It was suggested that this is a difficult challenge to manage because retention results from every decision made within the organisation, including product, promotion, CX, and customer service. Therefore, it was suggested that it is the CEO’s responsibility. 

But, I’d argue that the CEO can't get into enough detail to be able to make the right retention calls, which is why you see so many brands revert to quick buck acquisition tactics and cost reduction initiatives when times are tough.  

For this reason, a Chief Customer Retention Officer is critical for businesses of a certain size (think mid-sized enterprises and above). 

What's a Chief Customer Retention Officer?

A Chief Customer Retention Officer sits alongside the Chief Marketing Officer at the Exco level. 

This role includes responsibility for:  

• Any loyalty program 

• Retention research & analytics 

• Customer value measurement like CLV

• Customer happiness measures like NPS  

• All customer communications activity inc.. CRM Marketing

• Customer loyalty teams in the customer service organisation 

• Business casing for customer investment to support value realisation

• Key product journeys like the onboarding, cancellation or key services journeys 

Some of these functions may be dotted lines and fall within other parts of the organisation, such as product, finance, research, data, or customer service. Still, the sole responsibility of the individuals in those roles is customer retention and they report up to the Customer Retention Officer either directly or indirectly. 

While this leadership role won't be responsible for the core value proposition or acquisition marketing strategy, they are responsible for managing all customer interactions at moments of truth. 

Moments of truth are moments in the relationship that make or break retention, they are often very short, in some cases seconds long. They are moments that exist within life-stages like

• First app open

• Onboarding

• Critical service issues

• The cancel journey

For more on moments of truth, check out episode 37

Because this leadership-level role has a team that spends all of its time understanding the details behind different retention dynamics, the team can present a balanced, informed view to the CEO, who can then make the right calls in the interest of short and medium-term growth. 

Is this just the same as a Chief Customer Officer? 

Well, yes and no. Many organisations have a Chief Customer Officer whose responsibilities cover the above items. Here’s a list of a few: 

• T-Mobile

• Comcast

• Salesforce 

• Ford 

• Workday

• Recurly

In the last decade or so, we have seen a swing towards centralised CX functions, which either explicitly or implicitly included responsibility for retention, and then, in more recent years, a swing away again from centralised CX functions, with a focus on embedding CX into day-to-day practices. See this link from McKinsey on this: 

I’d argue that customer experience and customer-centricity are not nice to haves-but critical to success.

The problem comes when CX leaders adopt a puritanical view of customer experience: there can be a desire to optimise all customer interactions for all customer types. 

This results in a lack of focus on the right customers or the right moments and ultimately can mean that the evidence of the impact of these teams can be hard to prove. 

I believe adding the word ‘Retention’ would make all the difference. 

It would ensure the role focuses on moments of truth rather than the entire CX and that enough detailed attention is paid to the interrelationship between customer experience and retention. 

What's your view?

Please vote; I’ll share the poll results next week.

Do you know of brands with a dedicated C-level retention role? If so, I’d love to hear from you: [email protected] 

Until next week, 

Tom  

Do you need help with Customer Retention?

When you are ready, please get in touch with me to discuss consulting, my fast-track retention accelerator, courses, training and paid speaking opportunities. Or if you are interested in sponsoring this newsletter, get in touch via [email protected]