⬅︎This is not a retention strategy!
Every business needs a retention strategy, and every retention strategy needs a differentiator, something that makes your business stand out from the crowd. The differentiator must have long-term value, high barriers to entry, and must be consistent with both company’s culture and capabilities.
Differentiators and Long-Term Value Rating
Here are some typical differentiators with my opinion of how valuable they are to a B2B business over the long haul. (For my value assessment, I use a 1 to 10 scale where 1=disaster and 10=long term winner):
- Low price (1)
- Loyalty cards (2)
- Incredible social media presence (5)
- Thought leadership (7)
- Leading edge products and services (7)
- Excellent support (8)
- World-class account teams (8)
- Value-added solutions (10)
- Incredible customer experiences (CX) (10)
Each business must choose its’ own retention strategy appropriate for its business, marketplace, capabilities, and potential resonance with customers. However, incredible customer service must be part of the strategy! In addition, I suggest B2B companies take a severe look at evolving into value-added services. This evolution offers the potential for revenue growth because each sale is potentially larger than current sales. Even more importantly, if you do it right, you will help your customers grow and create more value for their customers, which in turn will cause more business to come your way. This is a win-win-win strategy – in the smartphone world, it is called “the killer app!”
Why Value-Added Solutions Belong in a Retention Strategy?
Here is an indisputable fact: Customers do not buy technology; they do not accept products or buy features. Customers only want to pay money to make problems go away. This is why we talk about value-added solutions – solutions are the proper term for “making a problem go away!
Today, solutions are synonymous with innovation. Peter F. Drucker once defined innovation as:
“The design and development of something new, as yet unknown and not in existence, which will establish a new economic configuration out of the old, known, existing elements. It will give these elements an entirely new economic dimension. It is the missing link between having a number of disconnected elements, each marginally effective, and an integrated system of great power.”
When creating a business solution, you must first understand the problem your customer is trying to solve. If nothing else, the discovery process will force you to get closer to your customers; by working together, to help solve their problems, you will improve their trust in your business, undoubtedly enhancing their loyalty. This graphic shows how a product company may go through three stages of maturity on the road to long-term growth:
Mehrdad Baghai, Stephen Coley, and David White, The Alchemy of Growth, New York: Perseus Publishing, 1999
Today, most high-tech companies are at the mid-level; they offer products and services. Some are at the highest level through their Professional Services organization or because their business model is to create unique solutions by packaging other vendors’ products – think VARs. But everyone else needs to get into this game.
How Does This Fit Into A Retention Strategy?
With the Internet, “everyone knows everything.” In ever-shortening timeframes, unique products become commodities. For example, as written in March 2013, talk about Apple is focused on the iWatch and AppleTV – iPhones; iPad now has serious competition from Samsung, and people are looking for Apple’s next shiny thing. How long did the Netbook control the spotlight before the tablet took over? Since the time an owner keeps using a product or service is directly proportional to the cost, as products become less expensive, their owners are more willing to discard them and replace them with something new – probably from a new supplier! Value-added services become the lockout specification.
But you may think, “Why can’t my differentiator be great customer experiences”? Since the barriers to entry for great CX are small (at least financially), and since the press and blogosphere are full of posts talking about it, everyone is, or soon will be, making CX a short-term objective. If you have great CX now, you will gain a fleeting and decreasing advantage and must maintain and improve your customer’s CX to stay in the game. This is true because I worked through the Quality era when it was a differentiator. Today, if your quality even sucks, you have a concise window to turn around the situation, or you will find yourself on the expressway to nowhere!
When thinking about long-term differentiation and retention strategy, think of value-added services.
About Middlesex Consulting
Middlesex Consulting is an experienced team of professionals with the primary goal of helping capital equipment companies create more value for their clients and stakeholders. Middlesex Consulting continues to provide superior solutions to meet the needs of its clients by focusing on our strengths in Services, Manufacturing, Customer Experience, and Engineering. If you want to learn more about how we can help your organization create a customer retention strategy, please contact us or check out some of our free articles and white papers here.