<— 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)
- Incredible social media presence (5 but rising)
- Thought leadership (7)
- Leading edge products and/or services (7)
- Loyalty cards (8)
- Great support (8)
- World-class account teams (8)
- Value-added solutions (10)
- Incredible customer experiences (CX) (10)
Each business must choose its’ own retention strategy that is 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 serious look at evolving into value added services. This evolution offers the potential of 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?
Here is an undisputable fact: Customers do not buy technology, they do not buy products and they do not buy features. Customers only want to pay money to make problems go away. Which is why we talk about value added solutions – because 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 his problem you will start improving his level of trust with your business, and this will certainly improve his 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 in the highest level through their Professional Services organization or because their business model is to create unique solutions by packaging other vendors products – think VAR’s. But everyone else needs to get into this game.
How Does This Fit Into A Retention Plan?
With the Internet, “everyone knows everything”. In ever shortening timeframes, unique products become commodities. For example, as this is being written in March 2013, talk about Apple is focused on the iWatch and AppleTV – iPhones, iPAD now have serious competition from Samsung, and people are looking for Apple’s next shinny 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 with something new – probably from a new supplier! Value added services become the lockout specification.
But you may be thinking, “Why can’t my differentiator be great customer experiences”? Well, since the barriers to entry for great CX are small (at least financially) and since the press and blogosphere is full of post 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 will need to maintain and improve your customer’s CX just to stay in the game. I know this is true because I worked through the Quality era when it was a differentiator. Today, if your quality even sucks a little you have a very short window to turnaround the situation or you will find yourself on the expressway to no-where!
When thinking about long-term differentiation, think value-added services.