Note – Although this post is about B2B businesses, there are many B2C’s with the same challenge.
In the B2B world, there are two broad categories of products; software and hardware (usually including software); services are unique and typically ongoing, so there is no question that the customer is still active. The “pure” software providers solved the “Is my customer still my customer” problem in one of two ways:
- Enterprise, or critical application software, users typically sign-up for a post-warranty maintenance and support agreement. This covers technical support, i.e., help and periodic upgrades that fix bugs and add features. It also ensures that the supplier and customer stay in close contact and constantly enhance their relationship.
- They offer their products using the SaaS (Software as a Service) business model. In this model, the user does not purchase or host the software; the developer retains ownership and typically hosts and maintains the software and client data. The end user does not have to worry about backing up his data, upgrading the software, or even running a server. The user only needs an Internet connection to access the application and data. The provider handles all the hassles and charges a monthly or annual fee based on the number of users, amount of storage, or any other value-added offerings that work for both parties.
The situation is very different for “hardware” companies. Many hardware product end users do not purchase a support agreement for one or more of these reasons:
- They have skilled maintenance staff on-site and a ready supply of spare parts
- Up-time is not critical, and priority response, usually a feature of a maintenance contract, is not worth paying for
- The equipment is very reliable and does not require maintenance
- They use a third-party service organization in a desire to save money
- They dropped their agreement when the equipment’s usage declined, and it became a backup unit.
The product is being used in all these cases, and, by most definitions, the owner is still a customer. However, the OEM does not know when the owner is no longer a customer.
Remember that a significant part of a growth and retention strategy is to sell more of what the customer purchased initially but other products and services that will add value to their business. So, suppose a company is serious about retaining its customers. In that case, it must have a non-intrusive way of periodically checking in with the infrequently communicating segment of its customer base to ensure things are still going well; the equipment owner is still likely to contact you when they decide to replace their equipment. They know about any trade-in or rebuilding possibilities you offer to keep your customers and maintain their loyalty. It doesn’t matter if Sales or Service does this periodic checking. What matters is that it is being done consistently by one of the groups and that they are sharing what they learn with their partner in the other group.
Another way to solve this dilemma and add value to your customer is to communicate via a newsletter or technical bulletin periodically. The customer will appreciate receiving the information if the content is valuable. However, if the customer is no longer using your products, they will certainly opt out of receiving the “spam,” you will find out what is going on by asking a brief question when the opt-out request is received.
As I said in the opening, this also happens in B2C. For example, I have a 2000 Acura, which I still enjoy driving. I had it serviced at the dealership until I hit 100,000 miles. At that point, I started having the service performed by my neighborhood repair shop. I still drive and enjoy the car, and when I am ready for a new car, I will consider Acura again, so I am still a customer (even though my dealer stopped communicating with me.)
Customer retention is the key to long-term growth. I’d like to hear how you handle this process in your company.
Related article – to learn more about customer retention, read this; Customer Retention Is All About Time
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 and implement a customer retention plan, please contact us or check out some of our free articles and white papers here.