Question

Please provide an example of a company that has an effective customer retention program and describe the components of effectiveness. Describe the potential impact of the company's customer service on their generation of revenue. Do you believe there is a correlation between the company's program and its financial success? Why or why not?

Answer 1

Customer retention is becoming more and more important to companies as they are realizing that it can be more expensive to focus on getting new business versus working internally to keep the customers they already have. “According to Gartner Group, 80% of your company’s future revenue will come from just 20% of your existing customers. While Adobe reported that online retailers spend nearly 80% of their digital marketing budgets acquiring shoppers, for each 1% of shoppers who return for a subsequent visit” . It just doesn’t make sense if you look at the numbers to exhaust your efforts into something that won’t pay off nearly as much as focusing on the customers that have already bought into your brand.

An example of a company that has incredibly effective customer retention programs is the company I currently work for, LogMeIn. We are a top-10 rated SaaS company that provides “products, solutions and services that help people do their best work – whenever, wherever and however” . As a company, it has been a focus for the entire year to date to be more aware of our current customer base and how important they are to the success of the business. That being said, they launched a program called Project Preserve where we are working with all current clients that are over-spending to re-align their spend and continue to earn their business. To explain further, we have legacy customers that have been with the company for many years and are on what we call “old pricing skews.” As the years have gone by, competitors have come into the market and costs have changed, some of these customers have very high price per user, which can cause them to look elsewhere for services. So, what we have done to retain these customers is re-align their spend per user with current pricing. This was launched this past quarter and already is working incredibly well. Customers of mine that have been evaluating other solutions such as Zoom or WebEx have stayed with us because we have been able to take care of them. I definitely believe that there is a correlation between Project Preserve and financial success and as the program continues to evolve it is only going to help retain customers, which is going to have a strong effect on revenue moving forward. They also opened a new job specifically in Customer Retention to oversee the project and ensure that we can retain as many customers as possible in a very competitive market.