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Customer Experience

May 21st, 2010

Four P’s Of Customer Retention

It has been approximately 40 years since marketing professor and guru Dr. Philip Kotler coined the concept of the four P’s of marketing – product, price, place, and promotion.

While still valid today, Kotler’s original four P’s do not have as much application to customer retention as they do to customer acquisition.

A more appropriate set of Four P’s for the area of Customer Retention would be People, Policies, Processes/Procedures, and Prevention. Here are a few thoughts on each of these attributes, and their importance in achieving higher levels of customer retention:

People – staff must be motivated, trained, and allowed to be customer-focused. TLC – thinking like a customer – should be the standard operating procedure. Staff should have a willingness to listen to customer concerns and to ask questions that uncover the full nature of these concerns. Care for the customer is accentuated by a consistent display of service ethics. Internal culture should maximise the willingness of all staff to work well with co-workers and to foster a desire to learn jobs outside their immediate areas of responsibility. Most importantly, you want staff that constantly exhibit high energy and enthusiasm for your customers.

Goal: don’t let your people drive your customers away!

Policies – your policies musts be flexible, expandable, and customisable. Eliminate the phrase “it’s our policy” from the organisation’s vocabulary. Train and empower staff, particularly front-line staff, in interpreting and applying corporate policies as guidelines on how to conduct business and engage with customers. Policies that concern corporate ethics and that could have major impact on profitability should certainly be followed to the letter. However, policies that have to do with internal procedures and processes, and which have a direct impact on the organisation’s ability to meet individual customer needs, should be used as guidelines to help employees deal with specific customer situations.

Goal: don’t let your policies anger your customers!

Processes/Procedures – these need to be made as simplistic and straight-forward as possible, in order to provide greater convenience, speed, and ease of access to your products and services for customers. Sign-offs and authorisation procedures should be more streamlined for existing customers than for prospects and new customers. When in doubt, reduce odious procedures and simplify processes for existing customers by granting them higher levels of trust. (A good example – why must a hotel require a credit card imprint from a guest who has stayed in that hotel numerous times before? After all, a returning guest with a multiple stay record is unlikely to abscond without paying the bill.)

Goal: don’t let your procedures and processes inconvenience customers!

Prevention – one of my deep-seated marketing beliefs is preventing customer complaints is better than resolving them. In my second job, while still in high school, the owner of the business taught me his 7 P’s of business success (please excuse the language): proper prior planning prevents piss-poor performance. To keep good customers, your organisation needs to commit to quality (as defined by your customers) from the top down and the bottom up. Eliminate errors and you eradicate many of the key reasons customers have for leaving.

Goal: don’t let mistakes cause your customers to leave!

Like Kotler’s original four P’s, the above are all inward focused. But, unlike the traditional four P’s learned in every basic marketing course, the Four P’s of Customer Retention are designed to be applied to current customers already captured through the time-honoured marketing mix.

Customer retention is the art of keeping good customers. This art is best applied through a concentrated focus on the Four P’s of Customer Retention – People, Policies, Processes/Procedures, and Prevention.

Awaken these four P’s in your organisation and watch your customer retention levels ascend to heights previously only dreamed.

About the Author

Steven Howard

Steven Howard is a Melbourne-based marketing consultant, author, conference speaker, and Non-Executive Director in both the profit and non-profit fields.

Visit his web site, for valuable information and links on marketing, customer retention, branding, and corporate image management or to sign up for his free weekly newsletter The Monday Morning Marketing Memo and his marketing blog.

He is a positioning specialist, whose 30-year marketing and sales career in Asia and Australia has covered a wide variety of fields, ranging from consumer electronics to publishing and from a national airline to personal financial products.

He is President of Howard Marketing Services, which provides consultancy and project management services in the areas of Marketing Management, Product Development, Positioning Strategies, Customer Retention Strategies, New Product Launches, Event Management and Brand Management.

He consults on a regular basis to companies in the financial services, industrial products, consumer products, restaurants, petroleum, publishing and hospitality fields.

Contact details:

Phone: (61-3) 5428-1388

Fax: (61-3) 5428-1399







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