In Part 1 and Part 2 we discussed many specific ways to employ retention-driving tactics and eliminate retention killers. In this final portion of the series, we will cover how to determine which strategies are best suited for your unique continuity program, how to evaluate their impact after implementation and how to improve their effectiveness.
A critical factor in reaching and maintaining your customer retention goals is monitoring and analyzing results on an ongoing basis. Retention drivers and killers can be measured in lifetime value (LTV) increases and losses. Among the comprehensive set of reports provided by OrangeCRM’s analytics module, OrangeBI (Business Intelligence), you will find several reports that are specifically focused on providing insight into emerging trends within your club memberships.
Listed below are a few of the top continuity reports, along with an explanation of how each of them can be used to obtain key metrics that will reveal the best ways to spend your retention marketing dollars and will help you assess how to optimize your results.
Customer Lifespan by Program Report
This report will help you quickly identify trends in cancelations based on customer lifespan, i.e. the total number of days you are able to retain a customer before they cancel their membership. Knowing the point at which customers are canceling can be helpful in the application of strategically timed tactics designed to prevent cancelations just before the customer reaches that particular point in their lifespan.
Use the last 3 columns in the report to determine the types of cancelations most received for the lifespans with the highest cancelation counts. Canceled by CSR indicates the customer requested the cancelation, whereas Canceled Non Payment refers to automatic system cancelation when a transaction is hard declined by the bank and no further billing attempts will be made. Suspended customers most often result from transactions that were soft declined and are in the process of being resubmitted to the bank, per the user-defined retry schedule.
Now that you are aware of the most common cancelation type, you can investigate further to discover the specific reasons for those cancelations. If your most common cancelation type is Canceled by CSR, use the CSR Event Activity report to view the cancelation reason dispositions chosen by CSRs within a given time frame. If your most common cancelation type is Canceled Non Payment or Suspended Customers, use the Declined Transactions report to see the decline reasons received from the bank for transactions in Declined, Error or Retried status.
Once you have isolated the customer lifespans with the highest number of cancelations, along with the most common reasons for cancelation, appropriate actions can be taken to address those particular problem areas and reduce the number of customers who drop out of the program at specific points in their lifespan.
Customer Cancelation by Date Report
The Customer Cancelation by Date report will help you quickly identify trends in cancelations based on customer cancelation dates (instead of customer lifespan).
This report will also assist you in discerning what kind of retention drivers to implement by exposing the types of cancelations most received for the cancelation dates with the highest number of lost customers – which, in turn, will tell you which supplementary reports can be used to find the reasons behind those particular cancelations (as explained above for the Customer Lifespan report).
Being aware of when and why cancelation spikes occur enables you to make special efforts targeted at reducing the number of cancelations at those specific times of the month and/or year.
Return on Investment by Program Report
Once you have used the data to make a well informed decision on the appropriate retention strategies to implement, remember that it’s important to confirm that what you think is a retention driver truly is one by looking at its impact on the lifetime value (LTV) of your customers.
The Return on Investment report will reveal whether or not your retention-driving tactics and dollars are having a positive impact – based on the profit (income minus costs and refunds) of each payment cycle successfully paid by the customer.
The two graphs at the top of the report allow you to quickly see which payment cycles have the highest and lowest profit margins (income vs. costs), as well as which payment cycles have the highest and lowest income (gross sales). The table below that provides additional data for each pay cycle, including: retention count, attrition percentage, a breakout of attrition counts by cancellation type, costs, refunds, and net income.
If the data reveals less than desirable results, you can use the Customer Retention report (discussed below) to pinpoint the exact billing cycles with the highest number of cancelations and identify what kind of adjustments are needed to make your retention campaign more effective.
Note: There is a difference between a payment cycle and a billing cycle. Payment cycles are based on transactions that are successfully paid by the customer. Billing cycles refer to the subsequent cycle after a successfully paid transaction, for which the customer may or may not ever successfully pay for prior to cancelation. To put it simply – payment cycles are based on received income, while billing cycles are based on anticipated income.
Customer Retention by Program Report
This report can be used to find areas where your retention strategies are not producing the desired results, and to uncover any new problem areas that need attention. It will show you which billing cycles have the highest attrition rates – based on the billing cycle the customer was in at the time of cancelation.
The two graphs at the top of the report allow you to quickly see which billing cycles have the largest drop in customer counts and which billing cycles have the highest percentage of lost customers. The table below that provides additional data for each billing cycle, including: retention count, attrition percentage, a breakout of attrition counts by cancellation type, costs, refunds, and net sales (sales less refunds and chargebacks).
Knowing which billing cycles have the highest number of cancelations – as well as the resulting financial impact – enables you to focus your efforts in the appropriate areas and fine-tune your retention techniques on an ongoing basis, as you work toward reaching your customer lifetime value goals.
Now that we have reached the conclusion of this 3-part series, let’s summarize the main take-away. The tricks to retaining continuity customers are:
- clear communication
- understanding customer needs
- letting customers retain a level of control
- continually monitoring your program’s performance and
- making changes as needed to optimize your results.
For more details on the reports mentioned in this article, and many other reports that are also centered around continuity metrics and are available in OrangeBI, please visit our online help guide at help.orangecrm.com > OrangeCRM Help Guide > Reports.