Mining Customer Data and Retention…Movin’ Dirt and Big “Hunkin'” Spreadsheets

March 25, 2010

According to a recent Aberdeen survey entitled “How the Best-in-Class Use Customer Data to Boost Retention Revenue in 2010“, 48% of 1,230 business executives from cross-functional disciplines indicated “organic revenue growth” is a top business goal this year. Whereas customer acquisition will be a primary focus among companies in 2010, a growing number are shifting marketing budget away from customer acquisition initiatives to retention marketing initiatives; with the goal of increasing retention revenue from existing customers. In fact, 56% of all survey respondents indicated “increased cross-selling and up-selling to current customers” as a customer-facing action their business has taken (or will take) in response to the economic downturn. Makes sense, right?

As I read through the survey results, one thing stood out for me. Aberdeen stated “Customer retention is about more than just keeping customers; it’s about transforming existing customers into a highly profitable source of revenue and knowing how to optimize your marketing investments“. I believe this starts with leveraging customer data to gain a more holistic understanding of buyer behavior in order to segment and deploy retention initiatives.

35% of respondents of Best-Class organizations are applying customer analytics techniques to improve cross-selling and up-selling messaging. Likewise all organizations cite the need to identify new and emerging customer segments as a top strategy.

Aberdeen provides the following recommendations:

  • Centralize customer data within a customer database
  • Continue to enhance you customer profile
  • Develop a periodic process to scrub the customer database

Recently, OpenView Venture Partners, an expansion stage venture capital fund, held a quarterly executive forum on market segmentation. Luke Hohmann, founder and CEO of Enthiosys and senior advisor to the firm, discussed the importance of retention and utilization. That is, the addressable opportunity within an existing account and your penetration rate. If you have low utilization, you are at higher risk of losing the customer. In order to increase utilization, you may need to do some research on customer data (move dirt and build big “hunkin” spreadsheets as Luke would put it), to understand the underlying issues (e.g., user/buyer personas, messaging or product). Needless to say, at the end of the day, its about increasing penetration, profitability and switching cost (stickiness).

What is your retention strategy?

Key Account Director

Marc Barry is an experienced sales leader in the Enterprise Technology Industry including Software, Cloud and Consulting. Currently, he is the Key Account Director at <a href="http://www.oracle.com">Oracle</a>. He was previously a Venture Partner at OpenView.