Marianne Downs
OK, welcome everyone to the Pendula customer retention webinar and virtual panel discussion. I will be your host today. My name is Marianne and I head up the marketing function here at Pendula.
Marianne Downs
A special hello to those attendees across the pond in Singapore and New Zealand. Alrighty. Now let me introduce you to our expert panel. First up, we have Nick Cherrier. He is our principal consultant at Cherrier Consulting. Nick is the former APAC chair of Zuora's Subscribed Institute and former General Manager for digital advertising at News Corp Australia. He founded Cherrier Consulting to provide strategic advice, subscription and advertising based to advertising and based businesses. David Palfreeman is our principal consultant at Palfreeman services. David is a CRM and loyalty expert who has consulted to companies such as Coles, NAB and Qantas on their marketing CRM and loyalty strategy. David has his own consulting firm specialising in CRM strategy, membership campaigns and project management. And lastly, we have our head of customer Ben Albrecht, Ben designs and implements our post Sales strategy, delivering better time to value retention and experiences for our customers. Prior to moving into start-ups, Ben comes from a background in consulting primarily in SaaS where he has witnessed how technology has evolved in all shapes and sizes.
Marianne Downs
Ok? For those of you who are new to Pendula, take it away Ben.
Ben Albrecht
Thanks Marianne. Yeah, so I appreciate there's probably some people in the audience today that are unfamiliar with the Pendula platform. So just before we launch into the panel discussion, I thought I'd give everyone a quick introduction to those who might be wondering what we do and how we drive value for our customers. So simply put Pendula as a proactive retention platform. Meaning we help organisations maximise the lifetime value of their customers and minimise churn by engaging customers at the moments that matter. So, whether it's engaging with a customer who is likely to spend more with your organisation, making that as seamless experience as possible or reaching out to one who might be at risk of churning. Now, this is all achieved by directly integrating with your systems of record and making the most of the customer data that you have. And all of this is done via a no-code drag and drop user interface, which is designed to put the power into the hands of the teams who know your customers best.
Ben Albrecht
Yeah, for further information, you can check out pendula.com or reach out to one of our family team and Marianne back to you.
Marianne Downs
Great. Thank you. Now, let's officially kick off our virtual panel discussion. Now, the Pendula theme today is centred around customer attention, engagement and loyalty plus the strategies and initiatives that can drive business growth and revenue rapidly. Our expert panel will share their recommendations and insights along with the meaningful customer retention, marketing and loyalty initiatives that work to drive unparalleled growth. So without further ado, let's kick off with the first question.
Marianne Downs
Many sectors that were previously focused around acquiring new customers are now looking to balance those efforts with increased customer attention. This question is for all of our panel speakers. I invite you to share your thoughts and views in a challenging economy. We are seeing a shift from net new acquisition to retaining customers. Tell me why you think this trend and shift of focus is here to stay.
Nick Cherrier
I shall I, shall I stop then, Marianne.
Nick Cherrier
I would say there's two things to take in consideration. The first one is in terms of economic hardship, you do have budgets that tend to freeze. Basically, customers tend to become a bit shy or take on new technology, for example, new partners. So deal cycles tend to lengthen as well. So as a whole, your cost of acquiring new customers increases.
Nick Cherrier
And as a result, it's probably a much smarter bet to bet on your existing customers and increase budgets and efforts there. So that's the first, that's the first element. The second one is to do, I think with a more long term view and this is why I think the trend is there to last, I do think that companies tend to over index on acquisition.
Nick Cherrier
And this is probably fueled by, let's say a capitalist mindset where you reward companies for huge growth. As we've seen, for example, in the startup world and less so on metrics like NDR, right? So what we've analysed at Zuora was how much for subscription businesses, how much of their revenue was done by existing customers versus new acquisitions. And interestingly, we saw that the stat was somewhere between 70 to 80% is actually done by existing subscribers. And I think that's really important, but second, the trend increases as you mature as a business. So younger businesses will just rightly have a huge amount of effort going towards new customer acquisition. But as you mature, it becomes more and more important to put all of your effort towards maintaining your existing customer base.
David Palfreeman
Yeah, I tend to agree with those points. Nick, I mean, I think that there really has been a massive change in the market over the last few months.
David Palfreeman
For example, I work with some recruitment consultants looking for business analysts. The same business analysts who were getting 1200 a day a couple of months ago are now looking for jobs at 700 a day. So the market has really changed. The economy has really changed as well. Also at the high end of the market, Brandy runs a high end watch business looking at pre owning, pre earned watches. He's seen a 30 to 40 cent drop in prices and the market has shifted from him trying to get hold of supply.
David Palfreeman
And buyers are just desperate to buy now, those same customers are trying to sell and they're trying to ruffle load their collections. So the market has really changed and I think for normal customers they're looking at what's important, what they actually need to spend money on and what they'd like to spend money on, has very much changed that they're buying the necessities. And I think in this economy to your point, Nick, people are really looking at where they're shopping and it's not just about going, acquiring those new customers, it's about those customers you've got already and getting a bigger share of wallet of, of their spend. And, supermarkets are a classic example. People aren't always loyal to one supermarket, but it's really getting a bigger share of their spend and they have very clever programs to help them enable that.
Ben Albrecht
Look, I, I'd agree with both of you guys. Look, I think the trends are definitely here to stay. Personally, I'm seeing a real shift in the way businesses view where their revenue growth comes from. in particular, the fact that you can now craft quite a strong retention strategy and have such a significant portion of your revenue being driven from your existing base. Now more than ever. This is pretty apparent in Telco the utility space as well, where competition for customers has always been quite tough, but we're now seeing verticals, you wouldn't necessarily expect like education, even disability service providers where you've got all these new players entering the market. And as a result, their retention strategy really has to take the front seat and become more sophisticated simply because the potential lifetime value for those customers is so high.
Ben Albrecht
I'm also seeing the trend towards all of this new technology. So things like customer data platforms or CD PS, access to enterprise grade software now accessible to pretty much anyone through SAS. Now it's much easier for companies to develop really strong, I guess, know your customer or retention type strategies that are supported by these incredibly rich customer insights. And I guess, why wouldn't you? It's probably no surprise to anyone that it's, I think it's, I think, five times cheaper to sell to your existing base than it is to acquire a new customer. So look, I think where we're at at the moment, businesses have never been better equipped to really understand these behaviours, personalization. and really develop retention strategies targeted towards keeping them engaged.
Marianne Downs
Yes, I definitely agree. There are some great insights from the panel there.
Marianne Downs
The next question I have is for David, you have accumulated some impressive experience consulting for leading brands, particularly within loyalty based membership organisations across a variety of sectors including finance, retail, transport and aviation over the last 20 years.
Marianne Downs
Do you think it's necessary to have a formal loyalty program set up? And in the instance that a business does not have a loyalty program or members database to lead on, what can an organisation do to retain customers in that situation?
David Palfreeman
Yeah. Thank you. Look, for some, some companies, it's absolutely vital to have a loyalty program.
David Palfreeman
There's a lot of companies that are now really starting to invest in it. I've just launched one recently where customers were screaming out for it. Like all our competitors had a loyalty program. They're the only ones that really didn't have an effective one. So customers want it. It's a great way for you to acquire information. On your customers and better serve them, better give them information, give them offers that are relevant to them and you can do some really clever things with the data. So for example, one of the airlines I worked with was finding that a particular time of the year and in fact, they've just launched it again recently that there was a drop off in bookings at certain times of the year. It's, there's a, there's a, there's a low period. So what they did was, they said it's very cheap to them but perceived as valuable by their customers, which is a double status credit offer. So basically status credits give you access to lounges, give you a shiny card that you can impress your friends with, but it doesn't actually cost the co the business all that much when they ran one of their campaigns on that, it generated $25 million in new revenue. So this was customers who hadn't made any bookings, made new additional bookings on what they had done. We saw the revenue spike. It was absolutely fantastic.
David Palfreeman
So you can really use that data for, for very clever marketing and targeting.
David Palfreeman
But you've also got to bear in mind that people aren't 100% loyal to you.
David Palfreeman
So for the airlines example, people will fly with other airlines and the loyalty is a way of getting that bigger share of wallet that we were talking about earlier.
David Palfreeman
And, if you don't have a loyalty program or a, or a database thing on it, you really need to think of a way of how you can legitimately capture and gather that data and some of the things you can do, like we, we have customers. So, they're looking at a website.
David Palfreeman
We were doing email campaigns to customers who had registered with us to say, look, we noticed you looked at a product multiple times online. It's actually on sale at the moment and we found those incredibly effective customer engagement. We've got very high open rates and, sort of 2% sale rate on people who have been sent the email, which is amazing, just, just added to to David's point.
Nick Cherrier
There's another trend that we're seeing certainly in retail, but, but probably a few other sectors as well is, is that notion of paid loyalty?
Nick Cherrier
And as you mentioned, David, there is this notion of shared wallet that is very interesting to a lot of companies out there trying to maximise their market share.
Nick Cherrier
Upsell cross sell, et cetera to the existing customer base.
Nick Cherrier
If you look at companies like Costco or Amazon in the US, they're probably the pioneers of that concept where you pay X amount per year or per month. Usually in these cases, it's, let's say $100 or something per, per year.
Nick Cherrier
And that allows you to unlock certain features, for example, Costco, you can go and shop there. Amazon, obviously, you've got streaming as well as free delivery. But the impact of paid loyal loyalties that you have there, customers that ha have already put skin in the game in a way, right? Like they're already paying you something. And so in order to maximise their benefit, it's in their interest to keep shopping with you to get more and more value.
Nick Cherrier
At the top of my head, I can't remember the exact figure, but I think Amazon saw something like a five X difference between a member and a non-member in terms of spend on their platform, just, increasing their basket size and their frequency.
David Palfreeman
Yeah, and that's a really great example, if customers see the value in spending that extra five or $10 a month, they've gotta be getting more than five or $10 a month worth of value out of it.
David Palfreeman
But yeah, as you say, once, once they've committed to it, then it's actually, well, I've got a choice between two providers and actually I've already got a, I've already paid the $10 a month for them, so I get free delivery, I'll go with them. So it's a very, very good scheme.
Marianne Downs
OK.
Marianne Downs
Some great insights and recommendations there from David and Nick.
Marianne Downs
Moving on to the third question, this question is directed to Nick, are subscription businesses better positioned or prepared to drive customer loyalty and offers with their consistent columns and pro programmatic schedules. We touched on that a moment ago in my mind, you would expect so on what could organisations do to replicate these business strategies?
Nick Cherrier
And you'd be right, Marian? It is. It is absolutely the case. Subscription businesses tend to be better.
Nick Cherrier
Obviously, there's always an exception, but there's a very simple explanation for why they are better at it.
Nick Cherrier
It's based on the recurring revenue model that they fall under. So if you take in contrast, a let's say a traditional business that just sells widgets, they will probably achieve a certain margin on each sale and move forward, right. So it's in their interest for you to shop there again because they can achieve volume and therefore higher profits. But at the end of the day, they've realised the sales and they moved on, right? Regardless of what happens with your usage of the product. If you look at subscription businesses, they are dependent on a loyal customer base.
Nick Cherrier
Usually they tend to be unprofitable for the short time customers. So they're banking on most subscribers probably staying more than three months with them for them to make a decent amount of money. So the notion of customer lifetime value is extremely important to them and they need to maximise that index. So in order to maximise that they need to be able to demonstrate value to their customer and ensure that they stay for as long as possible. Right? So yes, as a matter of survival, subscription businesses tend to have better practices. In B two B, this is why we see a lot of these businesses have customer success management functions. In B two C, we tend to see customer experience functions. But it's all geared towards one key thing, which is the concept that the customer should be at the centre of everything that the business does. And so the tip for any company that is looking to replicate some of the success of subscription businesses, is to put your customer at the centre of everything.
Marianne Downs
Yeah, great advice there.
David Palfreeman
Couldn't agree more. Nick, you, you've got to put the customer right at the centre and a lot of these subscription businesses actually start off with a, with a trial model.
David Palfreeman
So for example, you can buy stuff from Amazon without going to a subscription model. But once you start buying, you actually realise the subscription makes more sense.
David Palfreeman
And the whole try before you buy it works very well for them. I think the one I love was Spotify. you can use Spotify, listen to music for free and it's great. Or you can pay for premium service, not good ads. And my daughter showed me a great example of this. She works at a wedding venue and she showed me a video of a couple at the not at her wedding venue. It's another overseas wedding venue going up the aisle and midway through their journey up the aisle, the music was interrupted by an ad and that's it. I just cannot imagine what that would have been like for the bride and groom and the poor person who decided. Yeah, I'll skip the $16 or whatever it is for Spotify premium and go with the free version cos that will stick with them for a long time. So yeah, subscription models are really good.
David Palfreeman
I think the try before you buy from them is crucial and customers see the value of it and can try it and see the value and actually get some benefit from it and lots of companies are doing it now. So not just Amazon Kogan have got a model where you can pay a subscription, you get free delivery. Even the supermarkets, Woolworths and Coles have now got a model where you can actually pay a subscription, as part of their loyalty program and get free delivery and more points and things. So more and more companies are moving towards it.
Ben Albrecht
Yeah, Nick, going back to your point, look, you, you're absolutely spot on. And yeah, subscription businesses do lend themselves really well to that customer centric strategy. pendulum being a subscription business. I like to think of it as that, there's no such thing as post sales. Every activity we do is a pre-sales activity. No matter where the customer is along the the life cycle. But going back to the customer Centricity or I guess the moments of truth as, as we call them, I think it's something that any business can employ. No matter, whether you have a subscription revenue or not, a revenue model or not. An example I'm thinking of is a particular telco customer we have, they offer a lot of prepaid products which probably, you can't really consider subscription based. But they actually identified a key moment for those customers was when they switched off, like a direct direct debit function, which for them was a pretty clear indicator of churn.
Ben Albrecht
Now they use pendulum to engage those customers via SMS at that particular moment with a question to kind of better understand why the customer had made that choice, was it financial difficulty were they gain, not enough use out of the product, whatever it was, but then off the back of that response, provide them with something relevant. And of value. So, whether it's a discounted recharge free data or, or whatever it is. Now that immediately boosted their retention by, I think it was 5% immediately. But more to the point, it's a really great example of identifying a key moment of truth. And putting the customer at the centre of it. Now I know I talk a lot about moments of truth. But anyone that's unfamiliar with the term, as much as I'd like to take credit for it, it was actually coined back in the eighties by the president of an airline at the time. And his theory was essentially, if you managed every interaction in a way that created a positive outcome, then the business would be successful.
Ben Albrecht
So I think, look, if you're wondering how do you replicate this and incorporate the whole moments of truth concept into your business. You've really got to understand them first. And the best way to do that is to map them out. Look, we use a methodology called customer journey mapping. We are really effective And we do this internally as part of our own strategy, but we also facilitate it for customers. And, once you've got these moments written down, you can then decide, what can be improved, automated, streamlined to kind of make it that more customer centric experience.
David Palfreeman
Yeah, I agree. Ben, the moments of truth are key and also it's important to map the ones that go off track. We actually, like where there's been a failed delivery where the product's arrived and it's broken where they've been double charged and, making sure you've got those mapped out cos that's where you can actually either break or make the relationship.
Ben Albrecht
Absolutely. It's not always the happy path, David. Yeah.
David Palfreeman
Absolutely. It's usually the unhappy path where you find the most benefit in that mapping. And the other thing we find is, to your point, looking at where there's people who unsubscribed from a previous customer. We went through the unsubscribed list every week and we actually found some, some gold insights out of that. We actually found that one of our processes wasn't working because we'd offered a discount voucher when people signed up to our mailing list. But a certain percentage of them weren't getting the discount voucher because there was an error in our program. And the only reason we found that out was just by going through the unsubscribes and why are people unsubscribed? And then, well, these four people unsubscribed say they didn't get the voucher. Let's check into it. Oh my gosh, they didn't get it. So enable us to fix, fix the problem. So yeah, really look at all those issues and monitor them.
Marianne Downs
Great advice and feedback there from the panel. In terms of strategies, I definitely want to delve into customer segmentation. As a marketer, I see companies often segmenting based on demographics which is quite simplistic. What advice do you guys have in terms of customer segmentation and profiling?
Nick Cherrier
So that's one of my favourite topics, segmentation. So I'll take the lead on that one. And David, please try. I mean, I know you've got a lot of practical examples as well.
Nick Cherrier
And I used to work in advertising so it used to infuriate me when having conversation with clients and they would look at males between the age of 35 to 65 for example, right?
Nick Cherrier
That's a big range which pretty much, it, it's, it's not at all zoomed into a particular behaviour that you want as a business.
Nick Cherrier
And that's why behavioural segmentation tends to be much better, right? So things and by the way, usually people think they relate more to B to C but you can also have B two B examples in terms of what matters for business, right? So it's applicable in both cases. But the point is, it's not because you're of the, in the same, living in the same city, in the same age, the same gender that you'll have very similar behaviour.
Nick Cherrier
You may have preferences around different channels of consumption. You may have a different willingness to pay different interests, et cetera. So as a business, it's much better to try and understand what your customers want, and how much they're likely to spend on your product. If they're likely to, go for bundles. This type of, of, of insights tend to be much better. Ultimately, if you're looking at, at building some great tactics and strategy and tactics in, in the realm of retention, having a view of probable customer lifetime value is also very important. Because once you have those kinds of like different segments, it allows you to treat those customers in a very different way. I think David had a great example around travel earlier, you would probably employ different tactics based on the different kinds of customer sets that you have as well, right? And that's true for both acquisition and retention.
David Palfreeman
Yeah, I think that's a great point. I mean, to you, for example, with airlines, now you'll have customers who are travelling and the same customer wears different hats. So when they're travelling for business, they'll have very particular preferences about which airline, which class of travel they want to go in. But when they're travelling with their family, the same person has a very different set of requirements. So to your point, you really need to look at where that customer is in their customer journey and their buying profile. So not just say this custom and to your point about targeting gender, I'm completely against that. I work at an automotive parts company where a significant proportion of more than 40% of our customers are female.
David Palfreeman
So, you, you can, you need to target where they're in their buying experience. Again, to my example earlier and looking at what customers are looking at online, what they've been browsing. If they've been looking at something repeatedly, it means they're interested in it. And if there's a price drop and that's a great idea for great campaigns that customers actually really appreciate, they've been looking at something and maybe it's a little bit too expensive, but when the price drops, hey, now that's your indication to buy.
David Palfreeman
Also look at, you know what customers are doing. So again, with flights, customers are flying regularly in Melbourne to Sydney, but they're only flying one way. Well, there's a great opportunity to look at. Well, we should offer them some seats on the way back and find out why, to your point. Then about moments of truth, why are they not booking with you? Is it because you're not offering, you don't get a free beer on that particular airline and because the company's paying for it, they're not prepared to pay out the extra $5 for a beer. They'd rather pay a high price from another airline and get the company to pay for it. So, really understanding what motivates customers to make those decisions.
Ben Albrecht
Yeah, absolutely, David. And I think further to your point that travel examples, a great one, how customers actually do move through different segments, it doesn't matter how detailed or, or granular that that segment is, you need to understand. And this, I think is where a lot of businesses fall down is it's very one dimensional.
Ben Albrecht
So I think my one piece of advice is, adopt a more contemporary model where even though you're looking at a range of factors, allowing customers or accepting that customers will move back and forth across different segments, because they've exhibited different behaviours at that point in the customer journey, just to, just to add to your point, Ben on this one.
Nick Cherrier
It's true that you have customers that move across different segments. But also ideally as a company, you should be refining your data as you, as you move forward. And that means that your segmentation can evolve over time, right? So it's not a monolith as you refine things that you get to know about your customers. You should keep looking at it and evolving that segmentation as well.
Ben Albrecht
A Absolutely. It's not a one size fits all and as you said, Nick things evolve and change and as you, more, you wanna be refining that strategy ongoing, great advice there around customer journey, mapping and behaviours and segmentation.
Marianne Downs
I will move on to the next question which is for Ben. As an experienced customer success practitioner and someone who defines our retention strategy here at Pendula, what is your recommendation for those looking to improve or build upon their retention strategy? We've touched on a couple of those items already, but let's expand on them.
Ben Albrecht
Yeah, great question, Marianne. So look before getting into some of the strategies themselves. Look, I wanted to start by saying that, first and foremost, for anyone, you should be focusing on maximising the odds of the customer renewing by not just leaving it to chance. Now, the reason I say that is it's important to realise that retention is actually a customer driven event. Typically as businesses looking to retain our customers, we think of retention as something we need to do. But in reality, retention means that the customer's making a choice to stay with your business. So you wanna make sure that retention process and everything leading up to that is a really positive experience.
Ben Albrecht
But yeah, over to some of the strategies I've seen proven effective.
Ben Albrecht
And look, I think the start is the best starting point for anyone. And I've mentioned this before is a customer journey map.
Ben Albrecht
And look, it's really just AAA visual representation of your customer's journey that you've researched and captured. And if you've got one great, it might be worth revisiting. But if you haven't, that's something we can also help with as well. But there's a few reasons why a customer journey map should exist for your organisation.
Ben Albrecht
And those factors would be, you wanna accelerate your customers time to value as much as possible. No matter what you're selling or what service or industry you're in.
Ben Albrecht
You wanna identify efficiencies. So, we talked about this early where you can automate parts of the journey where you can, eliminate unnecessary steps.
Ben Albrecht
But ultimately, you want to identify those moments of truth.
Ben Albrecht
So look, one really important tip I have is to ensure you're doing them from the perspective of the customer. Now, David made a good point earlier, you need to be honest with yourself. And it's not always gonna be that happy path.
Ben Albrecht
And that's OK.
Ben Albrecht
The idea of going through this type of exercise is that you capture the experience as if it be good or bad. So that you can actually identify why, where things may need improvement. I like to say that you wanna kinda promote the positive moments and mitigate the negative ones. And look, the last thing I'll say on June Maps is it's also really important to remember that they're only a means to an end.
Ben Albrecht
Ultimately, what they allow you to do is understand where improvement should take place. And then shifting your focus to those outcomes, simply just creating a journey map and having no action off the back of it really isn't really gonna do much for your organisation.
Ben Albrecht
I think the other thing I wanted to mention was value realisation and how businesses should perceive that in relation to their retention strategy.
Ben Albrecht
And going back to my first point, retaining a customer, they're agreeing to extend their relationship with you. So that means, well, hopefully, that means that you've delivered value in the past, but that customer also sees a bright future ahead. And the promise of, of more value to come. Now this is a really subtle but important difference. So your customers are always thinking about the future and where they can get more value. So, it's really important to ensure you're not just relying on your old wins to guarantee your or forecast your customer retention.
Ben Albrecht
And look, I appreciate it's not always possible to continually demonstrate value realisation, particularly depending on what sort of business you're in.
Ben Albrecht
And especially when you're talking about businesses with thousands of customers. And that sheer scale makes things, really, really difficult.
Ben Albrecht
But one strategy I've seen prove really effective actually to compensate, that is, continual value reinforcement. So even if the value realisation was in the past, you wanna continually remind a customer of that value, hey, remember that great thing we did for you, that sort of engagement. And we typically see that a lot with streaming these days. I might have only purchased Optus Sport to watch the World Cup. But, I'm engaged on a regular basis. Hey, we've added this, well, we've got this sport now streaming to kind of reinforce that value and ideally keep me as a customer. So look to sum it all up, you, you want to be as proactive as possible. And, not design a strategy that kind of relies on waiting to see whether the customer's unhappy or not just building on, on that Ben that notion of continuous value is, is paramount there is, I'm gonna play devil's advocate here, but the notion of loyalty is a myth.
Nick Cherrier
Customers will, will turn as soon as you screw up. So you need to ensure that you keep showing them the value and that needs to be very clear for the customer.
David Palfreeman
Yeah. and I think to your point, Ben, you talk about the customer journey, often people do their journey mapping and it ends with the sale of the product. we've, we've sold it to them, we've delivered it to them. But, but for them, for the customer, that's the start of their journey. So whatever service or product you've sold them, they've just received it and that's when they need to, that's when they start getting the value out of it to your point. And you really need to make sure, if they've got a subscription service, are they using it? If they bought the product? Have you got to do a product review? How have you found it and just continue that engagement to get that continuous feedback? And one of the things we found really good is getting product reviews from people saying, hey, notice you bought this product, please give us a review. Tell us what you thought of it and even if it's bad, it's good feedback.
David Palfreeman
and if they've given a poor review, contact them often and they'll give them a refund and even probably they won't want it, but it just builds that relationship with the customer.
David Palfreeman
And if you've got honest feedback on your products, people believe in them. if you've got a few, one or two stars on your, on your review for, for products, people go, oh, well, that means the four and five stars are actually really great.
Marianne Downs
Some really strong points and strategies there. Thank you for sharing. I will move on to the next question. Bear with me.
So this is our last question for the panel discussion before we move on to the Q and A. And this is for all of our experts to answer what are the current and future tech trends. All businesses need to prepare for the rise of A I and Chat GBT. Can you share your views on how businesses should approach these modern tech advances that are trending right now?
David Palfreeman
I can kick that off if you'd like. So I think boards and CEO S and marketing directors get really excited about bright and shiny technology and I would call this bright and shiny technology and they go, this is great. We should get ChatGPT, we should invest in this technology. It's the latest greatest thing, what they often forget is their fundamental underlying data is what needs to be fixed first.
David Palfreeman
So, if they've got customer data, that is wrong. When you feed that into ChatGPT and try to or whatever it is and try to use that data, you get some really ugly results.
David Palfreeman
So, I've seen this with customers where they've got customer details, they've got the names mixed the wrong way around or they've got, information put in the wrong fields as soon as you start to automate that and start to use, these automation tools, it, it'll stuff up and the customer will have an absolutely terrible experience. So I would say, first of all, a lot of companies need to think about what their business objectives are, what they're trying to achieve and how they're gonna use that to achieve those objectives. So not the starting point, shouldn't be the bright and shiny technology, but the starting point should be what are the business objectives we're trying to achieve? What capability we need to achieve that and then what's the best way to do that and what's the underlying things we need to get right first and generally that's data. Nick. I know you've got some thoughts on this as well.
Nick Cherrier
Yeah. Yeah, I couldn't agree more. II I tend to love the saying shit in shit out, right. So I completely agree.
Nick Cherrier
I think we have to recognize that the global economy at the moment is a little bit cheeky.
And so it's natural for companies to try and look for improvements in their operating models in, in seeking, higher profits and therefore they're going to try and be more efficient in how they operate. Right. and I think Chad GP T comes at a moment that I think a lot of firms are looking for such tools. It's important and by the way, it's not just for, for companies, I think as, as personal users, it's great for us to do our own research and things and not invite everyone to play with it and see how, that can speed up whatever you're looking for on the internet.
Nick Cherrier
But I think there will be some disruption in terms of content creation, for example, there will be some disruption in terms of employment, job losses and things that so what I, I would advise, I mean, is for, for companies out there to introduce that their next strategy session when they're, when they're doing some blue sky thinking around what's the strategy for, fy 24 for example, put disruption chat GP DC, how, what could be, the impact on, on your company, what could be the impact on the sector and have a think about it. That's, that's, I think the best advice I could give.
Ben Albrecht
Yeah, I think just to jump in guys. Look, I think personally, as you said, Nick, it's pretty cool from a personal use perspective.
Ben Albrecht
It's still so new. I think we're still yet to see where it's gonna be best applied.
Ben Albrecht
I look, I'm hypothesising here. I can, I can see some useful applications when it comes to personalization.
Ben Albrecht
And I, I've been chatting to quite a few leaders, particularly in the marketing space at the moment and I think their focus at the moment is personalization.
Ben Albrecht
So that could possibly give a competitive edge. So, further to David's point, if you've got the data, I think it could be really useful for making recommendations for the next, best offer, all those types of things in the future.
David Palfreeman
Yeah. Well, I've, I've seen, did a project about two years ago now where we integrated not chat GPT but a chat dot into augmented reality where you could actually see a product in your living room on your smartphone, how it would actually fit in and then ask the Chatbot questions and it tell you how much it weighs, how big it is. And it was really, really impressive, but I'm not sure how much business value it'd added . It looked great, but I'm not sure how many additional sales we got. It was a nice piece of technology.
David Palfreeman
And again, he goes, what's my point? What is the business object you were trying to achieve or are you just trying to show off some bright and shiny tools?
Marianne Downs
Great inter interesting viewpoints there from the panel. Thank you for sharing. So there are a few questions that came into the Q and A. I'm going to call out. The first one that I saw, which was what are the key factors for creating a strong engagement and loyalty strategy. There are quite a few focus points touched on including customer behaviour profiling, making sure the data is clean, it's relevant. Knowing your customer, would you invite the whole panel to answer. Would you like to expand on this further?
David Palfreeman
Yeah, I'd love to if, if that's ok.
David Palfreeman
Yeah, I mean, the key thing for me is showing value to your customer.
David Palfreeman
So if your customer is gonna sign up to your loyalty program, they need to get more value, they need to get more value out of it than they're putting in. So if they're giving you their name, their email address, I'd I'd strongly recommend keeping the sign up as simple as possible, then you need to show value to them. You need to show that you're gonna use that data respectfully, you're gonna send them offers and messages that are channels that are appropriate to them and you're not gonna basically spam them every day. Like some customers do, they've got your email, you get five emails a day from them, you'd unsubscribe, you need to really take that information you've got from them and use it appropriately in a way that they're gonna see. This is great. This company really understands what I'm looking at. Like the example I gave, you look at what they're interested in and tell your messages to them.
David Palfreeman
So don't do what I have some customers here. I want to send a targeted email to all my customers. I said that's an oxymoron.
David Palfreeman
you need to really target in on what message is gonna be relevant and what's gonna show value to them. And some of the loyalty programs I work with, they've made an emotional connection with the customer where they've actually given them things that the customer can't buy. So, they've given them things like they've given them access to meet some, some of the celebrities they sponsor at special events or they've given them early access to sales. There's a whole lot of things you can offer the customer to really give that great experience, to make them feel proud that they're a member of it.
David Palfreeman
And, it's not just about giving points back because there's a balance with the loyalty program. If you give, make it really successful and give a huge amount of points back, so if you give 10% back on every purchase, your company will go bust.
David Palfreeman
You need to have that balance between making that good for your customers and still keeping your company profitable for your organisation.
David Palfreeman
Like, I'm sure you've got some other insights you'd like to share.
Nick Cherrier
Yeah, I agree. As I think we have very similar views on this. I would, I would even say that loyalty or, or retention starts at acquisition and what I mean by that is, we talked about segmentation. Are you targeting the right customers out there? Because if you, if the notion of value is so important, if you, if you are going after customers that don't really like or have a use for your product, it's no wonder that you're going to lose them very, very quickly, right? So the first thing is like, really go for the right segments out there and then I, I completely agree with you, David. Then the value, the product itself has to be engaging. I think the number one reason for people to churn is because they're not using the product. So make sure that they're using it and that they are seeing the value.
David Palfreeman
Yeah, absolutely. And to your point about picking the right customers, some, some loyalty programs, they offer great benefits, but you've gotta be really picky about who, what benefits you offer to whom. And again, the airlines are great at doing this with their top tiers, they look after their top tiers incredibly well and give them benefits that the rest of us would love to have. But, we're not spending enough with them, so we don't get those benefits.
David Palfreeman
And that's why they don't give the benefits to everyone. Cos you've got to earn and these airlines are great at educating their customers. If you want these top benefits, you've got to earn them great recommendations there.
Marianne Downs
I will move on to the second question.
Marianne Downs
So businesses that are not based on a subscription model. What percentage of markings then would you recommend companies allocate towards retention and loyalty initiatives in the current economic environment?
Nick Cherrier
Yeah, so I have a very, very good question. I think it's a, it's a, it's an answer that is quite complex despite how simple the question is. It's true that retention is therefore much more important for subscription businesses, right? So now as a non subscription business, you, obviously every sale is going to technically be a new sale. But I would invite you to look at how much of, of your, of your revenue is still done by existing accounts. That's especially true in B two B, right? If you have a way of tracking it in B two C through loyalty programs, memberships and things like that are also really important to do. And as we said before, usually the more mature the business, the more important existing customers are, what I would invite you to do or, or your, your CMO is probably the one that should be on the hook for that.
Nick Cherrier
you've heard us talk about segmentation, I think it starts with the segmentation.
Nick Cherrier
Any segmentation that is worth its waiting gold will have a view at least on the penetration of each of the different target segments. And that will tell you based on your existing strategy, who you're going after in terms of these segments. Are you going to play more defensive or are you going to play more offensive? And that's true, whether you're a subscription business or, or not, right.
Nick Cherrier
So if you're going for a much more defensive strategy, probably because you're one of the leaders in the market. And if you already have a strong customer base, then, I would say invest heavily in, in retention or, or, another way of saying it is invest heavily towards customers that have purchased from you before, if you're not a subscription business.
David Palfreeman
Yeah, I couldn't agree. More. Nick.
David Palfreeman
It's pointing your, your revenue towards the customers that matter again. I mean, the wagering industry is a great example. you've heard of the 8020 rule with them, it's more than 95% 5% rule that 90% of their rev, 95% of their revenue comes from 5% of their customers. And the top 5% of the customers you really need to focus on retaining and putting a lot of effort in and giving, account managers to them personal phone numbers for them to call the long end of the tail, you, you automate that more, but it's really about picking which customers you want to retain.
David Palfreeman
I'm being careful about it as well. So really been having a strategy in there to make sure that those customers really feel looked after and loved that are at the right end that are in the right segments and making that cost effective. So you're not applying that to your entire customer base.
Nick Cherrier
And I I mentioned the CMO . It's a good exercise to do with the CFO there because to your point around like the 8020 or the 95 5% It's not just about revenue but it's also about margin. You don't want to be spending too much effort on unprofitable customers even if they do a lot, a lot of your, your, your business revenue. So, having visibility around how profitable the different segments are is actually very important as well.
David Palfreeman
Yeah. And the wagering industry that was particularly relevant because you get some customers, you get some customers who are wagering a huge amount and they're not winning and you get some other customers who are w, a fairly substantial amount but they're winning all the time. And to be honest, it's like they're after these guys. Yeah, these guys are, they're creaming us out, and the sort of the guy from Tasmania who did very well out of the wagering companies built an art gallery out of it.
Marianne Downs
Yeah.
Marianne Downs
There's some great advice and recommendations there. Nick and David, I might move on to the third question. It is who owns, retention in organisations? Is it a shared capability? What are your thoughts?
Ben Albrecht
I might take that one guy. Look, if you ask me personally, I think, retention is everyone's responsibility across the business. But, look, if, if you're talking about who owns retention in an organisation and one single, throat to throat to choke as, as you would say, you look at subscription based businesses, you might have the concept of a customer success major and even a chief customer officer, who is obviously there to ensure or maximise customer lifetime value and minimise churn. Now, I understand that not all businesses are set up like that and a lot of businesses aren't even structured in a way that they wish to support the customers. So look, if you find that retention is owned by, let's say the sales or marketing function, which it often is in organisations. retention's translating to revenue. So it usually does sit there.
Ben Albrecht
All I would say is just make sure that those leaders are incentivized to, minimise churn and maximise retention just as much as they are with acquisition as well. So it's, it's really important that if, if the organisation is set up in that way that it's not just about acquisition and the individuals are incentivized as such.
Marianne Downs
Great. Nick and David, did you have any view points you'd like to share?
David Palfreeman
II, I agree with what Ben says. Yeah, I mean, retention sometimes you have, AC RM manager, CRM and multi manager.
David Palfreeman
But really, it should be shared across the business people should all be.
David Palfreeman
And it's interesting that some like, so we're talking about some of the touch points like, customer service, they can be really key when people are ringing up and complaining they need to have skin in the game.
Nick Cherrier
I think, the more interesting question is then how do you incentivize it as well throughout your organisation? Right.
David Palfreeman
Yeah. Yeah. and it, and it can be very hard. I mean, especially, with the customer service you've got people ringing up and complaining and whining that their product wasn't delivered, product broken, that they are getting the right people in those roles, is very tough.
David Palfreeman
But when you do get the right people, they can make a huge difference and they're often very much underappreciated. Yeah, absolutely.
Ben Albrecht
and further to your point point, David, it's about having the right metrics and drivers aligned to those individual functions so that I guess that the combination of that is, is, a AAA great retention experience for, for the customer and making sure it's aligned across the business.
David Palfreeman
Yeah, absolutely.
Marianne Downs
That could definitely be the theme of our next virtual panel discussion. Well, big. Thank you once again to our panel experts for sharing their expertise and insights.
Marianne Downs
Really, really great recommendations, strategies and focus points. I'm looking forward to hosting you all again very soon. That takes us to the end of our virtual panel session. Have a great day all and see you at the next session.
Marianne Downs
Thank you.
David Palfreeman
Thank you. Thank you. Bye.
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