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Question: My company is a service provider and it has become necessary that we raise our established prices. We are currently evaluating our customer retention strategy to ensure we don't lose our regular customers during this transition. What are your recommendations to best aid in customer retention when a price increase becomes necessary?

In the short term, leverage your experience and customer data to help identify those more or less likely to attrite and their corresponding lifetime value. Use the resulting segmentation to develop measured save strategies that can be deployed to mitigate attrition, e.g., unbundling of services, down sell, staggered price increase, price lock with extended terms, special offer, other. You will want to be most aggressive with those high value/high risk customers compared to those low value/high risk customers. The former are critical while the latter may not be worth saving.

In the longer term, a strategy you may want to consider to complement your current efforts is what we refer to as “preemptive retention”. Simply put, preemptive retention looks holistically at customer relationships to determine opportunities to add additional value that is both meaningful to consumers and affordable to the business. The strategy looks to extend the relationship beyond the service offering to help establish additional goodwill – it is an investment in furthering the lifetime value of the customer and a forward-looking retention tool. It is different from most loyalty or reward programs in that it provides immediate gratification or access to benefits without anything to earn.

There are a number of program configurations to consider to best align with your economics and demographics, but most will include the addition of lifestyle benefits that consumers can use everyday. You can use tactically for example as part of a new customer acquisition, award customers for length of service and/or deploy as a save technique to help combat a customer’s desire to cancel. Ultimately, it is the experience with your service that counts but this can help to influence consumer behavior particularly when there are service hiccups, a not so good customer experience, or even a price increase. It becomes part of the leverage to help you weather the storm as customers have a more defined relationship and investment with you than just the services you provide.

Michael Ptak
VP, Sales and Strategy
Teleformix, LLC