Mapping Out an Effective Online Customer Retention Strategy

In today’s online environments, a bad customer experience can become visible more quickly and have more lasting consequences than ever before.

More and more customer interactions are taking place online, thanks to a combination of factors that make the Web an attractive place for doing business: speed of access and response; multiple and widely available points of interaction; and ability to make changes quickly.

However, these factors can also quickly turn against an e-commerce company.

When customers have either a good or bad experience, they want to share the details with others. Before the Web, word-of-mouth was the primary mode of communication, and there were various reports about how frequently customer experience information was shared with others, including statements like, “A happy customer tells seven others, but an unhappy customer tells forty.”

In today’s online world, good and bad experiences are shared on blogs, on Web sites designed specifically to collect and report experience information, through email messages that can become viral, on social networking sites, and in a wide variety of other fast-moving, widely distributed forms. The reach is well beyond seven or 40, connections are immediate, and the information about these experiences remains online pretty much forever.

Sobering Statistics

In addition to sharing information about their experiences, customers also can quickly “vote with their feet” — or, in the case of the Web, with their fingertips. Many studies show that customers simply stop doing business with a company because of a negative experience, and some never return. Whether it’s a short-term revenue dip or a long-term revenue loss, losing a customer affects your bottom line.

Retaining customers and keeping them satisfied, important in every economy, is even more important in the 2009 economy.

In Leading on the Edge of Chaos, Emmett C. Murphy and Mark A. Murphymake the following observations:

  • Acquiring new customers can cost five times more than satisfying and retaining current customers.
  • The average company loses 10 percent of its customers each year.
  • A 5 percent reduction in customer defection rate can increase profits by 25 percent to 85 percent, depending on the industry.
  • The customer profitability rate tends to increase over the life of a retained customer.
  • A 2 percent increase in customer retention has the same effect on profits as cutting costs by 10 percent.

It is not just the initial online application a customer launches that contributes to the overall customer experience, but also the applications that are part of problem resolution.

Call centers, online support sites, feedback survey sites, and the myriad of sites where opinions are shared — all are either online applications for customer self-service or they provide support to call center personnel as they interact with customers.

If a customer has a problem making a purchase or using a service, a company certainly doesn’t want to compound that problem by creating another through an ineffective online support site or via the applications used in its person-to-person call center.

When Customers Speak, Can Companies Respond?

Applications surround the online customer experience, from the initial interaction with support services to beyond. A customer who types in a keyboard command is speaking directly to the merchant, using the language of transactions. The etailer’s job is to hear what the customer is saying and respond.

However, transactions, once launched, travel over diverse and interconnected infrastructures. They traverse networks, application servers, firewalls, mainframe environments, virtualized systems, heterogeneous operating systems, and distributed Service Oriented Architectures (SOAs). In short, the transactions that create the customer experience run in an application environment that is highly complex, very composite, vulnerable to multiple points of failure, and difficult to manage in production.

Regardless of infrastructure or application complexity, ensuring a good online experience ultimately comes down to the transactions — billions and billions of real user transactions that are launched and, when all is working as it should, completed every day.

Transactions represent the actual service quality customers experience, are independent of implementation complexity, and are even more important in a world without infrastructure visibility — a world that includes virtualization, outsourcing and cloud computing.

Transactions, in short, are the DNA of the online customer experience, the fundamental building block. Information about transactions also makes up the quality metric IT most frequently uses to monitor and measure customer experiences: the service level agreement (SLA) and SLA-based contracts.

As transactions travel complicated paths through the infrastructure, problems may arise. Simply recognizing and finding the root cause of the problem can be difficult. Yet diagnosing and fixing the problem quickly is the foundation of creating good customer experience and customer retention, and the company’s response needs to be reliable, predictable and fast. To do that successfully involves tracking every transaction as it completes its travels from the customer to the infrastructure and back.

Managing the Online Customer Experience

Since every online transaction is a 1:1 request from a customer for a response, the company needs to monitor and respond to each and every one. Managing the online customer experience is a 24×7 requirement to provide the best possible online experience and the foundation for a long, profitable relationship.

In complex heterogeneous environments, little issues can add up.
(click image to enlarge)

Customer requests are created in production environments, and monitoring and management also needs to be implemented in that same environment. By monitoring in production environments, in real-time, an etailer acquires the capability to quickly identify, triage, prioritize and resolve problems before customers and business are affected.

Because of the complexity of today’s composite application and infrastructure environments, even small issues can have a big impact on the overall customer experience. Even though IT may own many tools that, independently, will show no problems with individual pieces of the transaction, the impact of each issue on the customer can add up.

Investing in a solution that monitors transactions end-to-end ensures a complete understanding of the impact on the end user.

Only by following the entire transaction from the customer through the infrastructure and the successful delivery of those responses back to the customer, is it possible to have the true picture of the online customer experience.

Christopher Cook is corporate senior vice president and general manager of CA Technologies’ application performance management business unit, responsible for all CA Wily operations worldwide.

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