Retaining customers is fundamental to any organization and it is more so today.
A useful technique in the customer retention effort is to measure a customer’s relationship with your organization. This measure can be expressed as an index. This index can help you identify customers, well before a milestone, such as a renewal date, that might be a risk of leaving or cancelling.
The index can be developed based on several important customer activities, attributes, characteristics and trends. These can include
- The products/services purchased
- Length of relationship
- Purchase activities and history, including recency, frequency, and monetary value
- Degree of participation in events, i.e. conferences, seminars, webinars, user groups
- Customer service usage
- The number of contacts from the customer organization using your products/services
- A change in the key decision maker(s)
Your index should include the trend of activity over time compared to previous periods.
Various names have been applied to customer retention indices. These include Customer Relationship Index, Member Retention Index, and Danger Index.
Whatever you may want to call it, a relationship index can help you identify possible customer attrition and give you the opportunity to work with your customer to retain their business before it is too late.