Boost Customer Retention with Smart Tech
Years ago, when I was a product manager, my absolute favorite part of my job was to visit customers. Watching how they used our products in vitro, discussing their needs, listening to their suggestions and better understanding their business was ground zero. Primary data. Truth. And fundamental to all the drivers of revenue growth: customer expansion, market share, market expansion, product expansion and pricing optimization. Here I’ll speak to the most basic and sometimes overlooked revenue generator: retaining the customers you have… but with an AI twist.
I used to carve out around two weeks a quarter to visit customers and even then, since I was on the road covering a lot of distance and taking care of other business, I could visit maybe 8 customers per trip and that was with the help of sales doing the heavy lifting of scheduling the visits.
Today digitally-native companies program this into their products and wow, it’s a firehose of valuable information compared to the trickle of my younger efforts. Whether it’s Netflix or AutoCAD or Amazon, software tracks what the customer is doing and how they are doing it. Feeding this data into statistical and AI models churns out a 24-hour-a-day, 7-days-a-week stream of valuable information without ever having to get on a plane or doing a zoom.
Until recently this window into the customer’s world was shut to physical products used in the physical world. Until recently after a physical product, part or component was sold the OEM lost direct contact with the customer. Or whatever customer relationship there was, was indirect, passing through people at each level of the sales channel resulting in data that can be best described by the game telephone.
Customer retention. As we all know, it’s far more profitable to keep a customer than to acquire a new one, whether that’s to sell them more of the same or new products or services. The absence of a direct relationship results in a loss of customer control and potentially a loss of customer without ever knowing why.
Today selling a physical product doesn’t have to mean the end of the customer relationship. Smart products are connected to the internet and just like software, they are forever connected to the customer… if you provide them something valuable in return. The bandwidth and fidelity of the connection varies. If the product is a place, equipment, a machine or a vehicle like a Tesla, the relationship can be as intimate as any steaming service, design software or ecommerce site. If it’s something simple like a plug it may only communicate where it is or if it’s being used. No matter where on the communication spectrum, a direct customer relationship can be established by a smart product, and that relationship can be cultivated to maintain contact, provide the customer value and in turn, improve retention rate. Or heck, like Tesla, it could be used to change the business model and disintermediate that indirect channel altogether.
Proprietary customer data is power. Power that can be used to retain customers, grow revenue and change monetization by following the same playbooks used by tech’s most valuable companies.
Bruce Sinclair is Managing Partner of Digital Operating Partners, a smart tech value creation firm
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