As Experts’ Views on Customer Retention Evolve, Customer Care and Revenue Recovery Become More Alike
Expert views on customer retention have evolved, as the following three very different opinions make clear.
1. Based on Customer Acquisition Cost
Long-held beliefs on the importance of customer retention are rooted in data that shows acquiring a new customer costs five times more than retaining a customer.
A pre-pandemic survey found that:
- Retaining an existing customer costs 20% as much as acquiring a new customer.
- Selling to existing customers is successful 60-70% of the time compared to a 5-20% success rate with prospects.
- A 5% increase in customer loyalty can boost profits by 25-95%.
Other views consider the customer lifetime value (CLTV) of retention as much as or more than acquisition cost.
2. Based on CLTV
When asked about those long-held beliefs for an article in Forbes, Wharton School of Business marketing professor Peter Fader said, “Here’s my take on that old belief: who cares? Decisions about customer acquisition, retention and development shouldn’t be driven by cost considerations—they should be based on future value.”
Fader believes decisions about customer acquisition and retention should be based on future CLTV, not the cost of acquisition. His view is that some prospective customers are worth acquiring and retaining, while others are not.
3. Expanding Our Understanding of CLTV
Michael Schrage, visiting fellow at Imperial College Business School, approaches customer lifetime value in monetary and behavioral terms.
Schrage ends his Harvard Business Review article, What Most Companies Miss About Customer Lifetime Value, with the statement, “The best investment you can make in measuring customer lifetime value is to make sure you’re investing in your customers’ lifetime value.”
He advises brands to move beyond calculating CLTV strictly in monetary terms and also value customers’:
- Ideas and insights.
- Ability and readiness to promote the brand on social media.
- Trust (the key to unlocking their data).
- Willingness to try new products and services.
While these three viewpoints pose intriguing and different opinions about customer loyalty and how to measure customer lifetime value, they align with customer experience (CX) programs that strive to retain your most valuable customers and increase their CLTV.
Valuing positive customer behavior, as Schrage suggests, has been a hallmark of exceptional customer care for years. Now, brands and BPOs recognize that valuing and encouraging positive customer behavior improves outcomes in revenue retention, including boosting CLTV.
In this blog post we’ll cover:
- The relationship between customer retention and revenue recovery.
- 6 ways modern revenue recovery mirrors customer care.
- The role of digital CX technology in both customer care and revenue recovery.
- The benefits of partnering with one BPO for both revenue recovery and customer care.
We’ll start with a look at the ways revenue recovery has changed.
With Customer Retention in Mind, Revenue Recovery Now Prioritizes Getting Relationships Back on Track
In the past, revenue recovery focused solely on collecting money from customers who were behind on their payments.
Today, the focus goes well beyond collecting money from the customer.
Customer-driven brands and their revenue recovery agents strive to build and maintain good customer relationships, retain customers, and keep them happy.
This shift toward prioritizing customer relationships has been driven by changes that include:
- Increased use of scheduled automated payments, for which failed payments may be caused by circumstances beyond the customer’s control.
- Recognition that today’s customers are more likely to respond positively when treated with kindness and empathy.
- Restrictions by the Fair Debt Collection Practices Act and the new Debt Collection Rule of the Consumer Financial Protection Bureau targeting legacy revenue recovery tactics.
- The power social media gives customers to applaud brands that prioritize their relationships and help resolve their credit issues.
- The need to verify debt reporting information from the outset. In 2017, more than half of all consumers who were contacted by revenue recovery agents reported that either the debt was not theirs or the amount was incorrect.
Approaching revenue recovery with the intent to understand and assist helps build customer loyalty, get relationships back on track, and reduce customer churn.
Brands that place a high value on customer retention now approach revenue recovery as a strategic opportunity to create loyalty and strengthen long-term customer relationships, with an eye toward growing the customer’s lifetime value.
Increasingly, revenue recovery is adopting customer care strategies.
6 Ways Modern Revenue Recovery Mirrors Customer Care
Exceptional customer care programs use methods proven to satisfy customers and earn their loyalty, thereby increasing customer satisfaction scores (CSAT), net promoter scores (NPS), and CLTV. Successful revenue recovery programs have adapted these methods and made them their own. Consider how much these revenue recovery techniques are like customer care.
1. Communicate proactively: Keep customers aware of your policies regarding the timing and cost of late fees. When an analysis identifies customers whose payment habits have slipped, notify the customer of the help available to them. Build trust by showing you’re on their side.
2. Be flexible: If a customer is struggling to make a payment, work with them to find a solution that meets their needs. Every situation is different, so you’ll need more than one solution to offer them.
3. Show empathy: Understand customers’ feelings and show them the respect you’d want to receive if you were in their shoes. People don’t want to fall behind. Sometimes things happen beyond their control. Build rapport with the customer by listening to what they say and acknowledging their feelings.
4. Keep their satisfaction in mind: Regularly survey customers to make sure they’re satisfied with the revenue recovery process and with the treatment they receive. Solicit their feedback and take their comments seriously, especially if you receive the same feedback from multiple customers.
5. Take a consultative approach: Show customers that you want to help them get through what could be a tough time for them and keep the brand-customer relationship in good order for the long haul. You both have the same goal: to maintain or reset the relationship on a positive path. Demonstrate your commitment to the relationship. Provide guidance that will help them achieve that goal.
6. Look to the future: Assure the customer that they are valued as a customer, now and in the future. Guide them through their current challenges with a vision toward a long brand-customer relationship ahead.
Role of Digital Customer Experience (CX) Technology
Using digital CX technologies, agents can review every customer interaction with the brand, regardless of the type or number of channels the customer has used. That includes a customer’s history of interactions with all agents and notes from each of those interactions.
Digital CX technology provides the agent with all available information about the customer so they can personalize their interactions by addressing them by name and communicating with them knowledgeably and with empathy.
Supervisors use digital contact center call monitoring and speech analytics to pinpoint agent coaching opportunities. Ongoing coaching improves agent performance, helps lift CSAT, NPS, and CLTV, and improves revenue recovery outcomes.
Confidentiality and security are critical to revenue recovery. The right digital CX technology will keep all interactions secure and ensure that agents always work in compliance with applicable regulations.
If your organization is managing revenue recovery and customer care internally, you may find that a partnership with the right business process outsourcing (BPO) provider will improve results and reduce potential exposure to security and non-compliance issues.
Benefits of Partnering With a BPO for Both Revenue Recovery and Customer Care Services
BPOs view personalizing the customer experience as a holistic customer-driven approach to two distinct yet related goals:
- Customer care’s goal is to provide customer service and earn customer satisfaction resulting in sustained brand loyalty.
- Revenue recovery’s goal is to help the customer get back on track with their payments resulting in sustained brand loyalty.
That’s why BPOs keep their customer care and revenue recovery staff separate. Agents who provide customer care work exclusively in customer care, just as revenue recovery agents work exclusively in revenue recovery. Those teams are in different locations, possibly even different countries.
Moreover, agents on the customer care team are trained, coached, or supervised by different trainers, coaches, or supervisors than those on the revenue recovery team, and vice versa—they are separate lines of business (LOB).
Feedback Loops and Flexible Staffing Benefit the Customer Experience
The CX personalization techniques used in the two operations are virtually the same, however, and there are several benefits to partnering with one BPO for both LOBs, including:
- The ability to create feedback loops that inform customer care with what revenue recovery learns from the customer about the impacts of policies and procedures on their customer experience.
- Similarly, the ability to create feedback loops that inform revenue recovery with what customer care learns from the customer.
- Continuity in customer relationships, including disclosure and execution of policies and procedures that affect the customer.
- Increased staffing options, so agents can be assigned to roles where they benefit the client’s program the most.
Here’s a checklist to help you ensure the BPO you’re considering can deliver these benefits for you.
How to Know Your BPO Can Handle Revenue Recovery and Customer Care
When a brand considers contracting with a BPO to handle customer care and revenue recovery, its due diligence begins with confirming that their frontline agents work exclusively on a customer care program team or a revenue recovery program team, with no agent overlap between teams.
Beyond that, the BPO’s culture should be the brand’s primary focus. With a strong customer service culture, the right BPO will:
- Focus on customer experience and client satisfaction.
- Have a proven track record of excellent performance.
- Prioritize technology-aided training and coaching.
- Provide robust security and protect customer information.
- Use compliance software that monitors interactions.
- Reward agents who produce excellent outcomes for customers.
- Offer proof of performance in revenue retention, including recovery rates and CSAT/NPS trends.
- Offer proof of performance in customer care, including no talk time (NTT), average handle time (AHT), call avoidance, first contact resolution (FCR), and CSAT/NPS trends.
iQor operates multiple long-standing client engagements that began in revenue recovery and were quickly extended to customer care. Likewise, we’ve also started client engagements in customer care and were awarded revenue recovery as our relationship progressed. Either way, our culture-driven passion is always to make our clients and their customers smile by building rewarding experiences throughout the customer journey.
Experience the Best in CX
iQor is a business process outsourcing company (BPO) ideally suited to help brands create amazing customer experiences. iQor provides a comprehensive suite of full-service and self-service scalable offerings that are purpose-built to deliver enterprise-quality CX.
iQor’s contact center as a service model channels iQor’s digital ecosystem of customer service solutions to produce targeted improvements for the employee, end-customer, and client.
Our award-winning CX services include:
- Proven revenue recovery services delivered with the same passion to create smiles as our customer care programs.
- A global presence with 50 contact centers across 10 countries.
- A CX private cloud that maximizes performance and scales rapidly across multiple geographies on short notice.
- A partnership approach where we deploy agents and C-level executives to help maximize your ROI.
- The perfect blend of intelligent automation for scale and performance coupled with an irresistible culture comprised of people who love to delight your customers.
- Virtual and hybrid customer support options to connect with customers seamlessly, when and where they want.
- The ability to launch a customer support program quickly, even when you need thousands of agents ready to support your customers.
- A best-in-class workforce management team and supporting technology to create a centralized organization that can better serve your entire business.
iQor helps brands deliver the world’s most sought-after customer experiences. Interested in learning more about the iQor difference? If you’re ready to start a conversation with a customer experience expert, contact us to learn about how we can help you create more smiles.
James McClenahan is executive vice president and chief sales officer at iQor.