A well-known proverb states that the customer is always right. It reveals an issue that is crucial to the success of any business: Do whatever it takes (within limits of course) to make your customers satisfied and retain them for as long as possible.
Customer Retention is the ability of an organization to maintain a customer for a specific period of time. For Service businesses this means, that customers stay on or renew their subscription or contract. For classical, product-based businesses, customer retention means that customers re-buy the respective products.
Essentially, Customer Satisfaction measures how often the customers’ expectations towards a product or service were met, or even exceeded. These expectations can be regarding quality, appearance, pricing, or, since the emergence and dissemination of e-commerce, consignment conditions such as shipping time.
Digital products potentially help improving both Customer Satisfaction and Customer Retention. For example, many websites nowadays offer its visitors the option to chat with a bot in case any questions arise. While bots cannot yet replace human interaction, they can nonetheless give quick answers to frequently asked questions, thus reducing the time visitors have to spend waiting for a solution to their query. Additionally, resources at responsible call centers are freed up since the queries can be resolved before they are even redirected to a call center employee. By quickly resolving the issue through a chat bot, the customer’s expectations of swift and effective service can be fulfilled.
Similarly, a company might employ an AI-based solution that assesses massive amounts of customer data to identify instances where customers were disappointed by a product or service to derive these customers’ current level of satisfaction. The system would then propose compensatory offers and incentives to these unsatisfied customers in order to reinstate a desirable level of satisfaction.
Customer satisfaction and retention do not only play a major role in B2C, but with growing competition, e.g. in machine manufacturing, more and more B2B players must focus their efforts on this topic. This is also one of various reasons, why most machine manufacturers are developing and launching a smart services portfolio to support their core business. These extending services consist of a large variety of useful digital solutions, e.g. real-time KPI tracking, automated alert systems to prevent machine downtimes, remote assistance software or document management systems. These solutions aim at increasing satisfaction, by supporting customers in enabling effectiveness and efficiency gains in their value chain. Furthermore, smart service portfolios serve as differentiators in the large, often substitutable offering of machines on the market, thus aim at improving customer retention.