Retention versus Loyalty
Loyalty is about Maximizing Long Term Value
I have frequently talked about differentiators in the cluttered EMR/EHR space. I have advocated that your unique differentiators are right under your nose, but you can’t see them. You want to be like someone else, in the process ignore what makes you really unique.
A simple strategy I advocate is to ask your existing clients:
- Why did you buy from us?
- Why do you choose to stay with us?
Answer to the second question is more important.
In addition to telling you what is so unique about you, it also tells you how loyal your clients really are. I have seen so many companies talk about 97% customer retention. Not bad, but not good enough. If I were a buyer, I’d like to know more than just retention ratio. Clients may choose to stay because they ‘don’t have a choice’, but I want to know if they stay because they ‘want to’.
Customer Loyalty is a powerful driver of business success.
Retention means keeping existing clients. Loyalty is about maximizing LTV – Long term value of a client.
An example of retention for Cloud EHR companies lies in determining what should be offered to clients at the end of their contracts to retain them. An example of loyalty for an EHR company is all about getting your clients to subscribe to your add-on services and products as well as promoting your EHR to their peers; without an incentive.
This difference is very important because the underlying drivers are different.
Companies that focus on retention are ‘reactive’ in nature. They understand the triggers that signal potential churn, be it features, bugs, or the time it takes to answer support tickets. Loyalty is driven by more fundamental issues like exceeding client expectations, value proposition, and overall experience with the company beyond product.
Retention and Loyalty being two different things, they need different ways to measure them and also different ways to promote them. You need sophisticated marketing automation tools to push retention and loyalty, and ultimately using communications to drive each. Think Marketing Automation beyond CRM.
Use of these tools translate into a holistic and compelling way to think about how to drive customer loyalty through analytics. It takes a mindset shift to make fundamental changes to creating loyalty and understanding that marketing is about far more than ‘loyalty schemes’ and reward points.