The Last Mile Strategy


According to Harvard Business Review, increasing customer retention rates by just 5% increases profits by 25% to 95%. In order to achieve these returns, it is important to have a clear Retention Strategy in place.

One of the most critical areas of a Retention Strategy is the Last Mile. It is the life-cycle stage when customers meet all three conditions below:

  1. Customer has decided to leave;
  2. Customer has established contact in order to cancel their relationship;
  3. Customer has initiated the process for terminating that relationship.

Surprisingly, despite the fact that the Last Mile stage is a damage control situation, best practices can yield saved-rates of up to 30% of customers. Here is how you can build a robust Last Mile action plan with 5 simple questions.

WHO? Segment. Not all customers are the same. There is no one-size-fits-all in Marketing. One of the first areas to understand thoroughly in the Last Mile is who are the customers that are leaving or asking to leave. This will help understand the impact of macro-trends, guide further analyses, and set-up tailored corrective measures.

WHY? Root Cause Analysis. Understanding the root causes of cancellation requests is fundamental to try and sort things out. Why customers are asking to leave; why customers end up leaving; and what type of customers are they; are just some of the questions that need to be answered. To do this, amass as much data as possible and find patterns in customers that have left before. It involves a large amount of analytical work, but also qualitative research. These insights will guide the analysis by generating relevant hypotheses.

WHAT? Counter-offer. In many cancelation requests, there is an expectation gap between price and value. A counter-offer can be a good tool in these situations. It can take the form of a % discount; extra benefits; or setting up a new service those customers didn’t know it existed. Psychologically, action is more powerful than inaction. So while it is possible to dissuade customers from leaving in a specific moment by conveying certain messages, a long-term counter-offer will tend to drive loyalty for a longer period of time. This will impact the expected lifetime of a saved customer and the revenue return for the company.

HOW? Empathy. This is one of the most impacting areas of a Last Mile phase. The communication between your people and your customers is core to your business. It must be methodically studied and worked upon. It is often the case that some first-line managers and agents underrate apologizing and friendliness. Considering that just having an honest and candid conversation can dissuade 33% of customers from leaving, this is an area that can reap significant rewards when fully explored. So know your channel and your people well and feed it constantly with the right leadership and resources.

HOW MUCH? Investment. Deciding on how much money to invest and how to measure its return is the basis of any action plan. Only then you can properly set-up and shift the appropriate resources to support the right people, tools, products, incentives and channels. Measure returns according to lifetime value and get a couple of sound scenarios on what would happen if…

By continuously pursuing the answers to these questions your Last Mile plan will remain updated and will continuously maximize your Retention returns.

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