Episode 63: Celine Teoh on customer retention
May 7, 2018
Our guest today is my good friend, Umbrex member Celine Teoh an independent strategy and marketing consultant in the Bay Area whose functional specialties include data-driven marketing strategy and execution, strategic planning and business planning.
On this episode, we discuss steps firms can take to improve customer retention.
We also discuss the benefits you can derive from journaling – in terms of productivity, creativity, happiness, and centeredness. Celine has been journaling actively for years, across several different styles, and I’ve been working to put her suggestions into practice.
Celine Teoh on Customer Retention
Celine Teoh is a strategy and marketing consultant in the Bay Area whose functional specialties include data-driven marketing strategy and execution, strategic planning and business planning. Celine is a McKinsey alum and a good friend who I’ve known for a few years. I always love chatting with her, so I was excited about having her on the podcast. We talked about retention as one of the most overlooked but essential areas of the customer lifecycle, and also about journaling, a subject that fascinates me. Celine knows a lot about journaling and thinks it’s a great tool for directing personal development. We talked about that and much more.
Umbrex member Celine Teoh an independent strategy and marketing consultant in the Bay Area whose functional specialties include data-driven marketing strategy and execution, strategic planning and business planning.
Celine is my guest on Episode 63 of Unleashed – How to Thrive as an Independent Professional.
You can listen to the full episode here.
Will Bachman: You focus on customer retention as a type of incremental acquisition. Can you explain why you think it’s so crucial?
Celine Teoh: Companies spend a lot of effort and energy on acquisition, but the customer lifecycle is more than that — you also want to keep customers for as long as possible. Research shows that acquisition can cost up to five times what retention does, so it’s really no good having lots of customers come in the door only to leave after a single purchase. If you hold on to them and they become regular customers, it’s like acquiring them over and over again at a lower cost each time. If you can get customers to stay with you, it really affects their lifetime value.
How do you start a customer retention project?
I use a three-pronged diagnostic that starts with internal data and a bunch of hypotheses. I build a hypothesis tree around what might be driving retention or the lack thereof, then slice and dice the data to try to understand the shape of retention. At the same time, I talk to internal stakeholders because they usually have a point of view on what’s driving retention, as well as the barriers that may exist. The customer-facing part of the company is important too, because they have a great perspective on what customers value. You want to take a targeted approach.
What are some of the biggest opportunities and challenges to improving retention?
Based on the classic 80/20 rule, 80% of your profits come from 20% of your customers, so you really want to keep them. The challenge is getting these super customers to stay without turning off the rest of your 80%. I think one of the biggest things I notice is a lack of segmentation. Many companies treat all their customers the same, but tailoring your approach to your most valuable customers is really important. One way I like to segment customers is by using an approach called RFM which looks at how recently they bought from you, how frequently they’re buying from you, and how much money they spend with you when they do purchase. You want to figure out how to reward the most loyal customers to get them to stay, to make a good impression on your newest customers, and to figure out why others aren’t buying and how to get them to come back. Each of those segments has its own priority. Another problem I see a lot is lack of feedback, not staying in touch with the customer.
What kind of tools do you use to do that?
One is an ethnographic. It’s a form of research where you’re almost living the customer’s experience. You might visit the customer in their house and follow them as they go through a shopping trip, asking them questions around their expectations and experience at each stage of the process. It’s almost anthropological, and gives you access to significant drivers, expectations, and feelings. When you build a customer journey using it and other tools, you can focus on the specific parts that are affecting retention. You want to have a constant channel of communication with your customers, and not just the ones who love you.
Do you have any specific recommendations for how companies can take getting useful feedback from customers to the next level?
One service that’s fantastic is called Delighted.com. It’s a lightweight, quick way to get actionable feedback from customers. The customer gets a quick email at the end of an interaction asking for feedback. It uses emojis … little smiley faces or sad faces that they can click on. It’s very low barrier for the customer, very, very easy for them to do without being intrusive.
Last year you led a session on journaling at a top tier event. Can you talk to me about journaling in your life and why you recommend it to other people?
Journaling has a lot of benefits. It’s really good for mental health, as well as for directing your own personal development. I find it’s a good way to keep honest, on track, and focused on my own goals. For example, over the past year, I can look back over my journal and say, “Okay. Here’s are the main events that happened. Here are the milestones. Here is that development.” It’s a nice, little slice of personal history, which I like. And journaling is so flexible that you can customize it to your own needs.
I remember you spoke about different types of journaling.
I think of journaling as falling into three main buckets. One is goal directed journaling, for if you want to move the needle on some kind of personal development goal, or any goal really. It helps you make sure you’re working on the right things, moving towards your goals as we as on micro goals.
The second type of journaling is journaling for happiness. Gratitude journaling is a great example, where you write down what you’re thankful for, or milestone journaling where you can record the big things that happened during the day.
The last bucket is for processing emotions and events. It’s all about expressive journaling, the classic teenager writing in their journal, “This happened today, and I loved it,” or, “I hated it. Why is this happening?” Journaling is so flexible, and you can customize it to your own needs. I like to mix and match among all three of those buckets.
Do you have any recommendations for people who are new to journaling?
I’d recommend starting with gratitude journaling because it’s so easy, and there’s a lot of research out there that says that fostering an attitude of gratitude is actually huge for improving happiness and satisfaction with life. Gratitude journaling at its most basic is just a reflection at the end of a time period, usually a day, where you say, “Here are a couple of things I was thankful for.” Doing that regularly changes the way your brain works, because you start looking out for these moments where you can be thankful. It’s actually pretty cool. It’s super lightweight.
I always love to ask guests what two or three books they’ve most frequently gifted to others. What are yours?
One title is Designing Your Life by Bill Bernett and Dave Evans. It’s a book about design thinking applied to life design, and its basic premise is that there isn’t one single correct path for people to take. Another is Give and Take by Adam Grant, who might be known by listeners as someone who wrote Option B with Sheryl Sandberg. It’s about how giving is a great way for interacting with the world, and how much more you get back.