The conversation around customer retention in corporate travel is nothing new but we have seen the pandemic, the ‘great resignation’, economic recession, and employee-shortages putting more emphasis and pressure on us. It’s a perfect storm. Operational capacity is strained, airlines are under pressure, rental cars harder to come by, and hotel amenities - and to a certain extent - services are pared down.
For the last couple of years, most of the corporate travel industry identified customer retention as an important key performance indicator (KPI) and priority in our strategic plans.
Customer retention measures not only how successful we are at acquiring new customers, but also how successful we are at satisfying existing customers. Ultimately, customer retention increases return on investment (ROI), boosts brand loyalty, and can play a vital role in bringing in new customers.
Just a 5% increase in customer retention can increase company revenue by 25-95% according to research by Frederick Reichheld of Bain & Company (the inventor of the net promoter score). On top of that, it is more cost-effective to retain customers. It’s a whopping 6 to 7 times more expensive to acquire a new customer than it is to retain one. It’s widely accepted that it’s easier to retain an existing customer, but in the current climate where we are all struggling for resources, I want to challenge that notion.
Our industry has been hit by a unique combination of forces. This includes the ongoing rise of automation and machine learning, coupled with the complexity of a global pandemic. Artificial intelligence, for example, has affected how our data is collated and processed. Manual approaches to predicting customer retention are no longer competitive. To meet the growing needs of a remote workforce, to the specific requirements and behaviors of our customers and their travel programs, a monumental shift was inevitable. Also, we need to keep in mind that the last three years has affected our customers on multiple levels.
The current situation has made our customers reconsider how and where they spend their travel budget. As travel volumes increase and we see our beloved business travelers return, we are starting to see a wave of dissatisfaction as the entire travel industry contends with a surge in pent-up demand coupled with labor shortages. This comes at a time when brand loyalty is up for grabs.
Best practice to next practice
In this changing landscape, those who prioritize Customer Experience (CX) will be in a better position to gain loyalty, build resilience, and future-proof their business. CX is so much more than a feeling, more than a department, and more than a phase in our overall customer journeys. It is a customer-centric way of doing business, one that requires analytical leadership, cross-functional collaboration, and continuous iteration to deliver a great customer experience.
Travel buyers have a tough nut to crack. Their travellers’ buying behavior is shifting. Well-being, technology, and value dominate the scene. Tech disruption is challenging the status quo and changing our industry faster than ever before. These are important considerations for our customers. As a result, we must assess the ability of our teams to adapt, deliver, and exceed evolving expectations. On top of that, travellers’ willingness to share information and opinions has influenced buying behavior significantly in recent years, and the nature and pace continues to evolve. This requires the industry to step-up and stay on top of their game when it comes to customer retention.
The long game
Customer retention strategies are mostly related to creating strategy and vision, demonstrating value, being a trusted advisor, and solidifying longevity with your customer.
It's important to start retention activities early. 24 months before any contract expiration is the (bare) minimum. I would set expectations early and often, create a clear roadmap for the future of the partnership, and don’t be afraid to ask for feedback – and act on it! And don’t be complacent thinking your relationships are solid. Make sure there are multi-level relationships, and your customer knows your entire team.
Customer retention in the travel industry should be at the forefront of all our plans. We need to move from best practice to “next practice.” Creating a robust customer retention strategy to increase CX can help us thrive in the current climate. We must make a real commitment to our customers and to ourselves – taking better care of the customers we keep, being pro-active, personal, and thoughtful will be a necessity for many years to come.
Maura Geertsma is Head of CWT’s Customer Experience Center of Excellence.