The Relationship Between Ideas and Customer Retention

Do you consider customer retention important? Is your CRM system a strategic tool used in developing leading, maintaining customer satisfaction or for calculating Lifetime Value of a customer?

Short History of Ideas and Customer Retention

In the early 1990’s, many organizations still saw little value in customer retention and focused more on aggregated sales numbers. That is pretty far from where we are today. We am not saying that customer retention and satisfaction are the only measures companies use because sales numbers are still important. However, there has been a shift in focus within companies.

We strongly believe that there are two reasons for this. First, technology continues to develop smarter systems, both in regards to CRM systems for organizations, but also for transparency with services like Tripadvisor and Yelp giving a public voice to the customer.

Second, better metrics have been developed to demonstrate how different aspects of customer service affects the bottom line. Companies can now see lifetime value of a customer and calculate this in relation to satisfaction, omnichannel experiences and retention, which many companies include in their strategic objectives and vision.

There has also been an increase in buzzwords like customer-centric, the customer/user experience, added value, active listening and customer engagement have become important in development and improvement of the company’s different offering.

Idea Management – A new era of strategic importance

Although innovation as a subject has existed for decades, the focus has been on R&D departments, stage gate models, innovation and new inventions. However, especially in the last five years, organisations have been slowly pulling innovation processes out of the R&D department and expanding them to all corners of the firm, giving a voice to all.

This change is the new journey for organizations and buzzwords like “disruption” are appearing on upper management’s radar as threats or challenges while empty, generic “entrepreneurial/innovative culture” phrases are communicated as part of the brand’s identity. This situation is the first step, and luckily, the field is developing the technology and innovation metrics that will create a similar shift like the one that occurred with customer service in the 1990’s.


Many front end employees deal with customers daily and hear about all their different pains and desires with no effective way to express them or articulate thoughts on how to improve them. Idea submissions may take a lot of work to fill out, but employees never hear anything once the idea is submitted, and they never see the changes occur.

Technology not only provides a more efficient way to submit ideas; newer platforms also allow employees to follow the progress of their ideas, as well as providing an avenue that allows employees to be part of the decision process of their team and their organization.

Managers also benefit from newer systems where individual ideas are built up through discussion and ranking prior to reviewing whether or not to proceed with an idea, as well as having the opportunity to sort or save potentially valuable ideas. And finally, developing the platform with user experience concepts in mind creates ease of use that increases overall engagement and potential success of the platform.

Innovation Metrics

There is a common saying in business: “You are what you measure.” This is just as valid when measuring innovation. First, if you don’t measure it, it will always be a secondary priority. When this occurs, it is only a matter of time before employees stop participating in the innovation process, limiting the overall value obtained. In my experience, this is the first hurdle companies must overcome.

Second, how do you know what to fix if you can’t see what is broken? Innovation metrics help an organization see what area needs to be improved. Carefully selecting a set of key indicators will contribute to understanding what part of the innovation is underperforming. With this focus, it is easier to understand underlying causes and issues, as well as plan for steps to minimize them.

Finally, deciding on the right metrics is key. Carefully consider which metrics are used to evaluate innovation and which can be measured regarding input, throughput, and output. For example, if you only focus on the number of ideas generated, you may collect a vast number of initial ideas, which are never implemented to create value for the organization. Furthermore, if you only gather information on patents obtained, they may be irrelevant to the company’s overall vision and not as valuable in meeting future strategic objectives.

Customer service currently has a few metrics that are widely used in almost all industries. These include satisfaction, retention, and willingness to tell someone about the product. From these standardized measurements, there has been a development of more sophisticated metrics, which can be used to discuss how customer service decisions align with overall strategic goals.

Unfortunately, innovation metrics are just not at the same level yet. This situation could be due to the complex nature of innovation, or the fact that innovation processes are arguably unique to the company and industry it is in.

However, we don’t believe this is the case. How about developing new innovation metrics that take the entire process into account? Benchmarking from customer service for example. And why not create a key performance indicator like “Idea lifetime value”? Unfortunately, this is impossible for a company that is currently not measuring innovation with the right metrics, but it is the logical continuation of the idea driven capability.

What’s Next?

As customer service theory developed standardized terms and advanced metrics, companies and academia were able to research more deeply and create a deeper understanding. This development included taking customer service out of its own solo and incorporating it throughout the organization.

For idea management, the time is now. Companies need to consider how to open up innovation to the whole organization. They also need to focus on developing and measuring key performance indicators in all departments and communicate its importance within the organization. It will be the companies that start on this path now that will be able to understand their innovation affect across the firm and what each innovation process can do for overall growth of the organization. Then they can focus resources in areas with the strongest returns. Only then will ideas move from buzzword to a key competitive advantage.

The time is also now to read some more about innovation; like “Innovative Scandinavia and its secrets” or “Innovation in Education and How it Works Around the Globe“.

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