That late fall or early winter draft that you may be starting to feel could be caused by your existing customers running out the back door to your competitors while you focus on acquiring new customers.
Let’s face it, especially during this time of year when the holidays are approaching, we can tend to think of all the new and shiny toys and gifts that await us, and overlook all the current things (i.e. current customers) we have to be thankful for. A downside in our consumer-focused culture is to always want the “new” thing and forget all that we have. Let’s all take a pledge to be thankful for our existing customers this season and let it carry over into our 2012 marketing plans.
While the economy is slowly improving and many companies are looking to become more aggressive to grow the business, we still need to focus on “thanking” and nurturing our existing customer base. While finding and acquiring new customers to feed the never-ending search for growth is exciting, we all need to keep in mind that decisions must be made on where to best invest scarce marketing dollars.
Are you marketing to your “best” customers? Your “at-risk” customers? Your “on-the-fence” customers? You can bet that your competitors are!
Your competitors are facing the same growth challenges that you are, and they’re looking at your customer base as a pool of qualified prospects.
What else can you learn about your customers?
Well, the customer is ultimately in control…but you do have an advantage over the competitor who is trying to take your customers away. You know more about your customers’ needs. You know which customers “count” and which ones are likely to leave you. Right?
The ugly truth is that many companies don’t use that data to their advantage. The rule of thumb that it costs 5 to 7 times more to acquire a new customer than it does to keep an existing one still rings true today. That measure converts to the fact that a 2% increase in retention equates to cutting costs by 10%.
Retention models can identify those customers most likely to leave. Profitability and/or lifetime value models can identify those who are worth an investment in keeping. And a bit of effort to address those most likely to leave can bring big numbers to the bottom line. A simple “check-in” customer service call may mean the difference between a lost customer and a ‘‘save.”
But let’s face it, while all customers are important, they are not all equally important. Identifying those profitable (or “future-profitable”) customers who are at risk allows you to focus your retention efforts on those that you truly want/need to keep and saves you the expense of attempting to keep customers who ultimately aren’t going to be profitable for you.
While it’s important to continue going after new customers, it’s critical — now more than ever — to “give” attention to your existing customer base and make sure that you are focused on retaining your profitable existing customers as well. A well-thought-out, data-driven, analytics-based retention program can go a long way toward ensuring that your acquisition efforts aren’t simply filling the spots on your customer roster left open by former customers running out the back door and letting that chilly breeze blow in. Oh — and did I mention that you also make it more expensive for your competitors? Now that’s a win-win in this season of giving!