Tag Archives: Customer retention

May 15, 2014 · 9:20 am

Love The One You’re With

One of the ongoing discussions I have with clients is the need to balance acquiring new customers with servicing exiting ones.

First customers

(Photo credit: stavos)

Many of the businesses with which I’ve been fortunate to have worked over the last few years place a far greater emphasis on acquisition than they do on showing the love to those who are already in the fold.  One of my mantras has been that it’s almost always more cost-effective and profitable to retain a customer than to find a new one and I tend to work with my clients on finding good ways to service their existing bases while helping along new customer acquisition as a lesser emphasis.

That’s why I was happy to read a recent study of small business owners from the Manta folks.  In conjunction with BIA/Kelsey, they found..well, I’ll let them tell you:

In 2012, BIA/Kelsey reported that small business owners prioritized customer acquisition over customer retention at a 7-1 ratio.  Recently, a new trend is developing as 61 percent of small business owners surveyed report over half of their annual revenue comes from repeat customers rather than new customers and that a repeat customer spends 67 percent more than a new customer  (emphasis mine!). In line with this, small business owners are spending less time and money on customer acquisition; only 14 percent are spending the majority of their annual marketing budget to acquire new customers, and only 20 percent are investing most of their time and effort to acquire new customers.  This is a significant shift in behavior as small business owners have realized that existing customers play a more influential role in business success than new customers.

In other words, existing customers bring in more dough than new customers.  The question then becomes identifying and segmenting existing customers into group that you can address in a manner appropriate to their buying habits.  You need to be having different conversations with the person who hasn’t ordered in 3 months than the one who orders once every 10 days. Maybe you handle the top 10% of your customers differently or maybe you look at spending levels, purchase cycle, or even those folks with an affinity for a specific product you’re wanting to emphasize.

No matter whether it’s loyalty programs, special customer service agents or insider news and information, customer retention needs to be a focus of every business, something I think needs to be placed ahead of new customer acquisition.  You?

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January 9, 2014 · 11:50 am

Mom and Pops

Before we get too far into the new year I wanted to write about something I saw over the holiday.  We have several very good local news sites here and there was a piece on one of them about local merchants and how they’re having difficulty competing both the online retailers and the national chains.  What was interesting to me was how almost every one of the merchants quoted focused almost entirely on price competition.  Many also mentioned “showrooming” – looking at goods in a store but buying the online where they’re usually less expensive.

The same day I read a report on a paper issued by Silverpop.  As MediaPost wrote:

Apple, Lexus and Amazon.com have transcended prices and features to create compelling and fulfilling customer experiences, says the report. They’ve embraced the customer revolution and are raising customer expectations for every other business.  A recent study reported that 83% of consumers are willing to spend more on a product or service if they feel a personal connection to the company. And one fifth said they would pay 50% more if they felt the company put the customer first, points out the study.

The paper talks a lot about how retailers can integrate data with the in-store experience and how that can then move across from the real world into the digital world.  You can read the specific suggestions in the piece.  For example, I wonder how many of the local guys quoted routinely gather email addresses in store and communicate in a way that helps them understand and reflect the customer’s needs and preferences?  I’ve had retailers ask for my email (and physical) address but inevitably they end up sending me a catalog, not something tailored to my buying interests.

The end of the MediaPost article states it nicely:

In 2014, marketers will have two choices, says the report they can keep running marketing for marketers, delivering generic promotional messages when the company has an offer it wants to push out, and focusing solely on driving customer transactions. Or, they can start running marketing for customers, delivering content uniquely tailored to each individual’s needs and expectations.

That’s how marketing has evolved over the last decade.  The big guys are learning it and the Mom and Pop retailers must if they are to survive.  It must be for customers, not for marketers.  Do you agree?

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December 12, 2013 · 12:07 pm

Stews Leonard’s And The Thumbtack In The Chowder

Today’s tale ended up providing a good business lesson but began as a potentially lethal bit of negligence.

Oyster crackers are better with this than thumbtacks!

Oyster crackers are better with this than thumbtacks!

I went to see my folks the other day and my Mom had something interesting to show me. On her counter was a container of clam chowder from the Stew Leonard’s store down the street from their house.  She had purchased the soup the day before.  On top of the container was a thumbtack as you can see in the photo.  I don’t know about you, but my Dad prefers crackers with his chowder and doesn’t ever consider thumbtacks as a condiment.  However, that is exactly what he found as he ate.

How the tack got in the chowder is a serious problem but not our focus today.  Obviously the commercial kitchen should not have small, sharp, unsterile objects anywhere near food but let’s put that aside and focus on what happened when I returned to the store.   Stew’s is known for great customer service.  At the front of the store here in Norwalk is a big stone that says:

We’ve been going to the Norwalk store for 30+ years and have always found that they practice what they preach.  However, we’ve never had an issue like this.  In any event, I took the tack and the chowder to customer service at the Danbury store and explained the problem.  The young woman didn’t ask for a receipt nor question me in any way.  She just apologized, asked me if I had other shopping to do and to please come back to see her when I had finished.  Upon my return she waved me to the front of the short line, asked for the new clam chowder I had picked up, tagged it as paid and refunded the price in cash.  I gave the soup to my folks along with their refund and they were happy.

We get opportunities in business to take bad experiences and make them worse or to make them better.  This was the latter which I think is a model about handling a customer problem.  Address it immediately, admit blame, tell the customer how you’re going to solve the problem, make restitution, and see if that resolves it.  I suppose if I had carried on about wanting gift cards or something more I might have got it but I wasn’t there to take advantage( I realize some customers are!).  They could have asked me for my parents’ email to send them an apology (about the only improvement I would have made).  They were being adult about it – I thought I’d reciprocate.

Many places would have denied there was a problem (that’s impossible, sir, maybe you dropped it in while you were heating it up).  Many would have demanded a receipt (maybe you were storing someone else’s chowder in one of our containers).  Some would have made me solve the problem (so what do you want me to do about it) instead of offering a solution themselves.  They did none of those things and so what could have been a series of horrible posts on social media are, instead, a blog post that praises them.

How would you have handled it had your customer found the tack?  Any differently?  Could this have been handled any better?

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