Tag Archives: Customer

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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December 4, 2013 · 9:03 am

No, I’m Not Making It Up

After Monday’s post on the collective genius of the folks at KlearGear.com, a reader reached out with a question.

research

(Photo credit: suttonhoo)

“I buy in to your thoughts on how customers ought to be treated, but is there research to support your statements about how doing business the right way (with a customer focus) actually translates into better business?”  Funny you should ask!

This from the Connected Customer blog from the folks at Liveperson:

Today’s savvy consumers want access to information and support instantly, and if they don’t find what they need quickly, they will look for it somewhere else. Our study tells us that, on average, consumers won’t wait more than 76 seconds if they need help during their online journey.  The research indicates that 49% of consumers continue to find websites difficult to navigate, with 33% struggling to seek help or locate customer service.

The folks at MediaPost’s Research Brief summed it up nicely:

Every interaction with a brand can either drive customer loyalty, or lead to abandonment to a competitor, says the report. The repercussions of a negative digital experience have never been higher, and the result of a positive experience is becoming increasingly more valuable. 84% of online users say brand trust is a result of a positive online experience. In addition, the vast majority say that a positive online experience makes it more likely for them to complete the purchase with the company and to buy from a company again

  • 78% of consumers agree that they are more likely to be loyal to companies that give them a great experience and service online

  • The result of a poor online interaction with a brand is abandonment of the transaction (45%), a negative perception of the company (45%), loss of trust (43%), and loss of a customer to an alternative website (41%)

So to answer the question, yes, treating customers as if they were family members or dear friends does have measurable positive effects.  We don’t need research, however, to tell us that suing our customers is a bad idea.  Almost as bad as having customer service people who can’t be reached by customers or who treat those customer complaints as annoyances rather than a problem a friend is having.

Does that make sense?

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October 31, 2013 · 8:34 am

Churn

We have a statistic in the television business called churn.

English: Butter churn, Dunserverick Museum One...

(Photo credit: Wikipedia)

Actually, it’s more about the cable TV business and it’s short for churn rate.  As is sometimes the case, Wikipedia defines it nicely:

Churn rate, when applied to a customer base, refers to the proportion of contractual customers or subscribers who leave a supplier during a given time period. It is a possible indicator of customer dissatisfaction, cheaper and/or better offers from the competition, more successful sales and/or marketing by the competition, or reasons having to do with the customer life cycle.

Obviously, if a company is to grow, that growth needs to exceed its churn rate – you need to gain more customers that you lose.  Simple, right?  It points out pretty clearly that keeping customers is at least as important as adding new ones.  That simple thought is what popped into my head as I read the results of some research from the Accenture Global Consumer Pulse Survey.  You can look for yourself here.

What they found was that companies are not working hard enough to stop consumers from switching. In fact, among people who changed service providers – banks, phone companies, retailers – 81% said that the company could have done something differently to prevent them from switching.  Maybe it’s not as simple a thought as it might appear?  As MediaPost reported:

The report says that while service providers… have more data and insights into consumer desires and preferences than ever before, providers have failed to meaningfully improve customer satisfaction or reverse rising switching rates among their customers.

Ouch.  So what does that mean specifically?

  • 91% of respondents are frustrated that they have to contact a company multiple times for the same reason
  • 90% by being put on hold for a long time
  • 89% by having to repeat their issue to multiple representatives
  • 85% of customers are frustrated by dealing with a company that does not make it easy to do business with them
  • 84% by companies promising one thing, but delivering another
  • 58% are frustrated with inconsistent experiences from channel to channel

Marketing is often focused on growth.  However, as any financial person will tell you, improved profitability can come from cutting expenses as it does from growing revenues (and I’m a strong advocate for the latter since those cuts often kill growth and revenues but that’s another screed!).  Churn is the cutting of losses and helps reduce costs – I think it’s cheaper to keep a customer than to acquire one.  It’s also something that businesses can fix if they focus on it.  None of the study’s findings are difficult to address IF there is an awareness and a commitment to do so.  Is your business ready to do that?

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