It’s crazy. Some people never learn…
Marketing to existing customers tends to be six to seven times more profitable than prospecting. We’ve known this forever. We also know that word-of-mouth can be two to 20 times more influential than advertising. Yet most marketers still spend a disproportionate amount of their budgets on acquisition, as opposed to turning their triers into buyers…buyers into advocates…and advocates into an army of brand evangelists. This overemphasis on acquisition is arguably the biggest mistake marketers make. It doesn’t have to be this way.
Marketers should never forget that old axiom: Make new friends but don’t forget the old; one is silver and the other is gold.
But what about you? Your business invariably hungers for both new customers and loyal customers. So should you be spending more time and money to drive customer loyalty?
7 considerations for acquisition versus retention investment
Here are seven considerations to help with your acquisition versus retention/loyalty budget allocation decisions:
1. Consider your wallet share: Generally, if your wallet share is low, your spending on current customers should be higher.
2. Consider the 80/20 rule: If your top 20% are treated a lot like your other 80%, you probably should change your rulebook.
3. Consider your Net Promoter Score: If your NPS says you’re not loved, share some love with those who should love you: your customers.
4. Consider your total number of prospects: Usually, the smaller your prospect population, the less you should be prospecting.
5. Consider your capacity: If your sales capacity or inventory is limited, your acquisition spending should be limited, too.
6. Consider the cost of acquisition: Obviously the more it costs to acquire customers, the more you want to retain customers. On the B2B side, for example, it might take six months or longer to close a sale.
7. Consider your organizational structure: If there isn’t one person in your organization ultimately in charge of loyalty and customer experience (as is often the case), there’s probably more that can be done to drive loyalty and advocacy.
Now assuming that you should consider spending more on customer retention/loyalty, what approaches should consider?
10 simple retention/loyalty marketing ideas
Here are 10 loyalty-driving ideas that any organizations can easily leverage:
1. Say “Thank you:” Thank customers any time they do something helpful, e.g., when they visit, try, buy, comment, share, or even complain. One study suggested that “Thank you” in a subject line increases open rates by 14%—and appreciated customers’ open their wallets far more often. So have you institutionalized “thank you’s” into all of your communications touchpoints?
2. Recognize your customers’ loyalty and actions: American Express has proven the effectiveness of this simple technique year in and year out. The company will write, “Dear Sharon, since you have been a loyal member since 1992, we want to offer you…” It has always works. So ask yourself, are you effectively levering what you know about who you know?
3. Get personal: Whether it’s remembering a client’s birthday or personalizing a mass email, even simple personalization can lift response by double digits.
4. Get off to a great start: The moment after a purchase is critical in your relationship. Customers want to feel good about what they’ve done and share the good news with others. Make it easy for them.
5. Talk it out: Forget monitoring talk time at your call center. These are your customers calling. Follow the Zappos model: Give customers all the time they need to talk.
6. Stop complaining: One study suggested that a customer who had a problem successfully resolved by a brand is 13 times more loyal than a customer who never had a problem with it. How good are you at problem resolution?
7. Talk to those who talk to your customers: Make sure your marketing department has a regular dialogue with those who talk to your customers every day—be that your salespeople or customer service reps. I’ve always found that spending a few hours in an internal focus group with a company’s customer service reps is one of the most effective ways a marketer can spend his time. When is the last time you gleaned formal insights from your frontline staff?
8. Celebrate service: Publicly acknowledge and reward those who go the extra mile for your customers. Make sure your entire organization knows the premium you put on customer service.
9. Give your best your best: What do you do that is truly extraordinary for those customers that are most important to you? If you have trouble answering the question, find some answers.
10. Let them in: Your best customers probably know and use your products far more often than your marketing department. Leverage these customer insights. Let them co-create your products. Let them test them, critique them, and then reward them for their advocacy. Build a community for them if they haven’t done it for themselves. Your customers are your best salespeople. Never forget that.
And never forget this either: In marketing “new” is always exciting, but when it comes to your customers, don’t forget your “old”—because one is silver and the other is gold.
|Lawrence M. Kimmel is executive director of hawkeye and a frequent keynote speaker at marketing conferences around the world. Follow him @KimmelsCorner.|