Retention: A consumer life-cycle question
What is most important to your business, the acquisition of
new business, or the retention of your existing client base? Presumably, your
response on this would immediately be BOTH!! But can you put your initial response
into facts and figures? How much of your
time, resource and marketing budget goes towards the maintenance of existing
Despite the statistics that state acquiring a new customer
costs 5 times more than retaining your existing ones, sales and marketing teams
(and probably your CEO too!) believe that resources should be spent on just
this, in fact 44% of companies* have a greater focus on acquisition over
retention – but what is the value of this, and how many of these new clients do
you end up retaining. How many are still with you after a year, and what is the
experience like that drives the decision on whether a customer returns, or
shifts to a competitor?
The simplest definition of customer service is (1) the sum
of all interactions that a customer has over the course of a client
relationship and (2) the customer’s emotions and perceptions of your brand
during the course of these interactions.
This experience begins from the moment a customer has a need and begins
the research into a particular product or service and from this point on wards,
everything a brand does in terms of marketing, personalisation, site navigation
and brand personality impacts the customer decision to buy from your brand, or
from a competitor.
Brands spend a lot of time, effort and money ensuring that
first impressions are strong enough to encourage customers to buy, and rightly
so, acquiring new customers is important to any business. However, there is a disproportionate amount
of effort placed upon the early stages of the customer life-cycle and the
efforts to attract and convert a potential customer. Once the customer is on board, it’s all over,
and brands make little or no effort to keep a customer engaged, failing to
deliver a positive experience through post-purchase interactions. As a result, a customer can become frustrated
or apathetic about repeat business, and brands get stuck in the never-ending
The harsh truth is, acquisition costs get more expensive as
retention numbers decline. Companies
must acquire more customers to fill ‘The Leaky Bucket’. Without customers to retain, acquisition costs
increase exponentially. Brands can only
fix the retention issue by focusing on delivering a valuable customer
experience and when that happens, the cost of acquisition will go down as existing
customers can help to drive acquisition through word of mouth referral.
So, how do you shift the focus? You need to demand alignment
between strategy and life-cycle investment. For example; if the goal is
profitability, but retention is low, reduce investment in the buy stages of the
life-cycle. If the goal is growth, invest more.
Redraw the company life-cycle to reflect customer realities.
Customise the stages to show the impact of each stage on the business and the
customer, indicate the weightiness of each stage, help employees understand the
change and advocate using the updated life-cycle for prioritising marketing and
customer experience investments.
Beyond this, as marketers begin to attract new customers,
the focus of their content and messaging should shift tone toward relationship
building and away from transactional messaging.
Winning over the hearts and minds of new customers is not so different
from developing personal relationships.
Critical to this shift is engaging customers at the right time, with the
right message – contextually relevant to the customers’ needs and touch-points
in their journeys. Understanding needs and wants and defining the pain points
along the journey, talking about how your services can solve their problems and
moving away from just acquiring and selling to developing long term
At MRM, we offer a consultative approach to the marketing
needs of your business, and have a proven track record in providing loyalty
schemes for both B2B and B2C clients.
If you would like more information on our customer acquisition
and retention tools, please visit our website https://www.mrm.co.uk/what/driving-sales
or email [email protected]
or you can give us a call on (01858) 414767, we look forward to hearing from
* Invesp - https://www.invespcro.com/blog/customer-acquisition-retention/
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