I’m sure just like every business person since the dawn of business your daily concern is finding new profitable customers. The thing is…you may already have them. That’s right, you’ve already done the hard work, you’ve acquired them as new customers, now just keep them!
I’ve heard many various reasons for companies choosing to focus more energy and resources towards acquisition leaving retention up to chance. I think a lot of our clients confuse acquisition with growth and therein lies a big problem.
Real, sustainable growth happens by perfecting your goods/services to the point where you’re increasing average time that a customer stays a customer and thereby increasing the lifetime value of your customers. This has a domino effect resulting in customers buying more, referring more business, and lowering acquisition costs – this is growth.
The Leaky Bucket
There ‘s an old metaphor in business about a bucket leaking water which represents losing customers. In order to keep the bucket full instead of fixing the leak you decide to pour more water in. Another leak happens and you need even more water.
Instead of fixing the bucket in the first place you’re exhausting yourself by running around constantly trying to find more water to pour in. You may even try catching the water that has leaked out in order to pour it back in!
The goal is to get to a point where your bucket has no holes, is overflowing, and you have to add more and buckets!
A quick story:
We recently wrapped up a project for a client that provides a monthly recurring service to their customers. Before our client hired Big Buck Research & Analytics they were losing customers at what they considered to be an industry standard rate. The problem was that after a while as their company grew in new customers more and more customers left and acquisition costs rose and rose.
The first step in fixing it?
After analyzing the customer data we discovered a pattern of issues that led to some unhappy customers and also some consumer behavior and company behavior that could have tipped our client off that the customers were going to leave.
This allowed us to work with the client to fix existing issues causing customer attrition. We took it a step further and used the information to implement a customer feedback system that allows the client to stay ahead of any possible issues. Since we also found common behaviors that customers exhibited before leaving, our client is able to flag customers that exhibit these actions and make them a priority to deal with before they leave.
After working with us the clients’ customers are happier, stay with the company longer, spend more, and rave about the business to anyone that will listen.
Let me make a few basic suggestions regardless of your industry.
- Survey, survey, survey. Do it often, do it professionally, make it quick and easy for the customer and make sure you follow up! Surveying customers and not following through with their concerns is worse than not surveying at all.
- After gathering the data from your survey you’ll be able to identify any possible trouble areas as well as where your business shines. Most likely patterns will develop where customers reach the point of no return and this allows you to head that off.