Editorial Articles

High spend acquisition campaigns have been hit hard by the recession, so driving profitable growth from existing customers has become more important than ever. Many businesses know that hanging on to your customers can be like trying to carry water in a leaky bucket –for each newly acquired customer, another will fall out the bottom. To keep the bucket full of water, there are three options: keep putting more water in, try to fix the holes, or get a new bucket. The first and third options – to keep putting water into the bucket or buy a new bucket - are not practical solutions for many reasons, and so the only sensible option is to fix the holes.

Managing acquisition with retention
The recent economic climate has caused many businesses to strike up aggressive acquisition and business growth strategies that have essentially drawn customers in at a price point that is unsustainable in the long term. Yet, such strategies can create huge customer management problems in the future.

Businesses may well worry that without an aggressive acquisition strategy, they risk losing sales to competitors. However, lowering the barrier to entry for customers through unsustainable propositions will simply attract buyers who cannot afford products at full price – an issue that is one of the major contributors to customer churn, not to mention low profitability. If retention and acquisition are to complement each other, companies need to deliver acquisition strategies with a much more holistic value-based approach that is capable of delivering long-term, sustainable customer growth and not just quick wins.

Customers, customers, customers
Too many companies see capturing new customer data as an opportunity to bombard the new contact with information and offers on every single product they have ever offered. Businesses unfortunately believe the easiest way to manage the customer and stop churn is to make customers own as many of their best products and services as possible. Realigning marketing and sales outreach to focus on the customer’s wants and needs will result in a far more targeted approach and allow businesses to add greater insight to the marketing campaign.

It is crucial that businesses respond to and predict individual customer preferences to deliver genuine results. So, the process of segmentation needs to be redefined, focused away from products and redirected to the individual customers and the potential value they can create. By basing decisions on additional customer level data and customer value modelling for example, the individual customer will sit at the heart of retention strategy and be more likely to repay this attention to detail with their loyalty.

The forgotten art of good customer service
Customer service is at the heart of customer retention; ignore it at your peril. Organisations that don’t do things well, going beyond the call centre and offering a more rounded customer experience, will fail their customers and risk losing them to the competition.

Businesses must accept that consumers have become more demanding and what was acceptable in terms of a communications approach ten years ago is no longer the case today. In order to meet the needs of the more empowered consumer, marketers must have the correct CRM capabilities in place to ensure that records of previous customer interactions are easily accessible across the business, from the call centre and website to the high street outlet. Only then will companies achieve a single customer view and be able to tailor messages to keep their customer base happy.

Fixing the leaky bucket
There is no simple solution to address the challenge of customer retention. In a connected and sophisticated marketplace, businesses must remember that, just as with a leaky bucket, there is more than one way to patch up the holes. Above all, the customer remains king and businesses need to ensure that they are listening and recording the needs of the customer to evolve their relationship. This will ensure marketers are one step ahead of the customer and are pre-empting changes to purchasing behaviour. Only then will businesses remain agile and profitable, safe in the knowledge that the only way their bucket is going to produce challenges is if it starts overflowing.

Author: Tony Mooney, Managing Director, Experian Integrated Marketing