You’ve probably heard the saying that it’s much more expensive to acquire a new customer than to retain an existing one. Brandon Carter, in this post – Customer Retention: Cheaper than Acquisition; Still Not Easy – points out that while retention might be cheaper, it isn’t easier.
We have all heard that existing customers are more valuable – I have heard three, four, five, even ten times more! In my opinion, the true numbers are specific to one’s industry and specific business, but most people will not argue that existing customers are more valuable to a business.
The point that is often missed, however (as Carter points out) is that customer retention isn’t as simple as it may seem. Acquisition allows the company to offer discounts for new business, but it also allows for companies to exaggerate the capabilities of the products or services that are being pitched. Existing customers know whether you have delivered on those promises, and they may not be happy with what they have found out!
Just as Rob Miklas discussed in an earlier post this week, your incentive program (and the program communications strategies accompanying it) should highlight your “reason for being.” If your products or services don’t deliver real value to your customers, your efforts to improve customer retention can backfire. The message must clearly convey the “win” for the recipient – and your existing customers can tell the difference between the “talk” and the “walk.”
When designing or revising your customer incentive program, be sure to address all of the audiences that can have an impact on your business. While most will readily agree that a combination of new and existing customers is needed to keep a company healthy for the long haul, the actual ingredients in the “sauce” will be unique to each organization.
Contact us to find out more about designing and implementing successful customer retention programs.