In marketing, we love the chase. Nothing gets our adrenalin pumping, our heart racing and concentration focused like the prospect of closing a new customer.
“New business” is the sexy part of what we do. It’s our opportunity to marshal all of our skills, arguments and resources to identify, persuade and close a new customer. It validates our product strengths. It’s the pay-off for all the planning, strategizing, analyzing and quantifying we’ve done. It’s a validating notch in our marketing belt.
Yet as important as winning over new customers is, rarely is the new customer our most profitable customer. For many organizations, it’s not unusual for up to 80% of its profits to come from just 20% or less of its customers. And more often than not, that 20% are those customers we won over long ago.
It is important for all of us in marketing to recognize what an important resource our long-term customers are. Not only do they buy from us often (usually with very little persuasion from us), they know us pretty darn well. They know our strengths. They know our values. And yes, they even know our weaknesses (though most of the time they keep that part to themselves). And by them using our products, they are exemplifying our benefits in the flesh.
The idea that once you’ve sold someone, you won’t need to sell them again is on its face ridiculous. Customers are bombarded all the time with competing messaging, new opportunities and new offers. The fact that most customers are staying put may have less to do with what you’re doing and more about the fact that they’ve yet to be approached with a more compelling offer.
Customer retention isn’t as sexy as customer development. There is no “close.” Customer Relationship Management is a process, not a destination. The dollars allotted to CRM on a spreadsheet are hard to translate into ROI. Yet without it, you’ll find that customers are churning out at an accelerated rate, and you won’t have much of a clue why. And replacing them is expensive. For most organizations, it can cost up to five times as much to develop a new customer as to retain an existing one.
Okay, so we can all agree that creating a Customer Relationship Management system for your organization is important. Enough with the pep talk, how, exactly, do you approach it? I’ll offer up a few suggestions in our next post.
