In with the old, out with the new: Customer retention vs acquisitionby
‘Out with the old, in with the new’ appears to be a favoured motto in modern society – whether this relates to material possessions or to more metaphorical ideals. We are a nation constantly striving to redesign ourselves time and time again.
However, in business terms, this ceaseless unrest can be a hindrance rather than a help. Often incentives and rewards are only offered to tempt new customers, as exemplified recently by the fund shop announcing that it would be waiving exit fees for a year – but only for new customers.
Rather than overlooking what is already there, businesses must focus their attention on the retention rather than acquisition of customers. Hand in hand with this is taking action on what current customers are saying and increasing engagement levels – only then will businesses reap the benefits.
This favouring of the new over the old means that often, businesses pay less attention to their existing customers. Recent research by Verint found that only 24% of UK customers believe that companies take notice of their views, giving customers little reason to speak out and engage with brands. This unengaged and somewhat stagnant business model is costly, and companies need to rethink the balance of spend and attention when it comes to new versus current customers – particularly when it comes to marketing and advertising spend.
Our research further showed that collectively, over 33% of customers would, if properly engaged and rewarded, stay loyal for several years and actively endorse the brand to friends, family and social media followers, meaning that a realigned sales model that encourages what we have coined as ‘brand champions’ will essentially be more profitable. A prime example of this would be John Lewis which, celebrating their 150th birthday, continuously invests in staffing, quality products and store environments in order to establish a large and loyal customer base.
Make or break
This adjusted approach can make or break a business. 30% of customers currently fall into the category of ‘silent likers’, those that are happy with a company’s service but do not interact or engage with the brand. Companies have a huge opportunity to turn silent likers into brand champions, whilst also ensuring that brand champions feel valued and appreciated for their loyalty. Currently almost three quarters of service leaders agree that they could do more to thank their best customers, with silent likers being least likely to receive ‘thank yous’.
In order to thank them properly, businesses need to start listening to what their customers are saying about the brand – across multiple channels – using customer engagement analytics, in order to build a complete picture of the customer. This information then needs to be strategically used in order to create a personalised experience for the customer, tailoring offers and rewards to their specific likes and dislikes.
By listening to and acting upon these insights and feedback, businesses can grow and retain their brand champion group. This is the group who will not only remain loyal, but will engage with the brand across different social channels, in the form of tweets, reviews and recommendations to friends and family – helping to raise further awareness. With the top internet activity being social – surpassing that of email – it’s important you get brand champions talking about you through this channel.
It is clear that the traditional model that favours acquisition over retention is starting to seem outdated. Businesses must use the changes in customer behaviour and interactions to their advantage, making the most of the technology available to capture a complete picture of customer engagements. Personalisation of engagement and rewards for existing customers will lead to a more proactive group of brand advocates, in turn acquiring new customers – doing the hard work for you.
Claire Richardson is VP at Verint.