Entrepreneurs often move full speed ahead to grab the next customer, the next deal, or make the next target. In their haste, they often forget about the people who got them where they are today — their existing customers. When looking at your sales cycle, you may discover that finding the new customer, obtaining interest in your product or service, gaining trust, and getting a sale takes time and effort. You often have to create deals or special offers to break through the clutter of the market.
"The cost of obtaining new customers is typically greater than the cost of retaining your existing customers," says Morris Bocian, President of Creative Business Planning and Adjunct Professor of Business at NYU's School of Continuing and Professional Studies and Baruch College. "Many time companies ignore their existing customers - they don't make the same offers available that they do for new customers, and that can alienate the existing customers."
"I don't like the word retention — it implies the customer is trying to leave" says Christopher Penn, Vice President, Strategy and Innovation at Blue Sky Factory Email Marketing. "If you look at standard funnel — marketing is at the top, then sales takes the leads and creates customers. Then customer service and product design work with the customer. From bottom of funnel to the top you have declining control. You have full control where product teams and customer service can tailor what you do to your customers. When you get to sales, control is iffy, and people may not buy if they don't have money. There's even less control in marketing - you're competing for people's attention, to turn it into a qualified lead. A good marketer in general can move 10% of the attention they create into qualified leads. With good customer retention, good service, good product, you have a huge amount of control about keeping your customers. They're yours to lose."
"Especially in the phone business, there's always a challenge in customer service and retention," reports Phone.com President Ari Rabban. His 3-year-old business is growing in revenue every month, and is up to 35 employees. "We port (move) phone numbers, so we know if you were previously a customer of a specific other company — we've done analysis — we have 9 times more numbers coming into our company than going out. We think customer service is key to retention. We have an in-house 24x7 customer call center, which costs more, but the results speak for it."
Rabban notes that his team contacts all customers who sign up for their service. "It's more interesting when we get complaints. We have no scripted answers in our call center. We deal with people directly and answer their questions if we were your IT team. When there's a crisis, we just admit a problem or find a quick solution, then most people don't want to leave us. They just want a fix and good attention. If we do this well, they often become testimonial customers and pass us on to others."
As far as using tools like email marketing for retention, Blue Sky Factory's Penn says "This may be beating a dead horse, but just send relevant, timely, targeted emails to people who ask for it. That's the real formula."
How do you keep your customers happy, or just keep your customers? Let us know below.
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