Are you ignoring your best customers in hot pursuit of new ones?

28 Dec

cheating on your partner

The survival of any company is based not on how many new customers come through the door, but on its ability to retain existing customers.

The strategy for customer retention is called Customer Relationship Management (CRM).

Many large companies develop sophisticated CRM strategies, but you needn’t think like a big business to acquire a potent strategy. Think like a consumer instead.

While product innovation is important and price is always an issue, research shows that most people split for the competition because they didn’t like the way they were treated.

That means poor customer service. I would argue (not too stridently mind you, because my head is still delicate from an excess of holiday cheer) that bad communication is at the heart of the loss of loyal customers, or churn as we call it.

Businesses don’t have to offer all kinds of crazy stuff to keep their customers from churning. They just need to communicate to them wisely. When they mess up, they’ll find that hell hath no fury like a customer scorned!

As a consumer yourself, no doubt you’ve received an email or letter from your telecom company that has tried to upsell you to services you already subscribe to. How does that make you feel? That the company doesn’t even care enough about your business to find out what services they are already gouging you for, that’s what!

You’re now a ripe candidate for churn.

What kind of customer service might take you the other way?

Dear Mr. Brown

We note that you currently have your TV, Internet and phone services with us. This letter is to advise you that we have adjusted our monthly price to you so you can benefit from a bundling of these services. You save $3.77 per month. Thank you for being our customer.

Instant loyalty. And they bought it for less than $50 a year, which is going to be way cheaper than what they are investing in getting another telecom’s customer to switch.

That’s smart CRM.

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6 Responses to “Are you ignoring your best customers in hot pursuit of new ones?”

  1. Stef December 28, 2011 at 3:30 pm #

    talk about almost perfect timing…I just wrote a whole paper on effective CRM! Wish this went up before I handed it in.

    My favorite line from the paper to add to your blog post:
    “Companies who value CRM practices, view their customers as a lifetime income stream, not just a set of independent transactions.”

  2. Doug Brown December 28, 2011 at 3:36 pm #

    That’s a great line Stef. Any new business strategy should begin with a CRM program. I would love to read your paper…or perhaps you might consider covering the highlights off within a guest post on the Copeland blog??

  3. Derek Ford (@DerekFordPhoto) December 28, 2011 at 6:08 pm #

    Timely blog post indeed.
    And Stef’s line underscores the point.
    I’m gonna write that one down.

  4. Doug Brown December 28, 2011 at 6:12 pm #

    I like this quote too Derek:
    “Customer retention obviously has profound implications for all businesses. Finding a new customer costs from three to seven times more than keeping an existing one, and for many large companies, up to 95% of profits come from long-term customers.”
    -PriceWaterhouse Coopers.

  5. Stef December 29, 2011 at 2:04 am #

    I would love to! Perhaps I can come in the office in T-minus two weeks and post/catchup with the Copeland Crew? I will get the review of CRM ready to go.

    Thanks Derek. glad the quote was helpful.

    And Doug – You added another great point with the PWC quote. The numbers really jump at you and emphasize your blog post. Also, if you are retaining your long-term customers they will often times recruit new business for you, simply by word-of-mouth and general satisfaction with the product or service. I’ll save the rest for the guest post.

  6. Doug Brown December 29, 2011 at 5:18 am #

    Brilliant Stef, that’s a plan.

    To your point about advocacy, I would add that your loyal customers ARE your recruitment team and they need to be treated as such, communicated to and rewarded in ways that recognize their importance. Of course, along with the power of a satisfaction comes the equal power of dissatisfaction. Loyalty is as easy to get as it is to lose. My communications company has my loyalty….for now.

    See you in a few weeks. Safe travels!

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