Rethinking Marketing

What if you completely rethought your marketing strategy? Many organizations spend most of their marketing budget on acquiring new customers. The theory is new clients help build your organization.

What would happen if you take the money budgeted for new customer acquisition and spend most of it on customer retention?

Many organizations have a discount for new customers (first year half off, 30 day trial etc). This certainly gives the appearance that they care more about their new customers than their older customers. If I have been a customer for 5 years, why should I pay more than a new customer who hasn’t shown any loyalty to the organization?

Most studies show that it costs a lot more to acquire a new customer than it does to retain a current customer so wouldn’t it make more sense to put the emphasis on retaining your current customer base?

This could be done with discounts for loyal customers, or anniversary gifts or many other ways. However, it could also be done by putting your money toward better customer service.

As an example, if a restaurant hired an extra server or two and provided quicker service (or maybe it’s a case of less hurried service) the customers are more likely to have a positive experience and come back again. While the cost of an extra server or two might seem to be coming out of the bottom line, the reality is by increasing the likelihood of the customers returning, rather than being thought of as simply an expense, this could be thought of as a marketing expense that results in more long term revenue and profit.

If a hotel adds an additional person to the front desk which would allow them to deal with the customers better, answer the phones quicker etc, how many room nights might they be adding? It wont take more than one or two to cover the cost of the additional employee so what might seem like an added expense will actually result in increased profit.

Any organization that doesn’t have the time to answer the phones properly might want to consider hiring another person to assist in that function. Every phone call must be thought of as a potential customer and having them hear “thank you for calling, please hold” is a major turn off for many people.

Some might think that while this would be effective for customer retention, it doesn’t help with increasing the customer base. I would argue otherwise. If you do your job well, the best salespeople are your current customers. If you provide a bad service, your customers will have a negative experience and this will result in not only losing them as customers but also them telling others. This will more than offset any marketing you are doing. If you provide good service, your customers will have a good experience and most likely return but probably wont tell anyone. If you provide great service, not only will your customers return but they will tell everyone they know (and this includes posting on blogs, tweeting on twitter, writing on the walls of facebook etc). Great service will bring in more customers, in the long run, than almost any type of marketing

There are three main reasons more organizations don’t reconsider their marketing in this manner. First, they have always paid for ads in the yellow pages, or billboards or newspaper ads or TV commercials and the fear of change is overwhelming. Second, they don’t understand the HUGE difference between good service and great service and since they feel they are providing good service and it’s not increasing their customer base, they don’t see this as being effective. Third, they simply haven’t thought about marketing in this manner.

Give it a try, treating your current customers as special will make a world of difference!

Have a great day!

Lawrence
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