It has been said that it costs 7 times as much to find and convert a prospect into a customer that it costs to keep one (customer) you already have. That figure will vary depending on the industry you are in but by and large it holds pretty true.
Now if your objective is to grow your business, the loss of existing customers only makes it that much harder. Since most of my readers are small businesses (at least I think most of you are in the small category) if you had 1000 customers and loose 10% a year that means you will have 100 drop off you’re your customer base. After I say ouch, what is the best way to put your thumb in the customer lost dyke?
1) Deliver what you promise. What more should I be saying, do what you say you are going to do the 1st time, every time? Don’t over promise so you end up the fool.
2) Understand your attrition. Every customer you lose leaves for a reason. It is there reason but if you don’t know what it is you have no way of stopping others like them not to do the same. This holds especially true if you sell to one or two major industrial groups. What could some of these be> He died, He bought from a competitor. His spouse’s employer is a competitor. Your company did something that made them angry. They were referred to another company by a trusted friend or business acquaintance. He does not like the new contract or design changes you made. Ok so some of these are totally out of your control. But some aren’t. How can you get the answers? Try asking. Then use their answers as a profile on a model with similar accounts.
3) Understand Retention. Generally there are 3 reasons a customer will stay with you in a business relationship. First, they are very happy with the product of service you are giving, Second, they feel ok about the product or service as it is more that adequate for their needs but they don’t think about it one way or another. Third, they are very unhappy but are too lazy to go and change.
If you know which of your customers fit each of these categories you can ask them and use the information to model yourself it other prospects. Modeling can also define what kinds of customers you should be trying to acquire. If attrition and retention can be predicted, shy go after prospects who are unlikely to stay with you? If you can find the right model for your best target customer. Then sail away at full steam ahead!
4) Create a Personalized Communication Stream. This can be one of the biggest benefits that an interrelated marketing attack gives. You can send your message out that is relevant to them using their individual channels of choice. To do an effective job each message must be part of an overall master plan to educate, inform and motivate the customer rather than stand alone communication (see blog Direct Mail Multichannel Integration
Posting on 2/17) Start thinking of this as an ongoing dialogue rather than a one shot wonder. This steady stream of communication should be reactive as well as proactive. You want the customer to be taking and making planned actions, like buying again. So build up to that action with a carefully constructed plan of attack.
5) Get your hands on your data. Once you have this wonderful information don’t stuff it in a desk drawer. Get it out in front of you and USE IT! You have an opportunity you to have the inside track into your customers head. Use if before it changes.
6) Test if you can. If you can and your list is customer list is large enough, try a few different things to parts of it and record down what works best.
Larson Notes & Satire: Any company can make a retention program if they want to. They key word is want.
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