Don’t count on satisfied customers…

If all you are measuring is how many satisfied customers you have, then you may be losing market share and don’t even know it. This statement might contradict much of what you learned from your business experience, but if you have plenty of satisfied customers and diminishing profits, then this premise has just piqued your interest.

Many companies today use customer churn to help measure market share and customer satisfaction. But this simple calculation is not telling the whole story. Every business has a core of existing customers who are very satisfied; they’re steady and you can depend upon this base to provide you with a predictable revenue stream each year. Therefore, you spend the smallest amount of sales and marketing dollars on your existing customers and allocate the bulk of the dollars to new customer acquisition and win-back. For some organizations this becomes a vicious cycle … a game of sorts that is unwinnable unless you outspend your competition every year. But by focusing on your existing customers, not new customer acquisition, you can break this cycle and begin growing your business in a meaningful way. Now, you may not be able to easily convince your CEO that this is the right strategy, but after reading this next story, you might.

When I graduated from college almost 15 years ago, my young career had taken me to a new city. After finding an apartment, my next order of business was to find a bank where I opened both a checking and a savings account. Fifteen years later I still have those two accounts and I use them regularly. You could say that I’m a satisfied customer, right? You might venture to say that I’m a loyal customer who is highly valued, right? Wrong! True, I may be satisfied with my bank; after all, they haven’t screwed up these accounts over the years and they haven’t caused me any major headaches. But a lot has changed in 15 years – at least for me. For example, I got married, bought a house, had a daughter, bought two new cars, and started saving for retirement. However despite growing up and living life, nothing has changed in the relationship between me and my bank. My mortgage, car loans, credit cards, investments, and IRA are all with a potpourri of other financial institutions.

You see, just being a satisfied customer isn’t enough anymore. Over the years, my bank didn’t do anything to excite me or motivate me to do more business with them. There are no positive experiences I can reference that demonstrate how my bank targeted me as a special customer… not after 5 years, not after 10 years of doing business with them. Yes, I got the typical junk mail from them like everyone else. I threw it away like everyone else too. Indeed, I’m a satisfied customer, but not a loyal one, and the funny part is that my bank hasn’t got a clue. One day, I may take my checking and savings accounts somewhere else too. Shortly after I do, I’ll be bombarded with letters and phone calls about what an important customer I am. I’ll be offered some low interest rates, VIP services, and a toaster if I return my business. It would be too late, of course, and their campaign would be in vain. Nevertheless, the story should sound familiar to you and if it does, then you are on your way to understanding that right underneath your nose – from within your customer base, you have a treasure trove of opportunity.

On the flip side, here is another story. When I went to college my parents said that I had to get insurance for my ’79 Volkswagen Rabbit. I asked a friend what company he used and I went with them. Fifteen years later my latest car is still insured with the same company, and so is my wife’s car. Not only that, but the same insurance company holds the policy on my house as well as my life. So what went right? It was my agent. I genuinely like the guy. He’s always interested in what our family is doing, and when we talk, it’s a positive experience. I’m both satisfied and loyal, and if you need an insurance agent, let me know.

In conclusion, give your existing clients some attention and don’t take them for granted. They have more needs than just the ones you are serving today, and you have a responsibility to connect with them and reward them for their loyalty. If you survey your customers in order to gauge their satisfaction, then you are only a part of the way there. The next piece is a loyalty or customer retention program. But beware: The program’s goal shouldn’t be to keep customers from leaving you. If it is, then you need to change your perception of the program. Rather, it needs to be something that gives back, motivates, and encourages new activity. This can be accomplished with the right attitude, good people, and innovative technology.

Contact details:
Eric Camulli
Director of Technology
Virtual Hold Technology
T: 330-670-2224
E: ecamu@virtualhold.com
www.virtualhold.com