On Taking care of current customers
Before we embrace promotional tactics for customer acquisition, it's important to address promotions for retention and growth of our current customer business. In crafting acquisition strategies, we also need to consider the effect of our communications on current customers who might hear about the promotion. Here is an example of why. I recently dropped my mobile phone and it broke into two pieces. Needing a replacement, I researched the newest technology online (ended up with a second-hand Star-tac for $30 on eBay, but someday I'll have that one with the camera and PDA...) and was instantly drooling over the capabilities that were available in the new phone.
Unfortunately, most of the deals were available only on new service. Here's a dilemma as a marketer. You have a customer whom you know to be a heat seeker, yet who has been a customer for several years and has a higher than average monthly bill which he pays on time. When he needs a new phone, does it make sense to exclude him from the offer that you will give to someone who has proven to be a good customer, and who has not only recouped the cost spent to acquire him as a customer, but who's business has also generated a profit over time if he is willing to sign a new agreement?
Loyalty programs and promotions designed to encourage repeat purchases or upgrades should be among the first considered, since it will cost less to do business with an established customer (and supplier from the customers' point of view) than from a new one. We should still use customer aquisition programs, but should make them synergistic with those designed for retention. Essential to this process is an analysis of what it costs your company to acquire a customer, how long it takes for that cost to be recouped, and how hard it is to replace a lost customer. My thought is that a company running a new customer promotion should provide an alternative offer to incent established customers to increase or extend their business so that they lessen the risk that a customer will feel like their loyalty is being punished. Did I mention my husband's mobile phone broke last weekend?
How does your company treat its best customers?
