I’d bet $1000 that at this very moment, there is a least 1 over-caffeinated CEO blabbing about:

  • Growth Hacking
  • Mass Scaling
  • “Crushing It!”
  • “Moving The Needle!”
  • Hockey Stick Charts
  • The Billy Ocean VH1 Story Blue Ocean Theory

But most of them are missing a REALLY important concept that could sink their ships…

Brand perception, customer experience, and the subsequent customer retention and the loyalty that you EARN… by taking care of the people who pay you… are as important (if NOT much more important) than acquiring new customers.

Continuing to pour water into a leaky bucket, will always yield the same soggy results

Gotta seal the leaks before pouring more water.

Finally: we have reached the final stage needed to complete your well-oiled, lean, mean, masterpiece of a marketing machine but…

Is this the end? Or is it just the beginning?

Here are a couple of stats that will blow your Birkenstocks and make you consider reverse engineering your business.

1. A customer is 4 times more likely to defect to a competitor if the problem is service-related than price- or product-related – Bain & Company.

2. The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20% – Marketing Metrics.

So if we begin with the end in mind (what happens after a lead converts to a customer), we can guaranty a much higher likelihood of long-term success.

That said, I am not here to restructure your business, expand your product line or build your customer service department.

However, I can help you identify your best customers through email tagging and automation rules so that we are speaking, treating and rewarding them as if they were an old friend, instead of fresh meat.

VERY IMPORTANT.

Anyway…

Featured Article by Jeannie Walters

The ROI of a Loyal Customer

I’m asked this question a lot: what’s the return on investment (ROI) of customer loyalty? It’s a good question, and one that’s not as straight-forward to answer as you might think.

The math is easier for customer acquisition costs and rewards.

1 customer > no customer

inventmentIt’s easy to claim: We’re winning! We’re winning! If we invest $5 in customer acquisition, and we get a customer for $9.99, then it’s easy to see we’ve doubled our investment. Yay, us!

Customer loyalty math is messy. It’s much more difficult to calculate, there is no easy formula for how to get to the right number, and it depends on factors that fluctuate, like discounts. The mistake, however, is ignoring customer loyalty. You see, even if determining customer lifetime value (CLV) is too daunting, you can get an idea of your customer churn rate. (For an excellent explanation and walk-through of CLV, check out this infographic from KISSMetrics.)

Churn is a little easier to digest. For the sake of simplicity: it’s literally the number of customers you acquire versus the ones you have that are walking out the door. If you gain 100 customers in a month, but during that same time you lose 30 active customers, then your churn rate is 30%.

Do you know your customer churn rate? Many business leaders don’t. Improving the customer experience starts with knowing where you stand. The churn rate can tell you at a glance if your customers are sticking with you or not.

If that isn’t a strong enough metric for you, then consider the bad word of mouth of customers who feel ignored, neglected and mistreated after giving you their loyalty. Take a gander at some of the vitriol reserved just for companies we loathe over at Pissed Consumer. Wow. You eat with that mouth!? 😉

But retention strategies are so much more than email strategies. Your customers are not waiting for you. They are living their lives, and if you and your brand fit into that, great. If not, they are certainly willing to move on. In research from Google last year, they found 61% mobile users said that if they don’t find what they’re looking for (probably within about five seconds), they’ll click away to another site.

Poof.

Do you have a retention strategy? Are you measuring customer churn rate or CLV? Are you focusing on the touchpoints that can keep or scare off your customers? The ROI of a loyal customer is basically every profit you make. Consider that before investing even more in short-term acquisition strategies.

 

About Jeannie Walters

Jeannie Walters is the Chief Customer Experience Investigator and founder of 360Connext, a global consulting firm specializing in the cornerstones of customer experience: customer engagement, employee engagement and connections like social media. 360Connext serves mid-market companies and larger by helping them evaluate their true customer experience. The evaluations always lead to improvements which then lead to results like increased online conversions or loyalty.