I’m sure you’ve heard the maxim that it costs a lot more to get a new customer than it does to retain an existing customer. It makes perfect sense, right? So why is it that we spend so much time and money in violation of that credo?
At the recent Email Evolutions Conference, direct marketing legend Stan Rapp pointed out that the advertising on this year’s Super Bowl equalled approximately one third of the total amount spent on email marketing in the U.S. last year.
Think about it. Thirty minutes or so of commercials featuring babies, monkeys, snow globes, horses and other trickery hoping to garner new customers in an economy where consumers are at best disinterested in establishing new brand relationships. Contrast that with email (and social media) where you can communicate directly to people that have already expressed an interest.
Turn Your Budget Inside Out
In an economy like this, why are we still having conversations about the effectiveness of radio versus print? Why aren’t companies turning their marketing budgets inside out, and focusing the vast majority of their resources on taking care of their current customers?
Think about it. How relevant and timely could your email program be if you invested in it what it costs to make even a modest broadcast commercial? How many Comcast Cares – style social media brand ambassadors could you hire instead of the money you spend on Yellow Pages or print ads?
Are you doing everything you can to hold on to the customers you have? I’ll argue that if you’re spending even one dollar on outbound, acquisition efforts you are not.
Think Bottom Line, Not Top Line
This approach requires a complete overhaul of the notion of ROI, moving from a customers and dollars gained mindset to a customers retained and dollars protected perspective. And how many industries can truly expect top line growth in the next couple years? If you’re not one of them, why are you continuing to focus on filling the top of the funnel instead of sewing the bottom of the funnel shut with killer customer service, social media outreach, and improved operations?
Think about it.
(photo by Gaetan Lee)
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Really well put Jason. Of course, what’s missing is the idea that making your existing customers happy via this approach will likely garner many new customers as well. Happy customers spread the word, right?
@Danny – Great point. Isn’t social media just word of mouth via technology? Happy customers definitely spawn new customers. Can be tough to measure that impact at the $$$ level, but data points like Net Promoter Score can definitely show trending.
Amen.
Jason,
Great point and great goal, but the challenge to tackle is in measurability. It’s much more clearly measurable to say “this effort gained a new customer” than “this effort retained an existing one” in most cases. Once we can tackle that (and social media makes a great step in that direction), perhaps the efforts will be better aligned with value.
Jason, Great Post
I our Boutique Apartment management Business we have dropped all traditional marketing efforts in exchange for Social Media Marketing.
To further integrate we started a Social Network site the UrbaneLobby.com where residents can meet and greet, trade pictures and videos and socialize on line. We manage and power a blog aimed at our residents the Urbane Blog, all designed around our target demographic local brand recognition.
Our Goal; “To provide our residents with an experience and value with a high enough return to create enough Customer Evangelists within our core resident base that they self rent our apartments.” We are working hard to lead our resident Influencers within our core resident base, and have transitioned most of our marketing budget inward, to further focus on our existing residents. Only good things have happened from this move. Resident retention has significantly improved, and we have created a forum and a field for the Influencers to participate.
Totally agree. If our telecom, utility, entertainment, and insurance providers would do more to care for us as existing customers before we consider switching, we’d switch less often.
I’m looking for existing customer incentives such as equipment upgrades, channel upgrades, and loyalty discounts. I’m not seeing them. Unfortunately.
Great point, Jason. Not only does email and social media avoid the TiVo effect, but for certain segments, it is the best bang for your advertising buck. There are a few catches; as you mentioned, effectiveness is difficult to measure, and click-through rates on large scale campaigns tend to be low. The other catch is that only a relatively small (although growing) segment of the population uses social media. For companies like Denny’s Inc, Frito-Lay, and Budweiser, the exposure from Superbowl commercials may well be worth the investment.
What if your buisness serves a client base that does not return? Emergency services or repairs. What if your clients do not need your services often enough and new buisness is constantly required for your servival.