Interim Management Question: Should Companies be Focusing on Retaining Customers vs. Acquiring New Customers
Should companies be focusing on retaining current customers rather than going after new customers due to the poor economic environment?
Paul Travis, Interim Marketing Executive
Often in life, we hear people wonder, “should I be doing X or Y?” I like to use my kids as examples — only because they are so clearly reflections of ourselves.
The question is not, “should I take out the garbage OR brush my teeth?” It is: given that we cannot let garbage pile up in our house, and we will lose our teeth — over time — if we do not brush… how can we get both done? It’s BOTH-AND rather than EITHER-OR.
Prioritization becomes easy, when we consider how much more expensive cost-of-sales is for new customers than existing customers (see my video). Most businesses do NOT regularly monitor this.
Back to your question, companies should have both a RETENTION and an ACQUISITION strategy.
Especially if they haven’t done so recently, leaders should analyze their customer base. SOME (usually ~10%) are customers we’d just as soon lose to the competition! They’re unprofitable, not a good fit from the start, etc. Nudge them to find a good home and get good karma points in the process.
Talk to the other 90% and learn what you can do to keep their business. NOT EVERYONE is jumping ship, so you’re likely to find that ~30% are solid. Another ~30% are unable to pay and you’re likely to lose them — proactively help them with a payment plan. The remaining ~30% are on the fence; maybe a “lighter” product/service offering would help them remain “in the fold”.
ONLY THEN should you consider how much energy/resources/investment to put into new customer acquisition. As always, metrics against controllables are best (that is, # calls made — rather than # new accounts).
Paul Travis is an interim marketing executive at OneAccord. Mr. Travis is based out of Seattle with 25 years of experience in high technology, marketing, and consulting. He can be reached at Paul.Travis(at)oneaccordpartners.com and at 206-910-2222.
