try some retention

June 15, 2008 ·

i'm not denying the importance of acquiring new customers as that equates to a higher baseline revenue stream for a company, but i've not understood why more efforts are not put against retaining existing customers. never are we made to feel more special to a company as the day we enter into their fold. after that, we're relegated to second class citizens, despite being the ones who fuel their ongoing revenues.

i will assume that there is some formula out there that asserts a new customer is more valuable than an existing one at the point of renewal. perhaps it's just as simple an equation for companies to say that we already got the existing customer's money, they're already invested in us and likely won't switch anyway, so who cares.

when you think about it, a new customer comes in and signs a contract much like an existing one would renew a contract. dollar value of the contract being equal, why is the importance on the acquisition and why is more effort made to seal that deal? take the case of the wireless category that spurred this post to life. in a situation where both a new and existing customer are signing up for the same three year contract, the plan fees and prospective monthly revenue to the company is identical. so why is it that the new customer gets their pick of all the phones, at significant discounts and other incentives to their monthly fees, yet the existing customer doesn't get all those phones to choose from and certainly not the discounts on them either, nor on the plan fees themselves?

we live in a what's-in-it-for-me society where incentives reign supreme. there isn't a lot of that on the side of customers renewing. however, continuing to be a new customer doesn't make a lot of sense either. sure there are some who wouldn't mind having a new phone number every 3 years, but for most, it's not a great option. same goes for other industries and services.

a company's approach to customers is universal; acquire them, and over the course of their term with you, maximize the revenue you can garner from each individual one. with this in mind, the customer should have the upper hand but you wouldn't know it. especially if the company has not yet recouped what they spent to acquire you. while it's not impossible to get comparable incentives to the new customer, you have to raise a stink to get it. this leaves the relationship contentious and opens the door to dissatisfaction and another company luring you away.

companies need to do more to keep their customers than send a direct mail piece every now and then, which ends up in the garbage anyway. we need to feel that we are valued by companies and for right or wrong, that often times comes down to when we're renewing. at that point when we have the opportunity to get out, it's not always apparent that a company wants us to stay. it's not enough to just thank us for the business as we hold our decision to stay in the same light as our decision to come to a company and that equation is heavily imbalanced.




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