Redmarketer

June 19, 2008

Rewarding Customers

Filed under: Marketing Philosophy, Marketing Tactics — Robert John Ed @ 2:56 pm

Valeria had a post this morning that got me thinking about rewarding customers.

Organizations of all kinds spend very large sums of money on acquiring and converting new customers (leads). Getting this initial sale is easily the most difficult aspect of business. There are countless hurdles standing in the way. Competition, consumer loyalty, product misconceptions, switchover costs and innumerable other reasons to stick with what they already do.

Marketing is essentially a practice to get people to give it a shot. To try out your offering, just this once to measure value. We marketers spend countless hours and budget to drive our target audience to give us that shot. And then we forget about them. We move on to the next group of leads.

There are some big problems with this:

1. Customers leave. It’s called attrition and it happens with every single customer you will ever have. Either they go to another company, they lose the need for your product or service, or they die. Morbid, but true. This is why understanding and maximizing your Customer Lifetime Value is imperative to marketers. Keeping customers happy should be more important than finding new ones!

2. Customers cost a lot less to keep than to acquire. It’s trite to say, but it’s true. The cost of acquiring a customer is much great than keeping one (a common number thrown around is 7x more to acquire than keep). The problem is that many organizations don’t spend much at all on customer retention.

The lesson here is that developing a strategy for rewarding and keeping customers happy should be addressed within your marketing department. Run it concurrently with those extravagant acquisition strategies. Create a few evangelists and get some long term positives. Earth shattering idea, I know.

;-)

(Pic from CRM Trends)

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