Retention Is Best

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By Robert Tuomi

(WINDSOR, ON) – In the last Marketing 101 column, it was mentioned that a new report by Call Center IQ and NewVoiceMedia found that on average, “nearly half of consumers (48%) are taking their business elsewhere because they’re not satisfied with the service they’re experiencing. Even more worryingly, many believe that the process of resolving issues is so cumbersome that they will switch without even attempting to make contact.”

The column went on to discuss the role of the Department of Sales Suppression  (DSS) as largely being the cause of this startling loss of customers.

Some comments on the column have suggested that this estimate is way too high and that businesses couldn’t survive with such grand customer losses. However, apparently if one listens to Jerry Jao, one of the founders of Retention Science of Santa Monica, CA, only one company of many that he surveyed before starting the outfit had a customer-retention officer. That, on its own really tells the story.

Jao was quoted in the April 22 National Post and what he said exposes that marketing departments might be working too hard to attract new customers and are largely ignoring current customers. This, coupled with the DSS, is the reason for so much customer churn. In most cases, he believes, the emphasis is on attracting new customers rather than getting more business from current customers. If there is a secret to getting more business it is, “all about how marketing messages are structured.”

Too often marketing people come up with grand schemes to win new customers but mostly what they do is blanket a potential market with discounts or coupons when in fact they should be structuring their marketing efforts to deal with new and current customers. It costs a considerable amount of money to land a new account or bring in a new buyer. It if, suggests Jao, preferable, but a lot more effort, to work the current customer base to increase average dollar value per visit. When the work produces results, it is, he says, also less expense.

Admittedly, what he is advocating takes more time and more effort and is not as sexy or as high profile as, say, running funny television advertisements that allows the marketing staff to work with Hollywood producers. The work might be brilliant but is it really cost effective?

Suffering the indignities in the marketing trenches is never a lot of fun – Jao calls it dreary and for those who have done it it is that and more – so it is not hard to understand why some marketers go for the glamour at the expense of generating more business. That only one company in Jao’s survey had someone looking after current customers is almost a scandal.

Companies need to understand exactly what their marketing people are up to and need to ask critical questions about their marketing programs. Are they well-rounded, multi-focused and is the effort tightly tied to very specific revenue goals. The problem with marketing is that if it is not done well the consequences can be considerable so it is up to senior management to make sure that marketing is firing on all cylinders.
One of the issues Jao has some expertise in is the age old question of when to contact customers with meaningful contact, not simply blitzes that flood email inboxes. He says by, “determining the right frequency for contacting customers and re-engaging those who were losing interest, we increased conversion more than 170%, even as we reduced the number of offers (discounts) by 10%.”

In many instances, and many is correct and not an exaggeration, marketing is quick to offer discounts. This is simply a sign of very weak marketing people who do not understand why their customers are buying nor how to get them excited about buying at full price. No company wants to shave points off of their profit by cutting prices so it is hard to understand why so many companies are so quick to drop their revenue potential.

Real marketers go beyond the normal and find creative ways to enhance revenue and thereby become a profit not a cost centre. If your marketers are working diligently at cutting your profits, you may need to consider looking for better operatives in the department.

If you have a question about marketing, you’ve come to the right place. Let us know and we’ll give you an answer to help your business.

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About the Author

Ian Shalapata

Ian Shalapata is the owner and publisher of Square Media Group. He covers politics, the police beat, community events, the arts, sports, and everything in between.

His imagery and freelance contributions have appeared in select publications and for organizations in Canada and the United States.

Contact Ian with story ideas.

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