Stop treating customers as disposable: here’s what needs to change in marcoms
Victor Condogeorges, head of data and insights at Orchard, examines customer acquisition versus retention, and why it's time for the equation to be reassessed in 2021.
The tussle for budget between new customer acquisition and existing customer retention will arise again, except this time we, and our customers, are smarter for it.
Brands are being nudged towards a commitment to change, often guided or led by customers wanting a more sustainable future. The loyalist segment has been untapped for many, but can actually be a source of enriching customer experiences and a deeper connection with brands.
The disposable customer
Recent research has revealed that customers are cottoning on to marketing tactics, and ones that are obviously focused on new customer acquisition. Retention it seems has taken the back seat, as though the mentality has been that it’s cheaper to acquire new customer than spend money retaining existing ones.
This attitude of the ‘disposable customer’ has been reflected in the modernisation of the world around us. When something breaks, or it has no value to us or our objectives, more often than not it makes its way to the neglected pile, and eventually to the tip.
The throwaway society is manifesting in the way customers are being retained—like when there is an exclusive offer only for new customers. This neglects to reward existing customers for their loyalty. It isn’t uncommon to leave a service then return to get the offer for ‘new customers’.
The limitation of customers, however, is not seen in the same way by many marketers who are steered by their goals of new customer acquisition. Lifetime value is still in its infancy for most marketers that are on their journey to customer-centric measurement, so it may not have the same weight in their KPI set yet.
Practice what you preach
The underlying problem behind this though is that customers are sick of being told one thing then observing another. Existing customers see how differently new customers are treated, revealing to them how brands may be duplicitous in their appreciation of paying customers. Ever wonder why your favourite show on Netflix is cancelled after two seasons? It has to do with new customer acquisition.
This is revealed when people are exposed to brands using societal concerns to support sales and marketing when they are not fully committed to being part of the solution. If brands want to stand for change, it can’t be a short-term gimmick, but rather a commitment to that cause, whether it be global warming, supporting workers’ rights, or even committing to being customer-centric. Research actually suggests that only true green behaviour will have the desired positive effects on reputation.
Show appreciation
Existing customers are more than a CRM list of people that are using, paying, experiencing, and enjoying a brand’s products. It doesn’t take much to send them a ‘thank you for being a customer’ email or even do something for them, and not everything has to have a “Buy Now” message attached to it.
Sometimes you might see a better yield to up-sell existing customers than focus on pitching for new customers all the time. It was a different time in 2001 but 20 years on and this teaser from Bain & Company still rings true: “In the current downturn, most companies are tightening their belts. But too many are missing their biggest opportunity to contain costs: building loyal relationships with their best customers and with their own employees.”
In 2021, keep it simple, show appreciation to the customers you have, dismiss the disposable customer mindset, and be true to what the brand claims to stand for.
Victor Condogeorges is the head of data and insights at Orchard.
