com·pla·cen·cy – a feeling of quiet pleasure or security, often while unaware of some potential danger
I give you exhibit A...
That’s right boys and girls, 60% of all the respondents – who were comprised of executives in both B2B and B2C companies from a cross section of industries, dedicate less than 20% of their marketing budget tocustomer retention.
See where I’m going here with the whole “complacency” thing?
The 60%/20% statistic is even more telling when you factor in the 80/20 rule which many brands adhere to and states that the top 20% of customers drive 80% of a brand’s sales and profits.
The findings also make mention of a study done by Bain Consulting which found the average company loses 20-40% of its customers every year. Reducing customer attrition by a mere 5% can improve a business’s bottom line profits by 25-85%.
Exhibit B comes in the form that nearly 75% of respondents indicated that less than half of their employees focus on driving retention marketing programs.
There is some good news to report as nearly 60% of respondents plan on increasing their marketing retention budget over the next two years.
Of course I wonder what about the other 40%. What are they doing?
But I digress.
So why the low numbers when it comes to retention?
Why aren’t more marketers and brands focused on retaining the customers they already have? Presumably these are the loyal customers so it makes me wonder aloud what is these marketers and brands are thinking by not concentrating more on keeping the customers they currently have “on the books” especially when you consider it costs six to seven times more to gain a new customer than to keep an existing one according to Bain Consulting.
One would assume that the majority of companies, brands, marketers, advertisers, organizations or any other way you want to describe them, would know who exactly their most loyal/most valuable of customers are, right?
Well about that whole what happens when you assume edict, try this on for size.
Less than half of all respondents know who their most loyal and valuable customers are and as Tim Suther,Acxiom’s chief marketing officer, put it in the press release announcing the findings of the survey, “… knowing who these loyal customers are and how to best engage them is a business imperative to succeed in the age of the empowered consumer.”
You know, from having read my recent article that brand loyalty among American consumers is very low. You now also know that far too many companies, brands, marketers, et al undervalue the need for retaining existing customers, and far too many don’t even know who their most loyal and valuable customers are.
Do you think, just possibly, that the reason for such a low percentage of brand loyalists has any direct correlation with the fact that so many marketers are not doing enough, not engaging enough, with their existing brand loyalists?
I realize that price and quality play a major role when it comes to purchase decision time given today’s economic landscape but “creating an organization-wide focus on and commitment to retention drives a brand’s ability to deliver the level of experience that optimizes customer engagement” which in turn increases brand loyalty.
In other words Mr. and Mrs. Brand, remember who brought you to the dance, aka your most valuable customers. Don’t ignore them once the dance starts, talk to them, engage with them and stay engaged.
And dance your little hearts away all the way to the proverbial bank.