23. May 2016
We are all very well aware of the power of great marketing. In fact that’s where most companies allocate the biggest budgets every year. Great marketing defines your company’s identity, drives desire and brings customer to you but does not help to retain them.
What is the best marketing strategy? Most experts answer – great customer relationships. The relationship that’s built between customer and brand. Who is the voice of your brand? Chances are, that person is a customer service rep.
Let’s look into the facts. A recent report from Adobe revealed that retailers spend 78% of their marketing budget on search and display advertising, while around 41% of their revenue comes from existing customers, who make up just 8% of their website visitors. As a result, European retailers have to recruit seven new customers to equal the repeat purchase value of a single existing customer, while US retailers have to sign up five new customers.
What would happen if the two figures were reversed and more was spent on keeping the customers?
Today, in the era of online shopping and self-service human interactions are what your customers will remember and talk about, maybe even write about. From a marketing standpoint the quality of those interactions is significant!
No matter how good design, attractive content, great bargains you offer, nothing compensates a bad customer experience.
The greater the dissonance between who your marketing department tells customers you are and who your people SHOW customers you are, the harder the judgement will be. As the Advertising legend David Ogilvy says “The consumer is not a moron, she’s your wife”
To make sure your people can deliver what your marketing department is promising you need to invest money and time to improve your service quality. Constant training of your employees, coaching of the managers and mystery shopping is crucial for every company who wants to save on marketing budgets and retain their customer base.
In today’s SoLoMo (Social,Local,Mobile) environment your customers are more likely to do their own research about your company before your first point of contact will get in touch with them. You only have one chance to make a first impression.
Starbucks, the goliath of coffee has made its name with customer service. Janet Bailey, director of customer service at Starbucks recommends to focus on personalization and unique customer experience. “It’s not just about the product, it’s also about the experience” she says. “Attention to small things sends a big message. It says you really value your customers and don’t take them for granted.”
Marketing might get you new customers but if you’re not looking after the customer experience, what’s the point. Look at your CAC (Customer Acquisition Cost) and calculate how much you can save if this one customer would keep on buying. It’s cheaper to retain existing customers and keep them happy rather than finding new ones. It doesn’t mean your marketing budget should be zero, not at all. You need to find the balance between keeping the marketing budgets equivalent with customer service development budgets. Great customer experience is your best marketing and every cent you spend on customer service is more effective than money spent on marketing.
What would happen if all businesses worked as hard keeping customers as they do acquiring them?
If you estimate that for each 1% of shoppers who return for a subsequent visit, overall revenue will increase by approximately 10% according to the Adobe report mentioned earlier. In the other words, if we’d invest in keeping another 10% of our existing customers happy enough to keep coming back and buying, we would double the revenue.
It’s time to stop feeding the marketing monster and address the myth that advertising delivers higher ROI than efforts of improving customer service and CRM.
Stop wasting 80% of your marketing spend on advertising, shift your budgets to empower your Customer Service team. Value customer retention and repeat revenue over customer acquisition.