This seems to be the state of mind with most companies regarding their current customers. I am the only one that see this? It seems like every marketing campaign is to get new customers by offering huge discounts, free products, and other incentives that are very rarely offered to existing customers. That type of customer service is why customer loyalty is almost non-existent. Common sense makes me think that current customers would be more loyal and maybe even purchase additional products/services if these same discounts were offered to them. For example, if I were looking to get a new phone and my existing provider said “hey, if you trade in your phone we’ll give you the new model free as long as you agree to stay with us for another year”. Now they lose around $800 for the phone, but they are getting around $120/month for my service for the next year. Some of you are thinking “Don’t cell providers do this already with the 2 year contract?” In a way yes, however if I were to buy a new phone today on a 2 year contract it would cost me around $200, plus changes to my data plan because I am technically changing plans, plus the upgrade fee. However, if I were to change providers they will let me trade my current phone for a new phone, pay my disconnect fee, and also give me credits on my bill for the next 6 months. Financially speaking, changing companies every year is the smart decision.
Why do we continue to ignore the customers that are supporting us now? It would seem that companies would care just as much about their loyal customers who have been with them for years as they do about “the next one”. This is despite numerous studies that show it costs 5x-7x more to acquire a new customer than retain the ones you have. It is so surprising how many companies have not found that just by improving the customer experience will not only save you money but will also increase your revenue. People have known this for years, but just refuse to change.
Here are just a couple of stats from Beyond Philosophy:
- A 2% increase in customer retention has the same effect as decreasing costs by 10% – Leading on the Edge of Chaos, Emmet Murphy & Mark Murphy
- 70% of buying experiences are based on how the customer feels they are being treated – McKinsey
- 55% of customers would pay extra to guarantee a better service – Defaqto research
- A customer is 4 times more likely to defect to a competitor if the problem is service-related than price- or product-related – Bain & Company
- A 5% reduction in the customer defection rate can increase profits by 5 – 95% – Bain & Company
- It costs 6–7 times more to acquire a new customer than retain an existing one – Bain & Company
- eCommerce spending for new customers is on average $24.50, compared to $52.50 for repeat customers – McKinsey
It can be a balancing act when trying to keep existing customers happy while also trying to gain new customers. However, you should never exclude current customers. If you focus on treating your existing customers well, you help ensure that they come back again and again. Your existing customers are also a great source for feedback and product suggestions. The best part…..they are also a great referral source for potential clients. By keeping a positive relationship with current customers, you are only helping yourself.
Would love to know your thoughts on the subject. Am I just over thinking this?