The road to customer acquisition: paved with good intentions but undermines retention

//The road to customer acquisition: paved with good intentions but undermines retention

The road to customer acquisition: paved with good intentions but undermines retention

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Yesterday, I received an email offer from a company I have been a customer with for over 5 years.  “Sign up today!  All new customers receive free shipping on any purchase.”  I opened the email and it contained additional savings for their ‘new customers’, such as 40% off certain items and free $25 gift certificates if they spent $50 or more.  Ouch.  These incentives are far better than the ones I have ever received after being a loyal customer for years.  I wish that I didn’t feel like a second-class citizen.

Where is the CRM?

Communicating to existing customers about becoming a new customer is certainly an issue here.  When I first saw the email, I thought to myself “oops” on their part.  But the greater “oops” here is that they apparently don’t know their customers from their prospects.  How can companies communicate with their existing customer base if they don’t have a proper Customer Relationship Management system in place?  There are some companies and some CRM systems that do it better than others, but the reality is, there are solutions out there that can prevent such an “oops” from happening.  The investment in CRM solutions is not only to manage customer engagement, but there are important preventive benefits as well.

Getting to know you….getting to know all about you…

The fact is, we communicate differently to existing customers versus prospective customers.  Existing customers realize that they are just one of a million, but they still want to feel that they are one IN a million to you.  The communication to them should be geared toward their value.  It should be personalized and invoke feelings of familiarity and warmth.  This drives loyalty and ultimately advocacy.  Just recently, I received a sale email from one of the retail stores I shop frequently.  The deals offered were fantastic and I clicked on a few items I liked and added them to my online shopping bag.  Before making my purchase I got distracted by other things and eventually shut down the computer.  Two days later, I received an email from the retail store “Come back: your shopping bag is waiting for you”.  When I opened the email it read:

“Hi Jodie, Just a friendly reminder… Since many of our popular items sell out quickly, we are holding these items in your shopping bag.  Come back soon to place your order.” 

When I scrolled through the email, I saw the images of the items I had selected.  Wow!  Not only a reminder to get the sale, but customer assistance in that they actually held the items for me.  I did want the items, and it honestly did just slip my mind, so yes, I made my purchase (and told my friends about how happy I was to receive the reminder.)

The backlash when existing customers discover better incentives for new customers

As a business owner myself, I fully understand the need to grow your customer base.  Often times, organizations offer great incentives to attract and entice new customers so they can ‘hook and reel’ them in.  Makes perfect sense.  However, the problem occurs when your existing customer finds out that they are actually better off not being a customer at all.  While it’s important for an organization to experience growth and practice new ways of obtaining it, retention should never be overlooked nor should it take the back seat.  Getting back to my initial “oops”, why would organizations give better offers to new customers versus existing ones?  Are all of my old dollars not as strong as someone else’s new ones?  In the age of social media, let’s face it customers talk to one another.   Even if I had not received the email indicating such great incentives to “sign up today,” the likelihood that I would have discovered the same incentive through another channel is highly probable.

The better choice for this company would be to highlight the great offer for new customers AND the even better offer to those who have been loyal patrons for years.  Grab a new customer and show them that there are more incentives down the road in the relationship instead of just cultivating “offer jumpers”.  This is a far better approach versus having the retention team reach out and try to slap a band aid on the “boo-boo” after the fact.  Sure, this could be one of those barriers that are “just enough to cause indifference” and maybe even for some “small enough to forgive”, but is that the risk organizations are willing or better yet, able to take?

About Dr. Jodie Monger

Jodie Monger, Ph.D. is the president of Customer Relationship Metrics and a pioneer in voice of the customer research for the contact center industry. Before creating CRMetrics, she was the founding associate director of Purdue University’s Center for Customer-Driven Quality.

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By | 2016-12-05T15:15:20+00:00 July 22nd, 2010|For External Relationships|3 Comments
  • I have a similar story: a CRM vendor i spoke with a while ago and who knows i’m an analyst (therefore not interested in buying their products), keeps on sending me emails on how great their product is, asking about my plans of replacing existing systems, etc.

    Not only they don’t know much about me but obviously their system is not that great or is badly used since they don’t know i’m not a potential customer.

    • Thanks for your comment Gabriel. That happens to me far too often as well. Just recently I received an email to “register for a webinar on improving the value of my contact center.” But, I don’t have a contact center. Relationships are not meant to be taken lightly. And just as much as your customers invest in organizations, organizations need to invest back in the customer. Good CRM systems are an investment tool which can make or break your relationships.

      ~Amanda Kaufmann, Relationship Director
      Customer Relationship Metrics

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