It's doom and gloom, according to many of the economic commentators, but now is not the time to take your eye off the customer experience ball.
When things get tight, a company needs any edge it can get and retaining the customers it has is one way of minimising the impact of any downturn. Here are a few things to try to hang on to those most valuable of assets - your customers.
In hard times, existing customers are a godsend. Marketing spend per £ revenue is typically lower to retain an existing customer than it is to win new ones: the oft bandied figure suggests it costs five times as much to win a new customer than keep an existing one.
Keeping them therefore is a great way to keep revenues up and marketing costs down. And in the days of the networked world, the power of word of mouth is amplified, making existing customers' contribution to attracting new customers ever more important.
Word of mouth is one of the most effective methods of generating customers and often costs nothing - it just requires you to do what you normally do to the customer's satisfaction.
Retaining customers is predicated on the premise that the experience you deliver meets their needs and if your customers are anything like mine, that means getting better at the things that matter most to them. Investments have to be targeted, even more so in hard times so why not use feedback from customers to help you shape your improvement priorities. Here's how.
Suppose your feedback tells you that there are four key drivers of satisfaction and the percentage of people that are likely to buy again or to defect.
Now take the average sale value of a customer and for each of the drivers of satisfaction identify the percentage that are likely to defect and translate that into a number, using the total number of customers.
If you are able to segment the base and apply different values to each segment, so much the better. You now have an estimate of the revenue at risk if that driver of satisfaction in the customer experience is not addressed and improved to at least match the competition.
There's an improvement that can be costed against a benefit (the reduced number of customers at risk) and a guide to which investments provide the highest ROI.
It's not a perfect science but that applies to many aspects of managing a business. The technique can also factor in returns from increased advocacy if that is included in your feedback.
Advocacy is of course an essential element of the marketing mix of any switched on company. Research shows that positive word of mouth exerts significantly greater influence on both consumers and professional buyers than advertising.
It doesn't come free - you have to deliver a superior customer experience, one that stands out from the competition in the things that matter most to the customer. So a great customer experience not only helps with retention, it helps with acquisition too. One investment, two benefits! Just what's needed in hard times.
Now many of you may be thinking that this is all about additional investments but it doesn't have to be. Hard times are a great time to review how you deliver the customer experience and strip out the things that customers don't value.
Again, well constructed feedback can provide the source data. Companies do lots of things because they have always been done and some of these no longer add value; some of them never did.
Indeed some generate frustrations in customers and reduce their propensity to buy again or to advocate, so use your customer intelligence to stop doing some things. Customers will be happier, possibly more likely to repurchase and advocate for you and you save money to boot!
So if your budgets are under threat, make the case for increasing the focus on the customer experience.
Use these hard times to sharpen up your focus on the customer and then, when the pressure is off, keep these practices in shape and stay ahead of the competition because this is just good business practice in good times or bad.