Return on Behavior Magazine
Home for marketing and customer service professionals



Customer Experience

March 24th, 2010

Improving Customer Retention during a Slowdown

Daniel Alcorn looks at 5 statistics you should consider before creating your next marketing strategy.

When revenues decline, business owners are forced to reduce expenses.  However, the challenge is to make sure that your cost cutting doesn’t undermine customer retention. During a tough economy, it’s as important as ever to focus on improving customer satisfaction and retention.  Consider these statistics:

1.     The cost of acquiring a new customer can be five to eight times more than retaining and generating the same revenue from satisfying current customers (Alan E. Webber, “B2B Customer Experience Priorities In An Economic Downturn: Key Customer Usability Initiatives In A Soft Economy,” Forrester Research, February 19, 2022)

2.     A 2 percent increase in customer retention has the same effect on profits as cutting costs by 10 percent

3.     The average company loses 10 percent of its customers each year.  Improving that customer retention by 2 percent has the same effect as cutting costs by 10 percent.

4.     For some industries, the profitability of each customer tends to increase over the life of a retained customer (2002 Emmett C. Murphy and Mark A. Murphy, Leading on the Edge of Chaos, Prentice Hall 2002)

5. Once your customers have switched to a competitor, it is difficult and expensive to win them back. However, some proactive steps can be taken to protect your business income and enhance long-term loyalty (and profitability)  More research statistics:

  • 62 percent of customer defections can be modified if discovered in advance (Michael Lowenstein, “Model modelers in predictive churn,” SearchCRM, June 2002)
  • 68 percent of customer defections occur because customers perceive “an attitude of indifference.” (1000ventures.com. Data source: American Society for Quality)

If customers mostly switch to competitors because of vendor behavior (as opposed to product or price), you have the opportunity to reduce defection before your customer chooses to transfer her business and long-term loyalty to a competitor.

Strengthening your relationship and improving your results

How can you gain an advantage in customer satisfaction and retention? Obtaining-and maintaining-this customer-relationship depends on several actions: making a commitment to maintaining a current database of your customers, reaching out and expressing sincere appreciation to your customers at least 3 or 4 times each year, providing a feedback loop by which your customers can suggest useful information that will help you improve your service.

Conclusion

During economic downturns, many consumers reduce discretionary purchases and focus instead on essential spending and basic products and services.  Envision this: While your business promotes for its share of the consumer’s “smaller wallet,” your competitor has already implemented an Appreciation Marketing program.  The customer has heard from your competitor, perhaps more than once thanking him for the loyalty and feeling special; as if he belonged to an exclusive customer group.  The customer is about to purchase that product or service again.  Now envision this:  It’s your company that has been in touch with the customer, and not your competitor.   Which business would you rather be?


About the Author

Daniel Alcorn

Daniel Alcorn has a 30 year background in commercial banking and marketing, having served as Senior Vice President of New England based Chittenden Bank.

As the Strategic Business Owner, Alcorn created ShowAppreciation.Net to help his business clients improve their marketing effectiveness.

The company is based in New York state, midway between the large Montreal and New York City market base.

The Customer Appreciation and Retention Marketing Program helps business owners realize increased sales from exisiting customers.

Clients have the flexibility to manage the program in-house or have ShowAppreciation take care of the day to day routines.

Contact telephone in US (518) 346-2115  

Skype: DGAlcorn   

Email: DGAlcorn@aol.com

 






 
 

 
CEE2011_Berlin

Customer Experience Exchange 2011

We were recently invited along to the recent Customer Experience Exchange down in Berlin as one of the Media partners, and could not turn down the chance to meet and talk with some of the biggest and brightest names working wit...
by Fredrik Abildtrup
0

 
 
Experiensumer

Experiensumer : The new consumer profile

Many brands, and an entirely market are increasingly pointing out to a new consumer profile, the experiensumer. Characteristics of this profile are: - Sees consumption far beyond a transaction or a process, with a more experien...
by David Camps
1

 
 
balance

CEM Journey : Struggling with the old demons of marketing & strategy

More than ever it is becoming a challenge to help people’s mindsets evolve and embrace the new vision of the customer that is embedded within CEM and EFM. As I move in educating & working along with customers, student...
by Frederic Gilbert
0

 

 
unified

Analyst Research Highlights Need To Provide A Unified Customer Experience

We look at the findings from the recent research commissioned from IDC looking at how retailers can improve their sales and customer retention through improved multichannel planning and customer service cites the fact that sto...
by Ariel Lüdi
0

 
Advertisement
 
art of keeping

Measuring the customer experience

We take a look with Fredrik Abildtrup, the CEO of TeleFaction on how to measure the customer experience.. Using his experience, he takes us through the steps that we need to go through in order to really gain the insights of th...
by James Digby
0

 

 
costy of bad cem

Bad customer experiences are more expensive than you think

How much does a bad customer experience cost? The number may surprise you. I read an article on FastCompany.com yesterday that shared results from the Tealeaf 2010 Online Transactions Survey conducted by Harris Interactive. T...
by Tim Sanchez
1

 
 
customers right

It’s not about the customer…

Customer service is a sometimes long-forgotten asset. To create unforgettable customer service, you need to begin with unforgettable employee experiences. In this video, John explains more  
by John Hersey
0

 

 
Why Regular Communication helps Customer Retention

Why Regular Communication helps Customer Retention

Your ‘herd’ feel you’re interested in them It enhances the sense of value in what you offer It increases their awareness of  ‘you’ as the person they have a relationship with Even your laziest customers are kept info...
by Joe Pélissier
0

 
 
road to cm experience

The Road to Customer Loyalty

Customer satisfaction has long been the predominant measure of a company’s success. While it’s important to satisfy the customers your business serves, perhaps the most important measure of success for businesses—large a...
by Peggy Carlaw
0

 
 
brand vs customer

Brands versus the Customer Experience

To understand what is relevant and does get traction with customers, it is critical to recognize that the pursuit of market share and commodity sales are not the same thing. Germane to this distinction are the two buying perso...
by John Todor
0

 




One Comment



Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Anti-Spam Quiz: