A new benchmark report published last month by RSR Research, provides some interesting information about retailers and the shifts in focus and importance from 2012 to 2013.
According to the study, 61 percent of retailers feel customer retention has become more difficult, and building loyalty has become more challenging. This is a 10 percent increase from 2012. The study advised “if retailers are going to have collective leadership and responsibility for the customer experience, then they need to ensure that everyone is working off of the same vision for what the customer experience should be.”
In many businesses, there exists a general expectation that all employees proactively ensure that customers have a great experience. The problem is that there is typically not a single person charged with being responsible for it. You cannot have a goal of providing a great customer experience if you aren’t tracking whether or not you are providing it. You can’t rely solely on CSI scores and surveys from your OEM. You must have a process in place that surveys your customers and an employee in charge of analyzing the results and making process changes as needed. According to the study, “leaders identify – at an inordinate rate – that an executive tasked with managing and improving the overall customer experience is key to ensuring new marketing techniques have relevance.”
The study further found that 61 percent of business leaders believe that there needs to be a greater focus on customer experience and less on the product. At the same time, 44 percent responded that their marketing departments don’t spend enough time building customer loyalty.
And, while 52 percent of businesses with above average sales growth say that their marketing department is not spending enough time acquiring new customers; surprisingly this number rises to 100% for businesses with below average sales growth.
Dealerships have always spent the majority of their marketing budget on new customer acquisition. As the customer base grows, they may then shift some of their budget to customer retention. The problem is that while focusing on acquiring new customers, many dealerships fail to also pay attention to customer defection. The result is that they end up simply replacing defecting customers with new ones. And, rather than achieving growth, simply maintain the status quo.
According to the study, any growth strategy of acquiring new customers “may actually mean you can’t afford to take your eye off the target when it comes to keeping existing customers happy – because they can so easily share their dissatisfaction in social spheres and thereby chase new customers away.”
Business leaders increasingly recognize that the key to a successful growth strategy is to recognize that new customer acquisition must include a strategy for customer retention. It does not work to simply keep refocusing your efforts from one to the other. There has to be a symbiotic relationship between them.
Don’t try to plug the dam by running around sticking your finger in one hole to just to have another leak appear. A strategy that combines acquisition with retention along with successful execution will allow you to plug all of the holes at the same time.
How does your business retain customers?
Which do you think is more important: acquiring new customers or retaining your current customers? Why?