Today we are going to talk about four different aspects of the connection between companies and their customers: customer acquisition, customer retention, customer switching and customer relations. Notice that customer can mean any of the four types we defined in our blog post “What Is Customer Experience Or CX?”, not just consumer as in business-to-consumer, B2C. The implications of these concepts are so broad that we’ll stick with defining them and helping you think about them in practical terms, rather than go in-depth on each in this post.
Customer acquisition is the act of letting potential new customers know you exist as a business, that you have something of value to offer and they think the same, then make a purchase from you. How you work to persuade them to buy from you is another story (unique to each firm) and there is no guarantee they will buy a second time.
These days many of us, who act online mainly or only, try to automate parts of this process such that efforts can be concentrated to later parts of the connection to secure repeat buyers. It supposedly costs 5-25 times more to acquire new customers compared to selling to existing ones, so it’s no wonder customer experience has become crucial to any firm.
It’s humbling indeed to recall we need to work hard for any and all sales, but wouldn’t it be nice if a majority of customers would come back? You could take things to new levels and be challenged to grow as a business owner as well.
- Do you have a good idea of how many of your customers become repeat buyers?
- If you answered no, could you try to find out on a not-too-detailed level how many buy more than once?
Customer Retention is a big word for an easily understood concept: to retain customers, keep them with your firm rather than the competition. Once you’ve acquired a customer, can you retain them too?
The less easy part is how to go about keeping them, but we’ll get back to this in another post on customer loyalty. You’ll have plenty of tricks up your sleeve once we’re through this series about The Happy Customer, not to worry!
- Are you a firm for which it is even possible to retain customers? An example of type of business for which it can be hard or literally impossible is the gas station next to a motorway, when customer fill up the tank, use the bathrooms and buy food and drink, then drive off into the sunset.
Now we’re moving on to the parts of doing business that show who knows their stuff and who doesn’t. Exciting and fun if you ask us!
Customer switching, to put it bluntly, is when a customer bought once or several times from you, but decided someone else had a better value proposition. And off they went, thereby abandoning you!
This can be a good thing, believe it or not, and we will return to this interesting topic in the future, but let’s focus for now on when you think it sucks they decided to jump ship. Could it be that your offerings are too difficult to understand? Access? Implement?
Especially if you’re a coach or consultant, the perceived workload tied to a personal change or development may seem too daunting, so is there something you could start looking for lurking under the mental surface of a client? This goes for all of us though in that customers rarely give negative feedback, but they just leave. Keeping sensors out regularly can reveal surprising things on the emotional level.
Other times it’s nothing personal, but a money matter. People shop around for the cheapest deals on phone, electricity, insurance and other contracts, but some of us don’t care about who cuts our hair or prepares our food either. If their loyalty was based on living close to your brick-and-mortar rather than you and your business, they will feel the same about a new service provider as well.
- Is it emotional for you when customers choose to switch to the competition? Be mindful if this is the case and please remember there are numerous reasons for switching, more than we can come up with usually.
The fourth and final concept of this blog post is customer relations or customer relationships. Maybe you’ve heard of customer relationship management, CRM? It’s one of some major Things in modern marketing as product-centric marketing started to develop into a vast number of variants.
In short, customer relations is about nurturing the relationship to potential and existing customers, and CRM has developed into its own art form. If we return to the fact that acquiring new customers costs a firm far more, it’s no wonder focus is increasingly on how a customer not only perceives the offering itself, but also how it’s found, investigated and bought, then received and taken into use. It pays to climb into the shoes of a buyer when improving this experience and aiming for a smooth interaction every step of the way.
- Have you verbalised a concrete strategy for managing your own customer relations yet?
- If not, could you spend some time thinking about ways to draw existing customers closer to the heart of your business?
Customers are essential to a business and the most loyal ones do some of your marketing for free in addition to bringing friends along. Acquiring customers is only the first step since customer retention has potential to stabilise permanently your livelihood. Once you move customers from retention into satisfaction (coming up next!) territory, you’re solid and effectively avoiding major switching altogether.
Customer relations isn’t beneficial to the customer only, but once you have the privilege of spending more time on this part of business, you can learn new things about yourself and your firm. And can take it to other levels as a result, with profitability skyrocketing. Sounds good? We think so!
Please take a moment to think about our questions above and share your thoughts in the comments!
This blog post is the first in our beginner-level series The Happy Customer on customer experience.
Photo credit: Hao Ji.