As marketers, we’re often extremely focused on bringing new customers into the fold. And let me tell you there’s nothing wrong with that. In fact, it’s entirely necessary, especially during certain stages of your business lifecycle.
But here’s the deal.
You’re most certainly leaving value on the table with customers that you already have. And I’m pretty sure you already know that. In fact, it’s been widely observed that the cost of acquiring a new customer can be up to 25X more expensive than retaining an existing one.
In short, it pays to place attention on your existing customers.
At Sprocket, our purpose is to help you grow with your existing customers. Because of our focus, we also see common ways organizations leave value on the table. Here’s what we see and a few pro tips on how to course-correct if you find yourself falling into one of those traps.
- You don’t know your customers and their needs. The first trap is a fundamental one. With all the talk about customer experience and being “human centered”, we’ve found that most organizations just don’t have a good understanding of who their customers are. Most likely there is some tribal knowledge and a few assumptions; perhaps even a quantitative segment or two, but there is little true customer understanding.
IF THIS IS YOU: The never-ending journey of customer understanding begins with one step. You’d be amazed with what you’ll learn if you pick up the phone and call five of your customers this week. Ask them open ended questions about how your product or service helps them in their lives and let them talk. As you progress in knowledge about your customer’s goals, start gaining some quantitative insight via surveys or reviewing behavioral data (think Google Analytics and/or transactional data). Before you know it, you’ve got helpful and actionable definitions of your different customer types.
- You think your customers are rational. The shadow of the industrial revolution is still strong because it was from that era that we inherited the world view that customers were “completely rational agents trying to maximize utility.” More recent advancements in the areas of economics and psychology have taught us that we humans aren’t exactly rational. But we are somewhat predictable. Your current customers aren’t engaging with you more today because you’ve made it too hard in some areas of your business and your communications don’t resonate with them emotionally.
IF THIS IS YOU: Acquaint yourself with the wonderful world of Behavioral Economics (we think Predictably Irrational is a good place to start) and see where you’ve got opportunities to “nudge” your customers into the kind of behavior you’d like to encourage. You’ll be pleasantly surprised on how smart default choices, better framing, and a little social proof can help you grow your business right away.
- You have data but very little insight. Does this sound familiar? Charts stuck in PowerPoint presentations, a few glimpses of Google Analytics now and then, and a few quarterly reports. If so, you’re not alone…we’re all fat on data and skinny on insight these days.
IF THIS IS YOU: Turn the corner from analysis to “synthesis”. What I mean by that is you need to gather up your data, grab a few colleagues (from different teams) and start to make some sense of it all. Grab an open conference room wall, some post-its, sharpies, and a few donuts and start turning data points into clusters of related observations. Then create a creative “trigger question” to spark creativity. If your observation is “people with young families don’t frequent our brewery because the kids get bored and antsy” then your trigger question might be the inverse – “How might we alter our environment and our communications to make this brewery more inviting for young families?” (If you want to go deeper on how we use data to improve customer experiences, check out our video.)
- Your definition of marketing stops at advertising. This is less tactical and more philosophical. If your organization believes that the only role of marketing is to bring in new customers, then it’s going to be difficult to also place attention on existing customers.
IF THIS IS YOU: It’s time to appeal to the head and the heart of the organization. To appeal to the head, rationalize focus on existing customers by sharing well-established research about the value of keeping (and growing) existing customers. To appeal to the heart of the organization, create a customer journey map that goes beyond the initial purchase transaction and show all the ways in which you could create and capture more value. A customer quote or two in this document won’t hurt your cause, either.
- Your culture doesn’t encourage experimentation. There are two large factors in play here. The first is that the world of business moves faster than ever and is more complex than ever. The second is that humans (and thus, companies) hate dealing with failure…it hurts. The paradox of failure, however, is that it is necessary to learn, and learning is necessary for growth.
IF THIS IS YOU: We’ve found that while companies hate talking about failure, when growth initiatives are framed as “experiments” and expectations are thoughtfully planned out, it’s much easier to manage expectations. Experiments also open the lid of creativity because it reduces stress associated with failure and accelerates not only learning, but overall team alignment. Start reframing your growth efforts as experiments today and start seeing quick results. (Download our free experiment and learn tool today to get started.)
This is the year that you take advantage of creating value for and capturing value from your existing customers. Go get after it. And if you need some smart help, you know where to find us.