Companies that focus their strategy of new customer acquisition on aggressive marketing strategies often forget that engaged old customers can be a priceless source of new customers.
CUSTOMER LOYALTY BRINGS IN NEW CUSTOMERS
Last summer one of my glass lenses got scratched. Since I had to buy new glasses I thought it would be a good opportunity for a check-up. It had been five years since I visited my ophthalmologist!
With the prescription, I went to a department store (with very favorable payment terms) to buy the glasses. I had to wait for a long time and, despite of the wide variety of glasses frames, I liked none of them. I had the impression that the shop assistant was tired. Finally, I chose new (too expensive) frames.
When I picked up my new glasses and I saw myself clearly for the first time I didn’t like them at all. But that wasn’t the worst. I felt uncomfortable and, over the months, my discomfort increased until I decided to get back to my old scratched glasses.
I needed a second opinion. But how to choose a good eye doctor? It was something too serious to trust only on an Internet search. I decided to seek advice from a colleague and he recommended me his eye doctor.
The new ophthalmologist was very kind. I received a complete check-up and she said that the problem wasn’t in my eyes, but in the lenses. She recommended me her optician. The optician, who attended only a single customer at a time, did more tests. Without any pressure, I decided to buy new glasses. She helped me find new frames that suited me and that, in fact, were much cheaper than the last ones. I was very satisfied.
Thanks to the recommendation of a loyal old customer, both the ophthalmologist and the optician have now a new customer.
LEAKS IN OUR CUSTOMER BUCKET
Many companies are trapped by what it has been dubbed the “leaking bucket”. Facing a continued loss of customers, companies try desperately to stop this situation by adopting a dual strategy.
On the one hand, they push sales agents to adopt an aggressive approach of new customer acquisition. To do this, they offer incentives such as price cuts and unrealistic promises. We all know the result of this marketing strategy. When the promotion ends customers run off and when they discover that the promises are far from reality, they become detractors.
On the other hand, companies try to retain old customers at all costs. From a narrow perspective, loyalty is associated with repeat purchases or continued use of services. However, there isn’t always a causal relationship between these two elements. There are loyal customers who don’t make repeat purchases and, conversely, customers who despite making a heavy use of our services would leave us without thinking twice.
“IT’S THE CUSTOMER’S EXPERIENCE, STUPID”
Loyalty is something much more associated with feelings than behaviors. This doesn’t mean that we should completely ignore repeat purchases or use of services as a significant indicator of satisfaction. When a customer doesn’t interact with the company for a long time, we must find out what’s happening. However, loyalty is also based on intangibles such as the treatment received from the staff, customer support, punctuality and, obviously, the quality of products and services. In short, customer’s experience.