Marketing's Critical Dual Role: Acquiring Customers & Keeping Customers

03 MAR 2010

Most new businesses work very hard to acquire new customers. They carefully identify their target markets, place thoughtfully considered advertisements in magazines, invest in trade shows and send out bulk mail. Online they develop attractive websites, create, test and deploy “more information” registration forms, run ads in search engines and publish SEO press releases. Those who sell products through distributors and/or resellers carefully choose their partners to ensure their products are presented to those customers most inclined to buy.

From a time and money standpoint, the cost of acquiring new customers is very high, yet few startups and small businesses invest much thought or care into keeping those customers once they have been acquired. The failure to make this investment is one reason many startups and small businesses fail to thrive.

A customer who has purchased one of your products in the past has proven they have money and they have proven they are willing to give it to you. Given the opportunity, they are more likely than most to purchase more from you in the future.

The cost of “re-acquiring” a customer you have lost contact with may be as high, or higher, than the cost of acquiring a new customer. While some customers may have just forgotten you, others may have been left with some slightly negative impression of your business. They may lead them to turn to one of your competitors in the future.

The cost of enraging a customer, through poor performance during and after a sale, is extremely high. Some studies show an unhappy customer will tell an average of nine people how much they loathe your business. These days, an unhappy customer who takes to the Internet can cost a business thousands of sales. An unhappy customer is a dangerous “anti-ad” for your business.

There are many ways to maintain a good relationship with a customer after a sale. Not all of these methods are appropriate for all customers in all industries. Working with your customers you can identify which options they like best and which meet your economic requirements as well.

Send customers information on the product or service they purchased shortly after a sale. Make sure they know all the benefits of their investment, and that they understand how to get support when things don’t work as advertised. When you buy a printer, it is nice to find a URL for a video that shows you how to install paper and an ink cartridge. Its also nice to have a link for any drivers you may need to download.

Send customers information about related products or services in the months after a sale. This information may be “added value” in the form of discounts on things they need to go with their first purchase, or additional resources that are likely to be of value to customers in their market segment. Parents who buy an expensive stroller may be interested in new seat covers and padded bumpers six months later. If they can get them at a substantial discount, so much the better.

Send them information on products and services from your strategic partners when they are likely to be of great value. People who buy expensive sports cars may need car covers and enhanced car security systems.

Send them information on moderated user support forums and fan forums they can turn to as they use the product or service you’ve provided. People who buy Star Wars memorabilia are likely to find a link to a well moderated and active Star Wars fan site maintained by your business of great interest.

If you sell products through distributors and resellers, things become more complex, because although your product was purchased by someone, they are not yet your customer. They are the reseller’s customer. To make them your customer, there must be a path they can follow from your product to your business.

When appropriate, imprint a URL directly on your product.
Use mail-in and online warranty forms, maintenance agreements, and enhanced service agreement to initiate direct customer contact.

Include product packaging that offers free or deeply discounted prices on a related product. You may make no margin on the first sale, but you’re probably spending less than you normally do to acquire a new customer that purchases from you instead of your distributor.

Connecting directly with your customers enhances your position with your distribution and resale partners. You can use the data you collect to drive traffic to their storefronts when it makes financial sense for you to do so.

Provide Multiple Methods of Contact

Customers vary in how they want to be approached by those they have purchased from in the past.

For some customers, email works well, although it is increasingly difficult to ensure that email you send to your customers will be delivered. Some customers will not use an opt-out link at the bottom of a newsletter to terminate a newsletter subscription. Instead they simply identify your email as spam. When this happens enough times, your sending email address, and sometimes your IP address and URL, is used to route all the emails you send directly to the spam folder on most email networks.
Bulk mail of advertisements to customers is rarely justified unless it is subsidized by an investment from industry partners.

Telephone contact is appropriate to follow up with customers who have made a major purpose with which they may not be satisfied. Scripting the calls so it is clear these calls are designed to ensure customer satisfaction and not to sell something is critical. Timing calls so they don’t annoy customers is also absolutely necessary. You may want to add a question about when you should follow up with a given customer to the order form they or a sales rep fill out during the purchase process.

Twitter and SMS texting are acceptable for commercial communication to many customers at the moment. Customers seem to like that they can remove themselves from a Twitter feed at any time. They will allow the occasional SMS text message for a commercial purpose as long as it is possible to text a “stop code” to stop messages when desired.

In a perfect world, customers take the initiative in maintaining contact with your business after a sale. A good, well moderated, friendly website or support forum can make this a reality for many businesses. As long as customers find real value in visiting your site, they will keep coming back.

Smart startups and small businesses must ensure customer satisfaction and customer retention is a priority because pound for pound, it the best marketing investment they can make. Catching customers over and over again only to let them go will cost you your business. Your most successful competitors will not be making that mistake.