Customer Relationship Wear and Tear
20 October 2009
Read by 2132 persons
A long-held misconception claims that a company's oldest clients are the most loyal and profitable. Consequently, businesses tend to focus their marketing efforts on acquiring new customers; conquest is always more exciting than loyalty…
But, like a tire, the Relationship wears down over time. And like a tire, the Relationship can deflate, or even burst. A closer look at customer behavior shows that a more nuanced business strategy is needed.
1- The oldest customers are the most profitable: this is not at all obvious. It is necessary to analyze the turnover they have generated, but also the costs they have caused (special orders, claims, discounts, refunds, etc.). A simple glance at the ranking of customers in descending order of turnover always reveals the famous Pareto law - the 80/20 rule - and sets the record straight. Sometimes, it is more advantageous to drop a barely profitable old customer than to keep them.
2- The oldest customers are familiar with your products: yes, maybe. All the more reason to occasionally remind them of their qualities. And don't hesitate to consult them, involve them, and ask for their opinion when developing your new products.
3- The oldest customers are the most loyal: this is not at all obvious. The older the relationship, the more customers become aware of the value of their "loyalty", become less shy and tend to ask the company for additional benefits (special offers, preferential conditions, etc.). They are also very sensitive to how relationship incidents with the brand are resolved in terms of speed, kindness, and compensation. Incidents inevitably occur in a long-term relationship; some are minor and quickly forgotten. Others are more serious and are not easily forgotten if the company has dealt with them carelessly.
Conclusion: Extra effort and attention are required for your company's oldest customers. They are the heart of your Customer Capital and are never definitively acquired.
Published June 8, 2009
Posted October 20, 2009
entreprendre.ma
But, like a tire, the Relationship wears down over time. And like a tire, the Relationship can deflate, or even burst. A closer look at customer behavior shows that a more nuanced business strategy is needed.
1- The oldest customers are the most profitable: this is not at all obvious. It is necessary to analyze the turnover they have generated, but also the costs they have caused (special orders, claims, discounts, refunds, etc.). A simple glance at the ranking of customers in descending order of turnover always reveals the famous Pareto law - the 80/20 rule - and sets the record straight. Sometimes, it is more advantageous to drop a barely profitable old customer than to keep them.
2- The oldest customers are familiar with your products: yes, maybe. All the more reason to occasionally remind them of their qualities. And don't hesitate to consult them, involve them, and ask for their opinion when developing your new products.
3- The oldest customers are the most loyal: this is not at all obvious. The older the relationship, the more customers become aware of the value of their "loyalty", become less shy and tend to ask the company for additional benefits (special offers, preferential conditions, etc.). They are also very sensitive to how relationship incidents with the brand are resolved in terms of speed, kindness, and compensation. Incidents inevitably occur in a long-term relationship; some are minor and quickly forgotten. Others are more serious and are not easily forgotten if the company has dealt with them carelessly.
Conclusion: Extra effort and attention are required for your company's oldest customers. They are the heart of your Customer Capital and are never definitively acquired.
Published June 8, 2009
Posted October 20, 2009
entreprendre.ma
