Balancing Customer Acquisition and Customer Retention




PHOTO:
Anna Shvets | pexels

Growth depends on companies keeping a steady flow of new customers coming in. And in those efforts, businesses might offer discounts to new customers or provide a better customer experience for prospects while doing little for their existing customers.

While a legacy customer might continue to buy products or services from the company, they could just as easily be annoyed enough to take his or her business elsewhere.

Perhaps one of the best examples of this can be found in the public sector, when local governments provide tax incentives to lure new businesses to a community, while existing businesses don’t get the same or equivalent tax discounts.

In the private sector, “new customer discounts” are commonplace for subscription and other services, leaving legacy customers with their more expensive contracts. New customers may also get discounts on certain products, though usually in exchange for joining a membership program.

While gaining new customers is great, doing so at the cost of annoying current customers can lead to losses that are hard to make up. This may be part of the reasoning behind the current AT&T campaign promising “the same deal” for new and existing customers.

Below are some ideas for how to successfully lure in new customers without annoying others. 

Separate Offers for New and Existing Customers

Segment current and new customers through third-party opt-in data, recommended Robb Hecht, adjunct professor of marketing at Baruch College. “Once the brand has the data, automated processes can segment new and existing customers, providing new customers completely different content and experiences than existing customers, e.g. via programmatic ads, content strategy, CRM, social CRM and website and shopping landing page experiences.”

Related Article: Doubling Down on Customer Retention? Don’t Forget Your Onboarding Process

Offer Concurrent Rewards

Many businesses offer incentives for new customers who have yet to conduct business with their company, said Ishank Khanna, chief marketing officer for Clarify Capital. “This can be a good strategy for increasing sales and getting more people to try out your service or engage with your business, but it doesn’t do much for your loyal customers who have been with you the entire time.”

A good way to address this is to offer benefits that can apply to new and existing customers. “You can offer a first-time discount, bonus or reward for new customers, and offer a similar benefit to customers who have been with you a while at specific milestones of your business relationship,” said Khanna.

Engage Brand Advocates

“The best way to recruit new customers is to engage your brand advocates in your next sale,” said Jeb Dasteel, founder of Dasteel Consulting. “This has the dual effect of presenting the most compelling argument to your prospects and celebrating the success of your existing customer. There’s nothing like a great customer success to encourage a potential buyer to invest in your product. Why? Because it’s always about how you help your customers achieve their desired business outcomes.”

He added that nobody can make that case better than a customer who has demonstrated tangible results — and attributes that success to you. With this approach, brands can achieve many outcomes:

  • Your new customers see that you’re an effective business partner.
  • Your existing customers are reminded in the best possible way that you are focused on their success.
  • You’ve all but teed up cross-sell and up-sell opportunities with your existing customers.
  • The cost of sales is reduced, because it’s always less expensive to rely on a great customer reference than it is to sell without one.
  • You are connecting customers together and that sense of community is inherently valuable — to them and to you.

“Don’t fall into the trap of disenfranchising customers who believe you are putting more effort into new customer acquisition than taking good care of them,” Dasteel cautioned. “Whether you are a B2B or B2C enterprise, this approach to customer strategy will balance your customer acquisition with customer retention objectives. And everyone wins.”

Liesa Stecher, chief growth officer for Addition Capital, agrees. The London-based financial services firm recently introduced a referral program to great effect: “A well-planned referral program is a win-win situation: Existing customers get rewarded to promote a brand and product they love whilst potential new clients get introduced to relevant businesses that already have been proved and tested. A recommendation from an existing client is your rubber stamp of trust.”

Related Article: B2B Influencers vs. Brand Advocates: What’s the Difference?

Build and Maintain a Level of Trust

A key factor in any customer engagement is trust, according to Chris Pennington, SugarCRM chief customer officer. “If a company is going to develop any meaningful partnership beyond a ‘transactional’ encounter, it comes down to building and maintaining a foundation of trust.”

Pennington added: “Fortunately, the demands of new and existing customers are often different, so if done properly it is possible to develop marketing and CX strategies that appeal to both audiences.” Customers understand sales and special offers as a part of doing business, he continued. “However, trust is eroded when an offer underpins the very ‘core’ or ‘fabric’ of your service or product offerings. Sweetening the deal is one thing. But, if you are bending out of shape to accommodate either new customers or keep existing customers, you will eventually fall apart.”

Any strategy to attract new business or maintain existing customers should measure the outcomes against the original promise — it’s important to cultivate a CX mindset throughout the whole organization, Pennington added. “Highly functioning customer-centric organizations will expand the traditional marketing and sales communication channel to include input from customer success or service delivery teams.  This closed internal feedback loop across the three divisions helps keep messaging on point, making sure trust is cemented and not eroded.”





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