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As the holidays
wrap up and we return to make this year's sales and profit numbers
we can't help but come back feeling more appreciated and connected
to family and friends because of the time spent together and the
love shared over the past few weeks. You may be surprised to learn
how important love and appreciation is in the business world, too.
You see everybody needs a little love - especially customers or
clients - even satisfied ones.
The results of a market research study recently
cited in the American Marketing Association’s Marketing News
indicates that a vast majority of satisfied customers will leave
any given company for a competitor if they don't feel appreciated.
While 3% will leave for no apparent reason and 9% will leave for
a better price elsewhere, 68% will leave because they felt an attitude
of indifference from the supplier. Simply stated:
More
than 2/3 will leave because they didn't feel "loved."
We all know that it is much more costly to attract a new customer
than it is to keep selling - or selling more - to a current customer. Further,
common sense and marketing theory tell us that during economic recessions one
successful business strategy is to maximize one’s current customer base for revenue
and profits while incrementally and as inexpensively as possible seeking out new
customers. We also know that since the economy currently is NOT expanding at a fast rate we will
need to steal customers from competitors to grow our customer base. (By the way,
whom do you think your competitors are targeting?)
So if we know and accept
this information and logic, let’s take a moment to do a quick check on what's
been done in the past year to keep current customers loyal, to keep them from
developing a relationship with competitors, to keep them from using a slight difference
in price as the key criteria for changing suppliers.
For example, what did your
company do differently in 2002 - in the heart of a recession - than it did in
2001 to convince your customers that they are truly valued and “loved?” Go ahead,
grab your pencil, write down a couple of past programs:
1. _____________________________________
2. _____________________________________
3. _____________________________________
Hmmm ... what were programs #2 and #3 again?
To answer that question let’s do some quick calculations. First, quantify what
business your company lost simply because some of your customers didn’t feel "loved."
| Total number of customers or accounts lost in 2002: |
|
______________ |
(A) |
| Multiply by 68% |
|
x
.68 |
|
| Total number of “unloved” customers |
|
______________ |
(B) |
| Average
yearly sales per customer or account: |
$ |
______________ |
|
| Multiply by the number in (B) |
x |
______________ |
(B) |
| Total lost revenue |
$ |
______________ |
(C) |
| Average profit amount per customer or account: |
$ |
______________ |
|
| Multiply by the number in (B) |
x |
______________ |
(B) |
| Total lost profit |
$ |
______________ |
(D) |
Let’s assume that just 20% of those customers
could have been retained, how much more sales and profits would
your company have had on the books in 2002? You decide if your current
customers are worth loving.
| Revenue |
|
______________ |
(C) |
| |
|
x .20 |
|
| Profit |
|
______________ |
(D) |
| |
|
x .20 |
|
Learn from the past. See the New Year differently
because of your knowledge and experience. Make one of your business
resolutions for this year to lower your company’s customer
attrition rate. Then call Mosaic.
- Develop a retention marketing game plan that fits your customer profile, company size, culture, and budget.
- Execute that plan for you.
- Measure and validate the results.
- Repeat as necessary.
Let’s hope this exercise is less relevant and less painful for you a year from
now!
Remember, Mosaic creates customers and increases sales for business-to-business companies through specific project work, on-going retainer assignments or marketing coaching sessions.
Until
next time.....
Rosemary
Walter
847-483-5018
Rose1Walter@MosaicMM.com

Quote
of the Month
"The man (or woman) who views
the world at fifty the same as he did at twenty has wasted thirty years of his
life. "
— Muhammed Ali
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