The old adage that your best customers are your current customers is so true! In these days when we talk about cost of acquisition and cost per lead – your existing customers represent a whole giant set of $0 CPA and CPL people. Pure gold, right?
So why, oh why, do so many companies routinely screw over their existing customers in favor of potential customers or even non-customers? It makes no sense, business or otherwise.
Allow me to share two examples of this from recent personal experience:
Comcast / Xfinity
I know, everyone hates Comcast or Xfinity or whatever they are calling themselves this week. I am a fairly recent Comcast customer (we had a smaller cable and internet provider at our previous home). This example simply blows my mind though. We use their router/modem for internet (including WiFi) and phone service. Lately, we have been having some serious internet connectivity problems. Being the technical person I am, I routinely perform all of their recommended troubleshooting steps. This resolves the issues temporarily, but not for long. Finally, on a rainy Saturday with the internet crapping out, I broke down and called in.
Long story short, they sent a tech out early Tuesday morning. He was a very nice guy who sincerely tried to solve our problem. But, what he told me (which was later confirmed by customer service and tech support during my issues today) was that Comcast/Xfinity router/modems are now ALL, by default, including an external hotspot. What does this mean, exactly? Well, it means that my service, that I pay handsomely for, is being degraded. By turning on this external hotspot through my router/modem, Comcast gets to boast that they have this huge network of available hotspots – they are essentially turning every paying customer’s router/modem into one of their hotspots that anyone can use.
Are you kidding me with this? Do they really think this is a good idea? This is where companies get really lose sight of what is important – TAKING CARE OF YOUR EXISTING CUSTOMERS. I seriously could not care less if there is a hotspot available from Comcast here outside my house, or anywhere for that matter. I certainly do not want to subsidize that service for others to use for free. And yet, here they go effectively stealing bandwidth that I am paying for to offer this service to someone who is not me.
Want to offer free hotspots all around town, Comcast? Well, build your own network to do it and stop diluting your paying customers’ services to offer a service to people who are not your customers.
I know, I’m going after low-hanging fruit, but these examples are just too perfect in making my point. I recently had to get a new phone. My old one was starting to malfunction, so the situation was critical. I went to the Verizon Wireless store to purchase a new phone. As I stood in the store waiting for someone to help me, I was reminiscing about the days of yore when phones were free. I certainly know that phones, especially an iPhone, are no longer a freebies. I accept this reality. What blew me away though? They actually CHARGED me $40 to upgrade my phone, which also requires a 2 year contract with Verizon Wireless as part of the deal.
Throwing a little salt on that wound – every day I see commercials from Verizon Wireless offering to pay people to become Verizon Wireless customers by switching from other carriers. So, to review, Verizon Wireless will pay someone who is not yet a customer to become one and when a long time loyal customer opts to stay with them, they charged me $40 for the privilege. That is insane.
Take Care of Your Existing Customers (If You Want To Keep Them)
When making decisions about service or product offerings be sure you’re not thinking only about ways to acquire new customers, but also ways to retain the ones you’ve already got. You will find no better sales or marketing or promotional tool than happy customers. This is true today more than ever, especially when people regularly take to social media to ask their networks for thoughts and suggestions when considering purchases of products or services. It is important to really consider if a new customer, wooed by some great intro price or extra is truly worth more than an existing customer who renews or repurchases and passes along positive comments about your company.
It always makes me chuckle a little when at the bank that they have all their promos in the branch for free gifts for new customers. I guess the $3.50 service fee they charge me for not spending my money in a given month is paying for someone else’s free iPod speakers?
When you are thinking about acquiring new customers, don’t think about that process or the cost associated with each new lead or acquisition in a vacuum. Customer retention costs should also be reviewed right alongside customer acquisition costs. And, as I’ve illustrated here, don’t get too comfortable with customer inertia. If you don’t make retention part of your customer acquisition thought process, you will probably find yourself in an endless churn cycle.
In paid search, particularly e-commerce sectors, there is often talk about a customer’s “lifetime value” to a business. Part of that lifetime value includes a zero acquisition cost in years 2, 3, etc. Don’t forget about your dependable (but not guaranteed) customer base when you’re chasing shiny new prospects. A balanced approach makes for much smarter, and profitable business!
As always, we welcome your thoughts in the comments or over on Twitter (@NeptuneMoon).