Retention is the new acquisition
From here, it looks like the tide is turning.
When you fish the tidal estuaries of our New Hampshire coast, you quickly learn that fish bite when the tide is flowing. Many days I’ve sat in a boat at slack tide, waiting for the current to reverse, the tide to run, and the fish to bite. You watch for those first signs of the water moving, like a leaf or twig and then seaweed beginning to move past your boat. Right now, I am seeing indications that the tide in marketing is changing.
A while ago I wrote that the marketing spend of most companies was grossly unbalanced, with the bulk of the outlay going to customer acquisition even though most of the revenue is coming from existing customers. However this week at Connections, the user conference of our partner ExactTarget, we heard two of the keynote speakers sound a contrary opinion.
Author and blogger Joseph Jaffe spoke the lines in the title of this post, “Retention is the new acquisition.” Then Nigel Travis, CEO of the Papa John’s restaurant chain put it even more bluntly when he said “I don’t need more customers; I need my existing customers to buy more frequently.” We are hearing the same message from our customers — more focus on customer retention and reducing churn.
Of course, as advocates of existing customer marketing, we are encouraged by this trend. We’re glad to hear that people are coming around to the place we’ve been for the last ten years. But we look at retention as more than just stopping customers from defecting, at just holding onto your customers.
Your best new business prospects are often within your customer base – because cross-sell is new business and re-sell is new business. Use data-driven marketing not just to predict which customers are likely to defect, but to learn what to offer them, and to launch re-sell and cross-sell campaigns with double digit response rates. That tide will get stronger and stronger.