Any business that seeks to fulfill its growth potential must learn how to keep customers. This is because continuous customer defection hurts the long term vision of any venture.
According to Jack Brennan, the Chairman Emeritus of Vanguard, a Pennsylvanian-based mutual fund company with $5.3 trillion assets under management, customer acquisition is one of the costliest marketing efforts; hence discouraging customers to leave through careless management and shoddy products will adversely impact the bottom-line.
This insight is in line with the submission of one of the most popular management thinkers, Peter Drucker, that the sole responsibility of every business is to acquire and keep customers.
Customer acquisition is an investment. An excited customer will eventually become loyal, bringing a life-time value to the business. Therefore, the ability to engage, acquire and maintain a sizeable chunk of loyal customers for long will ensure the business has a steady pipeline of revenue and ready hands to accept new propositions.
In any case where a customer drops, to maintain that consistent inflow, the business must look for a way to replace that customer. That begins another circle of investment and nurturing which often time require a lot of resources.
Brennan explains, “In our business, the highest-cost thing we do is attract and onboard new clients. So why wouldn’t we be driven to increase the loyalty of those clients?”
“This isn’t differential calculus. When customers leave, you have to replace them, and we’d prefer to avoid that expense. So we have followed Bain & Company’s loyalty research very closely for many years. In the years since I became Vanguard’s CEO, managing for loyalty has gone from an intuitive idea to a conceptual goal to an operational practice. Across businesses in general, this is still underexposed and undervalued as a concept”, he adds.
Expanding the customer pool to reach a number sufficient to keep business going is non-negotiable. Investors are often interested in how a business acquires, keeps or loses customers before putting money into them. Netflix, Facebook and Amazon have become attractive investment areas because of their customer acquisition strategies, innovation and constant engagement to minimize customer churn-rate.
To stay in business, investing in customer acquisition and maintenance is key. That may require:
a. Loyal schemes
b. Product improvements
c. Creation of virtual feedback loops to speedily remedy areas of dissatisfaction
d. Ongoing customer relationship
e. Constant brand communications to build share of voice and mind
f. Added value services etc.