The Great Balancing Act: How to Strategize Your Way to Better Customer Relationships
You’ve heard it before; the digital age has given rise to a customer-driven economy. To remain relevant and especially to grow in this environment it is critical that companies strategize to align with customer demands and expectations.
A customer-centric sales strategy starts by understanding the customer journey. This task, when done correctly, illuminates a company’s path towards the growth/success metrics of improved customer acquisition, activation and retention, as well as increased revenue and positive customer referrals. None of these metrics exist in a vacuum, however, and heavy weight on one can negatively affect another. Thus it requires a holistic approach, carefully aligning each customer-centric metric to ensure success.
Making the Introduction
Customer acquisition strategies include everything from SEO, social media marketing, PR, emails, blogs, campaigns and business development. They form the first touch point that customers will have with your company, and hopefully not the last. Acquisition describes anything from the client’s first glimpse of your brand or logo to the first visit to a website, each of which must make a meaningful impression on the customer if they are to “stay” to learn more.
The strategies mentioned above have a cost, which must be considered. When evaluating effectiveness, it’s important to consider the sales & marketing expenses in a given period compared to the number of customers acquired during that same period. A lower cost is always the goal, of course, as long as it is not at the sacrifice of new and existing clients.
Customer activation is all about a customer’s first experience. It’s the place to meet customer expectations and, ideally, exceed them. According to a Deloitte paper on customer service, by the time today’s customers visit a company’s website or physical location they have a relatively defined idea of what they want. It is at this point that a company has the chance to convince the customer that they most certainly want their product or service, or even better, that they want a more premium offering. An adequate level of service is no longer enough to differentiate one company from the next. Customer service and experience are expected to be engaging and exceptional. It is up to each company to define their brand of exceptional.
Following the work of getting the customers through the metaphorical door and making their first purchase, comes the follow-up process necessary for retention. What will your company do differently to make your customers come back again and again? Whether you choose to use engaging email updates and promotions or budget appropriately for customer data analytics that offer up personalized product and service choices based on past purchases, or share special events as touch points with current customers, keep in mind that other companies will be playing the same courtship game. Considering customer acquisition typically costs 5x more than customer retention, this is a game your company must play to win.
Building a Long Lasting Rapport
A high customer retention rate means customers are coming back for repeat purchases, but customer loyalty is about more than that. Any company’s goal is to be the preferred customer choice in their market and to establish market leadership, but this will not occur without customer loyalty and referral. Referral rate can be tricky to gauge as it often relies on customer surveys, but campaign and contest strategies can improve tracking ability and survey response rates. A higher referral rate means a lower customer acquisition cost – your current customers are doing the acquiring for you – and a higher profit.
The above metrics, together, affect potential revenue. A high customer acquisition cost offsets and potentially lowers revenue, and a low referral rate and retention rate forces a company to rely on costly customer acquisition strategies for sales. In other words, a company’s overall customer growth/success strategy is a great balancing act.
A company must balance the expensive but necessary customer acquisition costs while investing in an exceptional customer experience with activation tools. Through these tools, customer retention will matriculate towards loyalty, resulting in referrals and increasing overall revenue. So if increasing revenue, expanding your customer base, and establishing market leadership are your company’s goals, a customer-centric strategy focused on these metrics is key. What are you waiting for?