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Market research means big bucks: Easier to keep a customer than win a new one
12/31/2009
By Geoff Kirbyson
If salespeople are giving you an extra smile, being particularly helpful and generally going above and beyond to make you happy these days, don't be surprised.
Businesses of all kinds have realized the cost benefits of keeping their existing customers happy and ensuring they'll keep coming back for more, rather than attempting to win the loyalty of people who are currently shopping elsewhere.
Tyler Gompf, CEO of Tell Us About Us, a Winnipeg-based market research firm specializing in customer surveys and feedback, said companies ranging from retailers to manufacturers are using research to fine-tune their offerings, products or menus. They're also diverting spending away from attracting new customers, and focusing on keeping those that they already have and reclaiming those who have left due to a bad experience.
That means more attentive salespeople on the shop floor, in many cases, and a more caring demeanour at all contact points with the customer.
"A couple of years ago, (retailers) were more interested in getting the masses in the door. If they didn't treat one customer at a service level he or she expected, there was another customer coming in (behind them)," he said.
Prof. Robert Warren, a marketing professor at the I.H. Asper School of Business at the University of Manitoba, said it's about 10 times more expensive to acquire a new customer than to hold on to an existing one. In order to get a new customer, you've got to think about the various ways and times to contact them and usually offer some kind of incentive, such as a discount, to convince them to make the switch.
Existing customers are far more preferable, Warren said, because they're less likely to be price-sensitive, they don't require nearly as much promotional material, and they're more likely to go for an upsell opportunity, such as buying dessert at a restaurant.
He said this increased focus on current customers is an extension of loyalty programs, such as Air Miles, that have sprung up over the years. Financial institutions have been particularly adept at not losing clients, Warren said, and gearing their marketing dollars appropriately.
"Once they've got you, they try to figure out your lifetime value as a customer. If you've just got a savings account, they won't put a lot of effort into you. But if you're a university graduate, they'll really want to hold on to you because you're going to have steadily increasing income, you'll be purchasing mutual funds, you'll be more likely to take out a loan for a car and longer term, you'll be looking to buy a house," Warren said.
Companies are also hyper-senstive to any bashing their brand may be receiving on social media, such as Facebook or Twitter. Kirby Gompf, Tyler's brother and chief operating officer at TUAU, said that prior to the Internet, dissatisfied customers would tell an average of nine people about their unhappy experience.
"Now they'll tell 9,000 or more," he said.
Rather than letting clients who have had a bad experience go, Gompf said companies are using these very same social media tools to combat the negative vibrations, including contacting the individual personally. Diffusing such situations can often create even stronger brand loyalty than before, he said.
Both Gompfs say the demand for services to keep tabs on current customers is so great that they're currently looking to increase their Winnipeg staff from 60 to nearly 80 people.
"A year ago we were processing 300,000 consumer interactions a month. We are now doing more than 300,000 on a weekly basis," Tyler Gompf said.
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Republished from the Winnipeg Free Press print edition December 26, 2009 B4
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