When Loyalty Hurts You in the Long Run – Loyalty Penalty for Customers?
Keywords – Retention vs Acquisition – Loyalty Penalty
Does it make sense to pursue new business while neglecting the customers on hand?
Well, it doesn’t. But this is the world we live in.
Recent findings in the UK suggest that, by sticking to a service provider long enough, existing customers end up paying more than new customers. There is some form of loyalty penalty imposed on customers who don’t hustle and look around after picking a product. This penalty adds up to a disparity of millions per year in some cases, e.g. in the insurance, energy, and broadband industry.
In reality, your current customers should be your focus.
You can find all forms of numbers associated with retention vs acquisition. From the costs associated with acquiring new business to the money that goes into marketing, common sense dictates that businesses should refocus for more than one reason. (This is coming from a digital marketing agency).
Perceptions Become Reality
Have you ever announced the intention to buy a new product among your friends? What is the general reaction?
Some of your friends will lay into how good or a bad the product is. And, most of the time, it is not even about the quality of the product.
Most people register strong opinions based on their interaction with customer service when a problem was faced. (Don’t give me this c**p that your product or service never runs into trouble. We have a meeting with our clients each week and there are still issues. The way we face those challenges is the number one reason for our great relationship with clients).
You can have the best product or service in the world, but if the perception of quality dips, the business dips. In the simplest form, perceptions become reality.
If your friends say that a product is bad, chances are you are not going to buy it.
And, this is not it. We can give a positive spin to this idea.
Customers as Spokespersons
(One of the first blogs we wrote on Marketing Voice was about how to convert your customers into spokespersons. If I go back and rewrite that blog, I will include the retention vs acquisition debate).
Now let’s rethink the announcement of buying a new product among your friends.
Someone has now pushed you to not buy the product you had in mind. So, you ask for recommendations. Your friends will tell you about the products they have used. And, chances are that they will recommend the one that treats them well.
The result? You will seriously consider buying the suggested product that brings the element of customer-centricity.
The people suggesting you the products are the consumers who are taken well care of as customers. And, they have turned into spokespersons for the business.
This is the best form of marketing. It doesn’t cost any money directly, but works like a landslide, wiping out everything along the way.
All you need to do to reach this level is to put the right systems in place. Make sure that your current customers are heard and taken care of.
Addition of Marketing
We are not suggesting to stop marketing to gain new customers.
We will simply cease to exist if people stop marketing. But, we are business people before marketers. And, therefore, our priority is always the growth of our clients, and we grow alongside.
If you want us to care for you, join the Marketing Voice community today by getting in touch.