If you are a well established business, chances are you are spending too much of your time on new customer acquisition and not enough on engaging, growing, retaining and converting your existing customers into advocates of your brand.
Any robust customer-driven growth strategy is rooted in having actionable customer segments, quantification of the value those segments deliver (and their potential in the future) and tracking of key customer metrics.
Do you know how much value was lost during the past year from high value customer segments that either stopped doing business with you or dramatically decreased their spending? Do you know why–and if you can reasonably do anything about it? Are those action plans in motion?
What about customers you recently acquired? Do you have tangible engagement programs to communicate that you value their business? Have you designed a diet of relevant, compelling, permission-based interaction with them designed to profitably grow share of wallet?
While established brands often lose sight of the importance of growing and retaining existing customers, I have seen this with relatively new enterprises as well. I recently worked on an acquisition evaluation of a high growth retailer. The target company is performing very well overall and during the sale process touted its impressive record of acquiring new customers and the average amount they spend. Part of our due diligence involved analyzing engagement, growth and retention rates. We quickly discovered the picture looked a lot less rosy. In fact, while the overall growth looked impressive, there was a major leaky bucket of customers that spend a lot one year and then spent little or nothing the next. When probed as to why this might be the case, the target company had no answers, mainly because they never really noticed this was an issue and therefore never had delved into it. Since ultimately the value of an enterprise is really just the value of its customer portfolio, this tempered our enthusiasm for an aggressive bid.
Clearly, depending on the specific circumstances of a given company, new customer acquisition can be quite important. And I would never tell a client to completely ignore attracting new customers. But for many brands the next best thing to do is to focus on serving the customers they already have and being sure you are optimizing their potential.
So the reason you might think you need new customers is because you are not doing a very good job keeping and growing the ones you already have.
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