What has happened to businesses today…why do so many choose to “reward” the WRONG customer instead of rewarding the RIGHT customer? Let me define “wrong” and “correct”. The “wrong” customer is the “new customer” that is acquired primarily through marketing and promotions. And the “right” customer is a “new customer” who is acquired by your “existing customers.” While I know this may seem a bit unusual or even surprising to you at first, if you think about it as a business owner and as a customer, I think you’ll see that it makes more sense than you initially thought.
I have talked about this for over 20 years in my speeches and why it makes so much sense. But when you change the way you think about the best way to acquire new customers, everything in your business will change for the better. There is no doubt that all businesses need new customers to survive and grow… the question is “how” should you get them? I don’t think the best way to attract new clients is through marketing and solicitation. I think this is a cancer in most organizations that eats away over time and eventually causes serious problems within the company that can be difficult to overcome. However, it is still the dominant way to “acquire” new customers.
I believe (along with many other successful companies) that there is a better answer to acquiring new customers and increasing your market position and profitability.
During the last weeks of last year, this was illustrated to me in various ways. Let me share two of these situations with you so you can get a better idea of what I’m talking about in regards to your own company. The first example is with Comcast, the cable company. I know… it’s the company everyone complains about for one reason or another. Let me share with you one of the main reasons why this happens.
I’ve been a Comcast customer since the 1990’s, if you can believe it… I often find it hard to believe. My infamous “2 year contract” has expired and I am now paying retail rates for my “triple play” of cable, phone and internet. Of course, no one called me or sent me a notice telling me that I was going to get out of a plan and pay more money, mistake number one. Since I saw this happening I called to see if they had any specials as they always have some kind of promotion, mistake number 2 (you don’t need promotions). I had the pleasure of speaking with the “retention specialist” who recognized that he was a client of 20 years as he looked at my account. While we were talking, he was also searching the internet for deals, so I understood what was available.
As we talked, the retention specialist thanked me for being a customer for so long… something nice to say to his longtime customers, a positive step. He then told me what he could do for me and what offers were available. Surprisingly (or not) these offers were higher than the ones I found on the Internet. I asked him about the offers he had found and he told me the sentence that for me is like nails running across the blackboard, “sorry, but those ARE ONLY AVAILABLE TO NEW CUSTOMERS”, error number 3.
I then proceeded to ask what I always ask: “So what you’re telling me is that you care more about attracting a new customer than honoring your existing customers? Because you’re telling me that my best price is higher than you could have.” . to know if I was someone new to their services. Am I understanding this correctly?” Unsurprisingly, she didn’t have a good answer to this question. She simply said, “All I can tell you are the prices I have available to offer you as a current customer.” Mistake number 4.
It immediately confirmed one of my biggest frustrations, Comcast really doesn’t care about “existing” customers, only “new” customers…because they reward “new” ones before “existing” ones. Since I’m in the business of helping businesses become customer obsessed… he was basically telling me that Comcast is only obsessed with new customers, not existing ones. This is not being customer obsessed and it is taking them further and further away from becoming a company that is able to “WATCH”… at least not in a positive way.
My second quick example came from iThemes, a company I use for some plugins on my websites and blogs. They have great plugins and help me do some amazing things in a reliable way… there is nothing wrong with their products or services. They charge me an annual subscription fee to use their plugins. I got my renewal notice and it was $100 per year. However, just a few weeks before my renewal, I see an ad for 40% off your services…sweet. As you can probably guess by now, after speaking with them they informed me that this discount was “only valid for NEW customers, not their EXISTING customers.” Mistake number one.
I asked them the same question I did with Comcast: “So what you’re telling me is that you care more about attracting a new customer than honoring your existing customers? Because you’re telling me that my best price is higher than what you I could get if I was someone new to your services. Am I understanding this correctly?” And once again, the same type of response: “This is only our promotional offer for our new customers, not current customers.” Mistake number 2…they didn’t know how to respond because they are not customer obsessed. They, like Comcast (and thousands of other companies) are focused on acquiring new customers through marketing and promotion, not because they are able to “LOOK”.
These were just two of the situations I ran into in a few short weeks! Companies willing to invest millions of dollars to acquire new customers but invest zero dollars to keep their existing customers. Does this make sense to you? It doesn’t happen to me. If you’re a leader in the company, it might make a lot of sense because your goal is to attract new customers and grow your customer base by a certain percentage each year. But as a customer, it doesn’t make any sense when a business literally penalizes you for being an existing customer. STOP and think about it for a minute if you are a business leader…we are waiting for you.
The argument is always the same, if we don’t spend money trying to acquire new customers, we can’t grow, so we must do something to get new customers. This is what the leadership team of most companies (usually from their marketing group) tells them. This is FALSE THOUGHT.
Spending a lot of money on frequent big promotions with amazing deals to attract new customers just doesn’t make sense today in a highly commoditized world… you can’t win this game… at least not in the long run.
This is the wrong way to think about it. Let me share a different way of tackling this same problem… but with much greater success in the short (and long) term.
The goal is to get new customers… there’s no arguing there. The question is “how” to make this happen and NOT LOSE YOUR EXISTING CUSTOMERS. Many analysts tell us that “Loyalty and Retention” are at an all time low today. What has happened to allow this to be so? It goes back to the core elements of Customer Obsession…these core elements have been eroding over the past decade.
The goal should be to become able to “COMMENT”…where your customers are so happy with you that they can’t wait to tell others about you! No one will disagree with wanting this outcome and no one will disagree that frequent, positive word of mouth is the most powerful form of sales and marketing… always has always will be. The question is, “How do you become ‘COMMENT’ able to get your existing customers to do their marketing for you?” That is the real question that leaders should ask themselves today.
If your customers aren’t talking about you, spreading the word about how amazing you are, or telling others they need to buy from you, you have a problem. But with every problem there is an opportunity. The opportunity is to move from “giving money away” (advertising, promotions, marketing) to “getting free customers” (having your existing customers (and others) do the marketing for you).
Think of a different solution… one where you can “WATCH”.
Using the examples I shared earlier, let’s reverse the situation. What if you rewarded your existing and loyal customers more than a new customer? What if you offered your biggest discounts or additional product/service benefits to your existing customers instead of your new customers? What if you did special things to help your existing customers throughout the year that made their lives or businesses better? What would your business look like next year and beyond?
The first thing you’ll notice is that your existing customers would be much more inclined to “comment” on you and your friends and colleagues on how well you take care of them as an existing customer. They would go out of their way to talk about you…they would be “doing your marketing for you.” When this happens, these “new” customers (through word of mouth) will want to be a part of it and reap the rewards that your other existing customers get. This would spread and grow day after day, month after month, year after year. In a short time he would have created “the most powerful marketing force on the planet… his customers.” What would your business be like if this happened?
This reverses the cycle described in the two previous examples. Now it would look different from all its competitors. Now you’d be reaping the rewards of “zero cost marketing” because your customers are doing it for you…FREE!
You would be letting your competitors spend their money trying to attract all the new customers with cheap deals and promotions… spending money to get a lower return per customer. When you start to think differently about customer acquisition by your current customers (and others) instead of investing very expensive money (your profits) to attract new customers, you start to see the world of customer acquisition in a different way. very different. And here’s the kicker… many of the customers you’re attracting with all these cheap offers and promotions aren’t really the ideal customers you want anyway. They are the “deal hunters” and are not looking for a long-term relationship with your company.
They are the wrong customers!
You have now eliminated the problem that I described in the previous two examples. Now he offers to help his existing (loyal) customers improve their lives or their businesses…by turning them into Advocates. This path leads to a high LTV (Customer Lifetime Value)… which means you’ll get more profit from each customer than with the traditional acquisition method. You will see much more profit per customer and your customers will be happy to spend it with you because they know you care about them and that they are important to you.
This is what it means to become able to “OBSERVE” for a company… to be obsessed with the customer so that their customers do their marketing for them. This is my passion…as a business owner and as a customer…trying to make as many companies customer obsessed and giving me so many reasons why I tell all my friends and colleagues that they need to buy from them.
What would that look like for your organization? Are you ready to change your path to be customer obsessed so that you can be able to “LOOK”? I would love to hear your story and what you think. If you think this is a better way to think and act, please share it with your peers. The more leaders we can come to understand how powerful this is, all of us as consumers will also reap the rewards. It’s a win-win.
