Forgotten Customers
We have been reviewing our marketing costs with a great deal of scrutiny. The litmus test is simple: can we track results? If not, we need to change the medium, or the offer, or ditch the channel entirely. More on this in another blog.
But more importantly, our review has also brought forth an embarrassing reality: over 80% of our efforts can be classified as acquisition based marketing. As we did a deep dive into our customer lifecycle management and database, a further realization occurred: we have thousands and thousands of forgotten customers. Deep down we knew this, and in fact we had hired more floor sales staff at several dealerships to focus entirely on getting in touch with our customers that have not been touched in years. When these new salespeople dug into the database and asked former customers why they stopped shopping at Flaman, shamefully (for us) an often repeated comment was “because nobody has been in touch.”
I hang my head…
Everyone knows it is easier to keep a customer than to attract a new one. Everyone knows that 80% of your profits come from the best 20% of your customers. In a world of decreasing customer loyalty and an ever increasing competitive retail landscape, I suppose it is easy to fall into the trap of focusing on growth by trying to attract more and more customers. Create a better offer, find new channels to reach the customer profile, expand your reach. But are you really gaining more customers or spending more money to just create a bigger customer churn cycle?
How about focusing on what you have and saturating your existing accounts. Grow from within. For Flaman, we are essentially a conglomerate that has been in business over 50 years. Our customer database is vast, a rental customer can be a fitness customer or an agriculture customer or a trailer customer or a parts and service customer. How much do our existing customers not know about us? How many would shop more frequently if they did know and were not forgotten about?
We as an organization did not want to forget our customers. We pride ourselves on customer service, it is our number one company goal and we have people in house that call customers back after their major purchase to see how they are doing and how the product is working or not working for them. If there is a problem we do not pass it off to the warranty department to deal with. A vice president deals personally with the issue immediately. We do not let our sales people have too many customers, we limit them to 300 per year to focus them on their customers.
And there is the source: sales people are confined to 300 customers and they deal with far more, and the excess every year get forgotten. The top sales person in the organization has been with Flaman for 25 years. He provides outstanding customer service but by no fault of his own, how many customers have been forgotten about over the years? When we look at the entire organization the list is vast. But this is not the only source, the forgotten customer is an multi-factorial problem, we do not focus on retention enough. Let’s look at the our customer lifecycle management as I see it for Flaman Group of Companies:
Stage One: Acquisition
We spend a lot of effort in this area advertising in all channels. 80% of our marketing dollars go here.
Stage Two: Welcome
Every Customer is welcomed; 10% of our marketing dollars go here.
Stage Three: Retention/Saturation
Customers are assigned to sales people and our direct mail offers only focus on our recent customers (last two years). We have no customer loyalty programs. 10% of our marketing dollars go here.
Stage Four: Forgotten
Customers that do not get assigned to a salesperson may receive a direct mail for several years, and if they continue to buy they stay on the list; if not they become forgotten.
Stage Five: Win Back
We have work to do. In fact, in 2013, this is the one of the strategic objectives of the marketing department. We will be shifting considerable acquisition based marketing efforts to win back efforts towards our forgotten customers.
We have a problem and to fix it we are looking at it as an opportunity. How much opportunity does your organization have with its forgotten customers?
Steve Whittington is President of Roadmap Agency Inc. He has also served for over a decade as a member of the Executive Team of Flaman Group of Companies an award-winning organization and has over 25 years of executive experience. Steve’s current board work includes serving as; President of Glenora Child Care Society; and Co-Chair of the Marketing Program Advisory Committee for NAIT’s JR Shaw School of Business. Previous notable board work included, Chair of the board for Flaman Fitness Canada, a national retailer, a Director for a meal prep internet Startup Mealife and Chair of Lethbridge Housing authority, the third-largest Social housing NGO in Alberta.
Academically, Steve was an instructor of Project Management at Lethbridge College for seven years. Steve holds a Bachelor of Commerce Honours degree; he is a Certified Sales Professional (CSP), Project Management Professional (PMP), Certified Marketing Specialist (CMS) and (CCXP) Certified Customer Experience Professional.
Steve’s first book Thriving in the Customer Age – 8 Key Metrics to Transform your Business Results teaches about the customer journey and provides a guiding framework spanning all stages of the customer experience. The book explains how every metric impacts an organization and how leaders can best utilize each metric to provide a stellar customer experience. Everyone knows the customer is the most important part of a business. This book provides the tools to improve an organization’s customer experience and drastically transform business results.
Recently Steve’s Blog has been profiled as one of the Top 75 Customer Experience blogs