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BEST PRACTICES & STRATEGIES
Investments in CXM pay off
The effort required for customer experience In many companies, the constant loss of customers is
management (CXM) is usually manageable and considered unavoidable, so campaigns to retain cus-
not too difficult to plan, especially when you tomers who are at risk of leaving (churn prevention)
consider that programs to avoid churn or to win and to win back dropouts take up expensive and fixed
back dropouts, let alone to acquire new budget items in customer communication.
customers, are significantly more complex and Another approach proves much more fruitful, namely
inefficient.
putting the focus on budget restructuring, based on a
new, sustainable, customer-centric attitude. Because
Nevertheless, budget planning in many companies usu-
ally does not take this into account: the large marketing fighting the causes is more efficient than fighting the
budgets still flow primarily into acquiring new custom- symptoms.
ers, avoiding terminations and winning back those who In other words, reducing churn is a key driver of reve-
drop out. However, that money could be better spent nue and profit growth, which ideally starts at the begin-
considering CXM. ning of the customer relationship in the customer lifecy-
cle. Happy and delighted customers are less likely to
For example, as soon as the number of existing cus-
tomers reaches a certain level, usually around one mil- quit but that requires more budget for CXM. They are
lion, the churn rate becomes a problem and quickly more emotionally connected and therefore do not think
reaches the order of four to twenty percent. At first of stopping. This saves money on churn prevention,
glance, the requirement seems obvious: more new cus- churn recovery, and new customer acquisition.
tomers must be won than lost, or reactive measures to Delighted customers not only cancel less often but are
reduce churn must be established. also more open to cross-, upselling and recommenda-
tions. This means that investments in CXM are suc-
Many believe that this is the only way to secure sales
and profits and, at best, continue to grow. But that is an cessful and sustainable in many aspects and are there-
expensive mistake, because this claim can only be cov- fore more efficient than reactive churn prevention and
ered with a lot of money for marketing and new custom- recovery measures. ◊
er acquisition. By Daniela La Marca
October 2022: Customer Journey & Experience Marketing 11