- Category: May - June 2010
Companies can observe an increase in profit if their customers have a strong relationship with them simply due to the very well known fact that the cost of getting a customer is five to eight times higher than that of maintaining an existing one.Traditional marketers have been using Customer Relationship Management (CRM) techniques to address the issue of nurturing their customers quite well in the past and the latest method they can use is electronic Customer Relationship Management (eCRM). It is emphasized by researchers that every organization should educate themselve about eCRM as a successful implementation of eCRM (web-based) applications can be beneficial for both customers and companies. And indeed every company should give its best to make out of their expensively acquired customers at least loyal, always-recurring ones, and thus distribute the accrued acquisition costs on a possible long time customer relationship. However, actual corporate practice looks unfortunately often different and whenever there is a change of personnel in marketing and sales management, it tends to also have a negative impact.
Attacks on the customer pool of competitors only succeed with attractive baits, such as price concessions or improved conditions. It is a common mistake to think that we could win all the customers of the competition, as every business actually has totally loyal customers, which are basically migration-resistant. The intension to unglue these customers usually gobbles a lot of resources and at the same time results in the fact that many profitable regular customers are neglected just to chase after the new. But those always only active in the front line, who throw all available weapons to the battlefield at once, are often unaware that in stagnating markets only as many customers break away at the back as are brought in anew. In fact, companies often spend incredible amounts of money to win new customers, but once they are finally captured, they find it hard to make ends meet: employees don’t get trained, or there are too few, or they can’t be bothered or are frustrated, or they are poorly supervised, have no resources, no leeway and no ideas to inspire customers to gain loyalty from them.
Customers should preferably blend in and obey, as nothing bothers the regular course of an organization more than the customer. But don’t forget: once a customer is disappointed, bored, bullied, or feels otherwise ill treated, he starts to think about a change. And according to an investigation of RightNow, 84 percent of all customers that have made bad experiences with such companies haven’t been willing to do business with them again.
According to a study by CRMGuru, 74 percent of all customers abandon a company because of poor service, 32 percent because of poor quality and 25 percent because of prices. Out of the managers interviewed at the same time, however, 49 percent thought it was because of the prices, 36 percent because of changed needs and only 22 percent because of poor service. This means the scapegoats are believed to be in the sales force and not in the office work. Everybody points the finger at others but himself although it would be more appropriate to engage in self-contemplation and to look for sore points in-house.
For many people, service on existing customers still bears the stigma of failure elimination and is therefore an evil that is preferably hidden in back offices. For others however, service units are already a profitable source of money, a nursing station for customer loyalty and a profit center for additional sales. Excellent relationship quality automatically means high loyalty, which is made in the after-sales service department.
The winner in this zero-sum game is completely the customer, as for him almost everything becomes cheaper and better.
By Daniela La Marca