Recession-Proof Your Business: Focus on Current Customers
Every CEO, President and Senior VP that I speak to emphasizes building processes, technologies and expertise for acquiring new customers. And yet, common marketing wisdom tells us that customer retention is where longevity and profitability truly lies. Because of the emphasis on customer acquisition, it makes sense that many companies spend less time and effort on truly maintaining their customer relationships. That could be a serious challenge in the months ahead.
Whether or not we accept the doom and gloom predictions of the severity of the impending recession, one thing is certain: for most businesses, things are going to get a lot tougher. Customers – across industries and across segments – are going to have fewer discretionary funds and that means the competition for every dollar is going to heat up. As a result, now is the time to focus on building retention infrastructure. But, to do this effectively requires elevating the value of retention in each company’s day-to-day practices. Senior VPs of Marketing & Sales can accomplish that by taking the following four steps:
1) Recognize publicly the important contributions that retention makes. For instance, retaining customers demonstrates:
• The ability to overcome the day-to-day challenges – project and interpersonal – associated with working with existing clients;
• The ability to adapt to clients’ unique corporate cultures, evolving demands and changes in personnel;
• The ability to build trusted and valued relationships.
2) Attribute the same high status to client retention usually accorded to securing new customers. For example, customer acquisition typically:
• Is held out as a significant accomplishment – and rewarded at bonus time; and
• Serves as an exciting or unifying rallying point for a team.
3) Establish and track specific retention targets. Just as with customer acquisition, build customer retention into all sales forecasts. Regularly monitor retention targets and provide appropriate skills training.
4) Identify valued customers who are consistently demonstrating signs of disengagement. For example, customers who:
• Are spending less on your product/service than they have in the past
• Have stopped referring business to you
• Don’t pay their bills
• Have gone to tender for business that they would normally bring to you
Reach out to these important customers to determine why they have attributed less value to your product or service.
While few companies will escape the impact of a deep recession, taking these steps now can help any senior marketer and sales professional better weather the impending economic downturn.
I welcome hearing any suggestions that you have for ways to help companies recession-proof themselves. Send your insights to president@thindata.com or share with us here on the CMA Blog.
