I got a great reminder this morning about the importance of showing your best customers lots of love–particularly during tough economic times. It’s easy to worry about grabbing new customers and launching new products. But your best and most profitable customers are the ones that you already have. Many research studies have shown the most profitable period in a customer life cycle start in the third and fourth years. Every time you lose a long-tenured customer, you start the cycle again.
This article about the risk of losing “loyal customers” appeared in the online edition of AdAge. The artticle cites a study done by Catalina Marketing and the CMO Council. It shows that one-third of formerly loyal customers had recently abandoned well-known and well-respected consumer packaged goods brands such as Crest, Hunts, Pine-Sol, and Tylenol. The research is based on actual purchases as tracked on the consumers’ supermarket club cards. The research didn’t dig into why the consumers were switching but the odds are good that price had a lot to do with it. The news wasn’t bleak for all brands though. Some, including Coke, did a good job of keeping their customers.
One of the keys to customer retention is consistent marketing. Not just advertising and certainly not TV ads. Just regular communication. Whether it’s in your local newspaper, on your website (you have one don’t you?) or through email. Email is one of the best ways to keep in touch with your best customers.
But there’s one tactic that you shouldn’t use to try to keep your best customers–price cutting. It always backfires and actually reduces brand loyalty. You can’t be wildly over-priced compared to your direct competitors. However heavy discount sends the message that consumer SHOULD be making their decisions on price.
Start building your business’s future by defending the hard-earned customers from your past.