Hunting versus Farming..

New Acquisition versus Existing Customer Retention

- Kapil Gupta

Look at the latest entrants – ecommerce guys, spending so much on ads as well on discount coupons, to make people download the new app and make the first purchase.. Similarly the centuries old business like banks have a large hunter team to acquire customers and the cost of acquisition goes through the roof.. on a simple belief that once the customer is acquired, he will stick around and contribute to the bottom line, making up for this cost. Does it really happen? If so, for what percentage of customers?

All of us agree that it costs anything between 4 to 6 times more to acquire a new customer than to retain an existing customer but is it really a practiced strategy among all organisations? Actually not.. Why?

Let us attempt to answer this..

• Are most of the so-called business leaders more of sales guys who have been chasing sales numbers in their successful part of their career?
• Is it easy to chase the straight goal rather than convoluted and more demanding path?

More than the above or any other reason, the existing customers demand or expect consistent and great multi-channel after-sale service and experience and the organisations find that the toughest.

To achieve the business objectives, the sales team normally overshadows the customer experience and value management team to drive what is more important to them rather than to the customer. Classic example being customers being sold high cost unit linked insurance plans instead of analyzing needs or talking about asset allocation and offering relevant solutions. In such a case, it is the short-term gain of the sales person that decided rather than winning the long-term confidence of the customer and create opportunity for multiple sales in future.

Going the other route offers long term gains, hence demands patience. The solutions are more demanding and complex. For the organisations to make it happen, it is imperative for the organisations to go “direct-to-customer” and be truly “customer centric”. While the organisations are going all out to invest in marketing analytics and big data infrastructure to reach out to customers through predictive models, it is the delivery of these and solution that is super critical – it has to be easy, simple and complete. For example, in case the model reflects that the customer would be looking for travel insurance since he is bought a ticket of an international airline, it is how simple or easy does the General insurance company or bancassurance partner make it for the customer to buy that policy.

Secondly, the customer experience is what counts..

You can’t have a situation that you have an awesome mobile app with funky features but no functional benefits to do the basics. Nor can you have “not so good” customer service at the branches that the customer exits the relationship, never giving him / her a chance to use that awesome app again.

All of us have read - “96% of unhappy customers don’t complain, however 91% of those will simply leave and never come back.. “

Eventually, it is the “lifecycle management” approach and reach out to customers with relevant solutions at the right time through the right channel. That is exactly what telecom operators have been doing most effectively since they own one of the key channels. Other service providers who have done tis effectively is Uber globally and Tata Sky in India.

Some of the companies have been using event based marketing and using complex algorithms on the advanced campaign management engine to reach out to customer just when customer needs it.. making the customers feel “how did they know that I was looking for it” - converting the service to sale and increasing the sales in short run and stickiness for long term. Amazon and Netflix have done this so well in the past, making others stand up and take notice.. Believe multi-channel delivery by use of technology, offering simple solutions are the best ways to stay relevant and customer centric.. making existing customer the primary source of growth..