An Ounce of Retention

Written by Shannon Wenkoff on May 23, 2014

After-sales support has long been thought of as the poor cousin of sales, but building a loyal customer base can really pay off.

You know the old marketing adage: When a customer is happy, they’ll tell two people. When they’re unhappy, they’ll tell ten. As recent studies show, those two customers can add up to some overlooked rewards.

According to a recent report by Adobe, far more marketing dollars are spent on customer acquisition than on retention and driving repeat purchases. The report, which analyzed 180 online retail stores in Europe and the United States, found that nearly 80% of digital marketing budgets are spent on acquiring new visitors.

Despite this level of new customer acquisition spend, returning and repeat purchasers continue to account for as much as 41% of sales, and every 1% increase in return customers translates into a 10% increase in revenue. So why does “marketing” to existing customers lag so disproportionately behind new acquisition marketing budgets?

When it comes to customer retention, we also know that positive service experiences are essential to repeat purchases—or continued subscription in our increasingly subscription-based economy. A recent Harris Interactive survey found that 86% of consumers quit doing business with a company after a bad customer experience.

The new subscription-based economy has made every support interaction a sales interaction.

This has become a significant area of concern for the consumer technology market, as typical product support experiences are simply failing to solve customer issues on the first call. In a recent Consumer Reports survey with regards to PC support, up to 40% of respondents found the staff’s patience, knowledge, or clarity is fair at best.

Today’s wired world has made it easier than ever to get pretty much anything you want with a few taps of your finger, anytime of day. But when it comes to making a product work the way users expect, many vendors promise more than they can deliver: either their agents can’t solve the problem, it’s beyond their field of expertise, or it’s another company’s fault.

THE 3 PILLARS OF THE CUSTOMER EXPERIENCE

In the end, vendors fail to create loyal, satisfied customers, so they must focus all their efforts into acquiring new ones—the same ones who would have been easier and more cost-effective to keep in the first place. It’s a vicious circle that can only be broken by devoting the same attention to each of the core pillars in the customer experience: purchaseuse and support.

In a world where technology products are so heavily interconnected and interdependent, however, delivering exceptional support experiences is a real challenge. At the same time, the stakes couldn’t be higher. As we continue to shift almost entirely towards a subscription-based economy, every support interaction we have with our consumers has also become a renewal/sales interaction.

Given this reality, what are we willing to invest to ensure great support experiences that solve the customer’s problem? What if you considered product support as part of your marketing spend? Would your CMO continue to allocate 80% of spending to customer acquisition? Are we missing an opportunity to grow our top-line through our existing customers?

Maybe it’s time to find out!