A smart marketer will not alienate existing customers in the quest for newer ones.
As I have often said, I spent six years of my life counting other people’s cash and writing other people’s fixed deposit receipts. Even after leaving the banking industry, I still talk about it as I am still a customer of one bank or the other.
Today, I am not merely a customer but someone who perhaps knows a little more about customers than when I was a callow youth in the banking counter hoping for a typhoon or a flood on Saturday morning so that I could leave in time to catch a movie rather than be flooded by customers! One of the first things I have since realised is something called “lifetime value of the customer”, which I knew nothing about or cared even less for in 1973 when I first started working with Grindlays Bank.
This is one of the most frequently quoted phrases that marketing people spout. Very simply, this term denotes the profits an organisation makes from dealing with a customer over a period in time. So, if you are my company’s customer for twenty years (bless you) then the profits we make from servicing you over that period add up to this number and clearly you have tremendous value to me and my organisation. Now I teach management students and they bank with one nationalised bank or the other because of convenience. They rarely ever have money, live hand to mouth and often have difficulty in meeting the minimum balance even. Soon they graduate, get jobs and grow in more ways than one.
In some time they become “high net-worth” individuals and every international and private sector bank woos my former students actively (and without a second thought, they switch camps and banks). So what has happened here? Here was a customer well within the fold of a nationalised bank and that bank messed up because it really did nothing to retain them.
Now is this unique only to nationalised banks? I am not sure as it happens too often in my own company. I am sure it may be happening (sadly) in your company as well even if you may not be forthcoming in accepting it as I have been.
Acquisition or retention?
Let’s understand why this happens. The reason is obvious. Companies are busy acquiring new customers. This is where the rewards and recognition are. Your bosses write to you. Your colleagues envy you and your career invariably moves north. And yet some questions are in order. Are we spending more time looking at new business and clients at the cost of our existing customers? Is our output better for prospects than for existing clients?
The constant gripe of clients in the advertising business is that their agencies churn out better work in creative pitches than they do for their existing clients and I can vouch for this – that agencies seem to be pumped about pitches but seem flat when it comes to ‘demanding’ current clients. I do hope that this is not the situation in your company.
It is worthwhile to remember that it is a lot more profitable to hold on to existing clients than spending on attempts at new business acquisition. This is not to diminish the value and importance of new business acquisition as growth is what we are looking for.
The smarter companies ensure they don’t jeopardise the service offered to their existing clients when they prospect for new clients. They have teams in charge of acquisition without depleting the resources on servicing existing clients.
Promising more than we deliver?
Let me end by coming back to the banking sector. I have every international or new generation bank wooing me because they are under the mistaken notion that I am a high net-worth individual. They mail me, call me, message me and meet me frequently. If I were a girl that a guy was wooing with the same energy, I would have succumbed long ago. And yet when I do give them the business I find that this energy is no longer in evidence in servicing my business.
My constant refrain is that my Relationship Manager does not even last for a quarter on the average. So much so that if a new Relationship Manager asks to meet me, I invariably tell him to come three months later if he is still with the bank! Clearly there is a gap between what is promised and what is being delivered.
In fact the Relationship Manager is the brand to me and he is the one who lets it down, in my view at least. And in my view, despite all the hype surrounding the foreign and private sector banks, my good old nationalised bank is vastly better. It knows me and will somehow reach me when either of us needs to.
Keep it simple
So what are we saying at the end of all this.
Customer acquisition is important. But in quest of this elusive Holy Grail, are we jeopardising our existing relationships?
Are we promising and trying to be more alluring in the courtship phase? After marriage, we suddenly realise that the person we married is a different animal from the one who courted us.
It boils down to treating our customer as an individual who matters, like the manager of my nationalised bank does.
Customer service is not easy. But the gains are phenomenal, if you hang in there. It is not easy to hold on to existing customers for years. But when you do the rewards are phenomenal.
Are you gearing up to reap the benefits?
Ramanujam Sridhar is Director of Custommerce and Founder CEO of brand-comm, a communications consulting company. http://www.ramanujamsridhar.com