I’m a firm believer that the more focus there is on strengthening retention, the more new sales a company will get.
What I find interesting, is for most subscription based businesses/industries, the marketing messages are all around how much you can save or get a free gift card worth $X when you sign up, or get a free month, etc…
A prime example is the Retail Energy industry. If you live in a de-regulated market, you will see a ton of ads that all look the same. Sign up here and save money, Sign up here and get a free X.
Yet, they don’t ever promote why I would want to be a long-term customer. Why are they not talking about how their referral program is better than the rest, or how if you are an existing customer you’ll receive unique benefits?
On the flip side, as an existing customer, I get some, albeit not much, messaging about their referral program and how I will benefit from it. Why wait to tell me this as an existing customer vs leading with that message to attract me to switch over to you?
There is one energy company that I know of, and its situation is not unique, is that they acquired 1M customer every year…awesome, right? Well, they lost a 1M customer every year as well. So they spent a lot of resources to stay in exactly the same spot….NOT AWESOME. Just imagine if they took some of that and focused on building a phenomenal retention program??!?!
Energy is a commodity, give the consumer a reason to pay your company’s premium over another. If not, then the price wars will always prevail and all that means is that you are racing to zero.
A couple of great examples of leading with benefits for being a customer vs the here’s what a new customer gets…
Capital One’s Venture Card commercials. They don’t talk about interest rates, they focus on how their airline mile program is far superior to the others because there are no blackout dates or airline restrictions for point-purchased tickets.
Comcast (yes, they do need to improve their customer service) promotes their X1 and Xfinity platform capabilities rather than their monthly rates for cable. So when I am contemplating on whether or not to sign up with them, I have a much better picture of what my benefits or cool factors are vs just a price comparison.
A company’s retention program should be front and center for attracting new customers. It should create a “I want to be part of that circle” demand and pull customers in.
What are some of your thoughts and insights on how retention affects new sales?
