Suzanne Taylor Marketing Strategy Consulting
Building Businesses Through Customer Driven Innovation
Customer Retention Marketing
Even though it is sometimes seen as less exciting than Customer Acquisition and new product development, Customer Retention is critical for delivering profits to the bottom line. Not only do customers need to continue to use your product on an ongoing basis, they need to buy other products and services that you offer to them. Current customers are important not only for their purchases, but for their word-of-mouth to help attract new customers. By turning loyal customers into advocates, you significantly reduce Customer Acquisition costs and significantly increase the value of your current customers.
Three key Customer Experience elements drive Customer Retention:
Long term usage and satisfaction: Retain customers who continue to use and enjoy the product.
Buy more products: Sell loyal customers more useful and enjoyable products.
Word-of-mouth: Turn customers into advocates to help you acquire new customers.
Often after companies successfully develop new products and conduct a big marketing launch to acquire new customers, companies do not pay as much attention to retaining those customers as they should. Current customers typically deliver the lionís share of a businessí profits because they have already been acquired and are more likely to buy new products and services offered to them from the same company. Further, for many businesses, word-of-mouth from current customers drives about half of new Customer Acquisition purchases. So loyal customers not only continue to pay directly for products and services used on an ongoing basis but also help to drive down Customer Acquisition costs by acting as your stealth sales force.
In order to measure how well you are doing in these areas, it is essential to identify the metrics that matter most. The metrics chosen will not only help to determine goals but will also be the yardstick by which success and progress is measured. The metrics must measure something that is important to business results and can be measured accurately, consistently, and efficiently. Some key Customer Retention metrics include retention rate, RFM, and recommendation rates.
Customer Retention is a critical component of any business because it delivers the most profits to the bottom line. Abandoned customers need to be carefully studied so you can understand how to prevent abandonment. Customer research such as segmentation and lifetime value analyses shed light on who the best customers are and why. This in turn helps marketers refine their target customer descriptions and marketing communications for Customer Acquisition. The lifetime value of customers also helps determine how much businesses should be willing to pay to acquire new customers. Finally, current customers certainly drive product development since their needs and wants should be considered a high priority.
About Suzanne Taylor
Suzanne Taylor is a marketing consultant who helps companies acquire more customers, create great products, and improve customer retention. Her area of expertise is building businesses through customer driven innovation. A member of Stanford University's faculty, she has taught seven marketing classes through Stanford Continuing Studies and holds Stanford AB and MBA degrees. She co-authored a book titled Inside Intuit: How the Makers of Quicken Beat Microsoft and Revolutionized an Entire Industry published by Harvard Business School Press. She also instructs and serves on the Advisory Board for U.C. Extension in Silicon Valley's Marketing Certificate program, teaching marketing and executive education classes.
Taylorís client list includes Intuit, Adobe, PayCycle, Yahoo!, Palm, Microsoft, and several high-tech startups. Taylor worked for Intuit, Inc. for eight years in a variety of marketing roles including Quicken product manager, customer insight, and corporate marketing. She also worked in brand management at the Clorox Company leading marketing efforts for Fresh Step cat litter and Formula 409 spray cleaner brands. Taylor has led product teams through the full product development life cycle and has managed all elements of the marketing mix, both online and offline. Symantec selected Inside Intuit for a company-wide management book club discussion.
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