Customer Conservation: tips to help you keep your customers in camp

by Alan Patching

To me customer loyalty and customer conservation are similar concepts, yet they are quite different in a couple of important areas. If we wish to increase our level of customer conservation, it's a good idea to understand the differences.

In its ideal sense, 'customer loyalty' refers to the circumstances wherein, having established a relationship with you, a customer would always choose your product or services above those of your competitors, when the need for those products or services arises in their lives.

In the most basic sense, 'customer conservation' could probably be seen as a little different, referring to the circumstances of maintaining existing customers for existing products and services irrespective of whether or not they choose to deal with you for future purchases to meet their needs.

A combination of both would be a prudent goal. However, if we are going to select a single term to cover both concepts, 'customer conservation' would always be my preference and recommendation. The main reason for this is that surveys have shown that we tend to see conservation as something that we the sellers are responsible for, while customer loyalty, while something we can significantly influence, is more in the customers' hands.

Of course, this is a fairly arbitrary splitting of definitions, but anything that encourages us to take responsibility for the state of our business and removes potential excuses for diminishing performance, should benefit the business in the long term.

A leading strategic consultancy firm contends that most businesses lose up to half of their customer base in less than 5 years. They also contend that, if businesses halve the attrition rate, the impact on bottom line profits will generally be halved. Clearly, there is a lot of sense in developing and constantly applying an effective customer retention or conservation strategy.

Let's now quickly review the four ways in which we can market and sell our products and services.

These are:

We can sell existing products and services to existing customers/clients
We can sell new products and services to existing customers/clients
We can sell existing products and services to new customers/clients or
We can sell new products and services to new customers/clients

Generally speaking, the task gets more difficult and more expensive (cost per sale) as we move down the list. By now you would have noticed that the first two options on the list involve marketing/sales activity with existing customers/clients. If we lose these existing customers we also lose our richest source of future business. Does it not therefore make sense that we should invest some time and effort, and maybe a few dollars as well, in retaining the customers with whom we already do business.

By the way, there is an impressive body of opinion that says to sign up a new customer/client costs a minimum of 5 times more than retaining one we already have.

In case you are beginning to think, here we go, another hair brained scheme that sounds easy but which takes a lot of time and effort and nobody can really measure the results, let's look at a couple of interesting facts about customer conservation.

At the risk of repeating myself, it is important to realise that marketing and selling to existing customers is for most businesses, a lot easier than marketing and selling to new customers.

The fact that most people like to do business and deal with people with whom they have long term relationships should make conservation a relatively easy exercise.

Notwithstanding the previous point, conservation of customers does require effort on our part, and preferably strategically considered and planned effort, if maximum conservation is our goal. Zero attrition rate of customers might be a near impossibility, but only by aiming for nil attrition will we be able to secure the minimum possible attrition and so maximum possible customer conservation.

It might take time, effort and finances, but remember, conserving a customer will, in almost all cases, cost a lot less than securing a new one.

Before we begin to investigate how we might be able to improve our customer/client conservation, let's spend a moment addressing what we might consider doing when we lose a customer. There could be any number of reasons why a customer/client leaves. Certainly a better opportunity or deal presented by a competitor might entice them from your fold, but that is not the most likely reason in the situation of a well developed or developing trust based customer relationship. In this situation, a very common reason for customers/clients leaving is a perception that you care more about yourself and your issues than you do about their's.

Such a perception more often than not will have evolved from customers/clients having a problem that was not satisfactorily addressed. A leading European airline studied customers' expectations in such a situation in the 1980s and this gives us good guidance on how to deal with the situation when it arises in our business. The essential steps to recovery, according to the survey were:

Admission of the error/mistake
Quick recovery
Apology
Immediate value added recovery action (letter from senior management, small gift or flowers etc)
Follow up on future service satisfaction where appropriate

So what are some strategic actions we can take to help maximize customer conservation?

Generally speaking, the secret is to build strong customer/client relationships through regular contact and to be seen to be trying to add value by providing service beyond expectation. We need to be careful with the last point. A level of service above expectations soon becomes a new level of expectation. Thought and judgement never did become redundant in the matter of everyday business.

Some specific ways you might choose to add value include:

Use a customer/client newsletter as a tool for adding value for your customers/clients. By the way, if you do have your own newsletter, make sure it is full of interesting news, information ideas, and perhaps even business suggestions. Never make your newsletter too much like a corporate brochure. If you are not sure of the correct approach for newsletters, get hold of one from the top law and accounting firms. Generally speaking, these people really know what newsletters are all about.
Birthday cards and special occasion cards are always a good idea. For the top line customers/clients, why not a bottle of champagne or even a birthday cake. By the way, I recommend being a little careful at Christmas. You don't want your cards being lost in the daily handful that arrive. I'd suggest you make sure it really stands out from the crowd, or even better, do something after Christmas as well when few other people think about doing anything.
Phone my mate, Max Hitchins on (02) 99661144 and buy a copy of his book, 365 Marketing Ideas. It schedules the significant celebrations held on every day of the year. I remember sending a card to a Brazilian potential client on Brazil National Day (found in the book) and being booked for a presentation for his new company a few days later.
Use the net without bugging people. Consider a short and informative emailed news bulletin occasionally. Be careful not to overdo it, we all know how irritating junk email can be. Short, topical and useful are the keys. And be respectful of the privacy laws in the regions you email to.
Run seminars with interesting guest speakers. I advise linking up with a fellow professional from a different line of business to run these. For example, you might work with your solicitor or accountant. They invite their client list and you give a talk about a topic related to your product and services. It's called host/beneficiary marketing and it adds value for all involved. The solicitor's clients get some useful information and a few drinks in a social environment. The solicitor gets 'brownie points' for caring about his/her clients and putting on such an informative event. If you are subtle and effective in your presentation, you'll create a few new entries for the hot prospects list. Remember, the presentation should be professional, impactful, and with a maximum of valuable information for the delegates and a minimum of blatant promotion for yourself and your business. You can anchor yourself with the delegates by following up with business cards, brochures or copies of your newsletter.
It really is all about contact. Make a point of contacting five to ten customers/clients each day or so, and have your staff do the same, just to say hello and ask how they are going.

Customer/client conservation flows from well nurtured relationships which, in turn, are based on trust and contact. Sometimes it's difficult to see how important some of the really simple things in life are as we rush about dealing with the urgent issues.

Never let conservation become so unimportant that some day, for you, it becomes a matter of the utmost urgency, for the sake of your business.

Good luck with your customer/client conservation activities.

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