Customer retention vs acquisition – getting into the heads of your customers

August 7, 2013

Mat Wylie - Head & shouldersA guest blogger post by Mat Wylie, Director of Customer Radar

According to Mat Wylie, the brains behind New Zealand’s most comprehensive live customer feedback business, Customer Radar, 96% of unhappy customers don’t give feedback to businesses.  In today’s competitive marketplace, feedback is crucial – as margins shrink, Internet sales threaten bricks and mortar stores and social media can go viral and damage reputations in an instant.

Unfortunately, in this challenging climate, many retailers have their “head in the till”, becoming solely transactional and focusing strictly on the money. “While most companies have something in their mission statement about how committed they are to customer service and retention, this is lip service for 99% of them who have no line of communication for their customer,” explains Mat. This can be remedied by shifting the business focus to the customer’s experience.

Why strain to retain?

You may be wondering why retention matters if you’re marketing to have a constant stream of new customers, however, customer retention is a crucial element in the continued success of a retail business. In fact, international statistics reveal it is seven to ten times more expensive to get a new customer than it is to keep an existing one.

“If money has been spent on marketing to get them in the door and having an experience with you, it makes sense to ensure it is a positive experience.  Every time they return, their acquisition cost keeps dropping, making their profitability better, long-term,” explains Mat.

Not surprisingly, the best types of customers to attract are those who become loyal ‘raving fans’ of your business.  “Satisfied customers aren’t good enough any more, you have to have raving fans,” says Mat. “When customers can give feedback and have it acted upon, the relationship flourishes and value flows both ways. It really does become mutually beneficial.”

Historically there haven’t been a lot of practical ways for retailers, who deal with large volumes of people, to understand what their customers are thinking. Existing methods are outdated and tend to be slow and inaccurate. When they eventually do allow for measures of customer satisfaction or feedback, they tend to be too little, too late.

Communicating customer experiences

Customer Radar was born out of the desire to give businesses more customer feedback options. With Australasia’s largest dataset of more than 360,000 individual pieces of feedback data, Customer Radar provides interactive dashboards, where retailers can see customer feedback in real-time -teasing out information pertaining to product or service satisfaction (to the minute), staff behaviour, previously unidentified problems, customer insights, areas of strength and weakness, and importantly, create new revenue opportunities.

“The technology allows businesses to build a line of communication directly with customers. There is nothing else like it available for business owners and once they see data flowing in, it proves to be absolutely invaluable, spelling out where they can improve,” says Mat.

An example of how this has translated into tangible changes can be seen in the case of a local hair salon. When prompted to give feedback on their recent visit, a customer indicated that the roof was dirty, which could only be observed by those reclining and having their hair washed.  Armed with this insight, the salon owner admitted that they hadn’t put themselves quite so literally in their customers’ shoes and promptly rectified the situation, resulting in a simple remedy to a customer observation.

When retailers make it easy for customers to give them feedback, they can then focus on delivering more of what the customer likes and less of what they don’t – a must for customer retention.