One thing that is baffling me with business models today, particularly in the technology space is… why would you spend 5x to 10x more marketing budget, sales efforts and compensation pay-outs on acquiring new customers, only to treat them worse once they become customers?

The probability of a sale from a brand new customer is only 5-20% whereas the probability of a sale from an existing customer is between 60-70%. In fact, 80% of your future profits will most likely come from 20% of your existing customers.

I tell you why, greed! Executives, shareholders and the board, demand high growth through net new business to boost the share price and increase their own personal wealth.

What then happens is so common…

Customers then see their ‘introductory offer’ removed, with prices doubling, tripling or more when they come to renew. But, the customers tend to stay where they are because of the path of least disruption. They simply can’t be bothered to change again, don’t have time to sort it out, or get lost in automated phone systems trying to cancel or get told ‘Sorry you are locked into a contract’.

The providers prey on this knowing they are likely to keep some and lose some through this process and seem ‘OK’ with losing customers not due to the level or service or quality of their product, but because the customer felt like they were treated second rate compared to new customers.

A current customer view could be… “As a buyer of your product or service, I have made a conscious decision to place my business and thus hard earned money, with your company and expect to be treated in a way that see’s your company respecting that fact. It’s not too much to ask… is it?”

Essentially, the only way to ‘win’ as a consumer/purchaser of said products or services, is to keep switching providers to get their introductory offers. Which is a total pain and an unnecessary process.

Notwithstanding the fact that I understand companies want to grow their businesses, increase share prices and launch new products, etc. My humble opinion is that the stock market should reflect stability in a company, should reward continuous moderate growth coupled with high customer retention rates, rather than over inflated, fast growth, yo-yo balance sheet, here today gone tomorrow companies.

If providers changed attitudes and made customer loyalty the highest priority, they would not only see customer retention rates stabilise, most likely increase, but new business acquisition would start to happen organically through customer referrals with customers sharing their great experience with their personal and business network, and thus you wouldn’t need to spend so much on new customer acquisition

Subsequent marketing cost savings could be passed on to your existing customers by not increasing their prices quite so much and so frequently!

It should be more difficult to become ‘part of the club’ for new customers, seeing existing ‘members’ get the most benefit!

Here at Connecting Business, we prefer to value our present and new customers alike, and in doing so, regularly receive comments such as:

“Thank you again for assisting us in EVERYTHING. Great support. World class!”
(Great Place To Work Norway)

Stats sources:

Forbes –