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Blind marketing and churn

Posted by Michael Bloch in web marketing (Thursday April 17, 2008 )

How much do you know about your customers? Don’t be ashamed to admit not a lot as you’re certainly not alone.

According to a recent audit by the CMO Council of 450 marketers around the world, a majority reported they have less than adequate knowledge of important customer data and a tiny 6 percent felt they have an excellent knowledge of the company’s customers.

It’s this lack of knowledge that can not only make us hit and miss in our marketing to potential customers but also increase churn rates in current customers.

Over 30 percent of companies surveyed were experiencing churn rates of upwards of 10 percent and nearly a third reported turnover of five to 10 percent – a desired or expected a churn level was quoted as generally being less than five percent.

Churn can be a major problem in some companies where retention isn’t seen as a growth strategy. In my opinion, it’s equally as important as new customer acquisition, otherwise it’s like trying to fill a leaky bucket.

Each (good) customer lost is not only the loss of what that client pays, but can impact greatly on a wonderful and mostly free form of promotion – word of mouth. Even if you’re able to lock in your customers with contracts or whatever, if they are constantly frustrated, they won’t have much nice to say about you and are more of a liability than an asset.

Word of mouth should never be underrated, particularly given that a recommendation from a friend, peer or colleague is one of the most trusted and readily accepted forms of marketing by consumers.

Think about it – how many times have you asked someone “what’s product X like” or “do you know where I can get Y at a good price?” This is where reviews sites are very powerful, but still not quite as good as getting a recommendation from someone you know.

The way to look at it, for every (good) customer we lose, at least 2 more are needed in order to get out of a holding pattern and start growing.

For marketers to do their jobs most effectively; they need good data at their fingertips, to be able to really tap in to the pulse of a business; and just as importantly – for the business to address the issues that are causing the churn and grumbling among the customer base in the first place; as these also are barriers to new customer acquisition.

Read more of the CMO Council’s report



 

 
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