In the newest article from e-marketer, Social Media networking better Retention than Acquisition, there is a mentioning of how social marketing money is spent by the market. I found it relevant because it directly relates to Chapter 4-2 , generic direct marketing strategies.
The Acquisition stage is when you spend money attracting new customer. This was originally a quarter of the spending, but now it's less than 15 percent. The article calls out that large firms have started spending more money on 'cultivating customer loyalty' and no longer spends heavily in attracting new clientele. (Also called Retention)
However it also states that the total money spent in this department has doubled, TWICE!! The article goes on to say how it's because the smaller companies are using a larger portion of their budget on acquisition, while the larger company's do not see the value in that stage for this medium.
To the large company's I say dumb. They spend millions of dollars on applications and little games, yet that doesn't add to customer retention. I don't see one practical way that their current methods are effective or actually meant for customer loyalty. I also have not seen or heard of a great success story about a fortune 500 company that said 'I think we should allocate about 10 percent of the budget to new clients. The rest, let's just make the one's we have happy by sending them Monopoly. Yeah that will make them think of our value proposition or mission statement."
I believe that most people would agree that when it comes to customer satisfaction, adding true value to our purchases is more important then us playing your newly developed Burger King Game. (although if a company can put it together and produce a game like the farm one with 50+million people playing it, I'll put my foot in my mouth) Unless this little trinket or gadget reduces cost or increases value or by some means makes my life a whole lot easier, your not really spending money on Customer loyalty, but trying to get more customers and calling it a different name. However BK, a rose by any other name....
The text, article, and your post bring up numerous fascinating issues.
ReplyDeleteThe one I'll focus on is "retention"; you said: "...it also states that the total money spent in this department has doubled..."
This is not at all surprising. Retention efforts -- in all its many forms -- have long been ignored in favor the more "sexy" art of flashy advertising and promotions to acquire new customers. A little measurement will show, over time, this is costly, and can be done at the expense of bleeding existing customers (think 80/20 rule).
Focusing dollars on existing customers can be a savvy strategy: boost customer service, loyalty programs, listen -- and respond -- to customer needs, etc., etc., can, in the long run, provide a company with an army of evangelists working the customer acquisition angle. (Not a week passes where I don't share my enthusiasm for Apple, MINI, Google, or Trader Joe's, to name a few brands I connect with.)
Companies can ignore this powerful force at their own peril. Give bad customer service and this army will probably work helping keep new customers away.
At the same time, I love your point about yet another online game. Unless companies like BK have a defined strategy for learning who these people are and measuring their online -- and offline -- activity, it can be a pretty worthless effort.