This week we have another guest post from Alan Hale of CMG (Consight™ Marketing Group) in Chicago. Exceptionally, I am publishing it as two separate posts because its length and value deserve the detail and effort he has put into it.
I have been fortunate to have managed over 250 voice of the customer projects in B2B over the last four decades, with over 50 engagements on customer satisfaction and loyalty. These projects were across a wide variety of industries.
During this time, I have seen some great successes and some tragic failures in trying to make customers Raving Fans. Based on this experience, I wanted to share some best-in-class insights on how to make your existing customers Raving Fans.
According to industry research, acquiring a new customer is 5 to 7 times more costly than keeping your existing customers, which is why you need to concentrate on keeping your customers and making them Raving Fans. While customer acquisition is indeed important, so is holding on to your customers and making them Raving Fans.
There is a lot of information on the media and LinkedIn about customer acquisition such as website development, SEO, ad words, effective selling and phone calling etc. Very little has been written on keeping and serving existing customers. Other industry research states reasons why accounts churn. Very seldom is the reason for defection price, no matter what the sales reps tell you. It is a breakdown in account service, the account is not being serviced at a level of their expectations.
First, let’s define a Raving Fan. The term was coined by Ken Blanchard in a book called, Raving Fans published in 1993. A Raving Fan is a customer, who is excited about your product, service or solution. Think of Apple and Tesla. These companies have waiting lists for products and sometimes have long waiting lines for a new product. They are your brand advocates and are an extension of your brand. The characteristics of Raving Fans are as follows:
- They are less likely to churn to a competitor
- They are extremely loyal
- They will buy more i.e. you have a higher wallet share
- They are more likely to buy new products, services or solutions offered in the future
- They are usually (not always) less price-sensitive and therefore more profitable
- They may give insight on possible new products, services or solutions to introduce
- They may refer you to other friends and colleagues and/or provide testimonials
Most of this discussion is applicable to both B2C and B2B; with the exception of the 80/20 rule which is explained later. The following discusses the issues and hurdles in creating Raving Fans.
1. Senior Management Paradigms and Expectations. Senior management has two dangerous paradigms. The first paradigm is “we know what our customers want. After all we have been doing this for many years and are successful.” Yes, but the past does not equal the future. There may be new expectations from customers and prospects. Markets are not stagnant, there may be new technologies or new competitors. Continue Reading