Meedia

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17.12.2019

The Importance of Customer Management

Above-average, sustainable growth can only be achieved by companies that prioritise new and existing customers equally and manage marketing and sales activities from a single source. 

Existing customers form the business basis of every successful company - especially in the digital context, because the market is characterized by saturation and predatory competition. On the one hand, it is necessary to win new customers permanently, on the other hand, existing customers must not be neglected.

It is something like a self-fulfilling prophecy and an analogy to agency business: People, whether managers or creative people, who have a lot to do with sales and marketing, are at some point convinced that it is primarily a matter of winning new buyers for a product or a service. Strategies and campaigns that demanding participants work on perfecting almost to the point of abandoning themselves almost always aim to convince others of the advantages of an offer. Target action on the part of the customer: the purchase.

As a direct result of this mindset, most companies and agencies, as well as their executives, are concentrating most of their sales energy on attracting new customers. An almost understandable pattern of behaviour - at least in the short term. Every freshly captured budget guarantees a multitude of positive reports in the trade press. These do not only contribute to the image, but also to the reputation of the acting persons. In their external and internal perception, they develop into doers. At first glance, it doesn't matter how long the freshly and loudly communicated customer relationship lasts. Hardly any media service reports when a company works in long-term partnership with a service provider.  Good marketing with the same energy should concentrate on keeping the existing customers and confirm them again and again in the feeling that they have made exactly the right choice with their decision.

Existing mindsets ensure high cost expenditure

In markets characterised by saturation and predatory competition, attracting new customers by investing in their attention requires a lot of budget in view of fragmented target groups and reach. 

According to expert estimates, it costs about 7 times more to acquire a new customer than to keep a regular customer, to retain him and to exploit his potential. Poured into a formula this means: 1 - 3 - >7 (Channelpartner.de). According to this, it costs a factor of 1 in time, effort and budget to retain a regular customer and exploit his potential. The Akquise of a fresh mandate hits against it at least around the sevenfold to beech. The number 3 refers to customers for whom one was active so far only as a secondary supplier, then however it for a more extensive co-operation to win can. Most marketing professionals, especially from the online business, have the relevant knowledge about the price and value of new and existing customers. Nonetheless, most of the investments - around 9.7 billion euros in 2018 - will still be made in online marketing and thus in acquiring new customers.

A few months ago, e-commerce expert Gerrit Heinemann from the eWeb Research Center at Niederrhein University of Applied Sciences predicted that 80 percent of marketing budgets would still be spent on acquiring fresh buyers. Between 50 and 100 euros would be spent by online merchants to acquire a customer. The investment only pays for itself when the relationship lasts longer. This is also confirmed by the study "ROI of marketing measures for existing online customers" by Adobe. The study comes to the unmistakable conclusion that 20 percent of existing customers in the online trade account for around 40 percent of sales. They order three times more per shop visit than first-time buyers and are easier to activate for subsequent purchases.

Harpoon vs. shotgun - why customer loyalty marketing is becoming more important

The isolated focus on winning new customers and the inadequate focus on existing customers is becoming a problem for industry, service providers and agencies in view of market conditions. Nevertheless, so far only about one in three German companies uses targeted customer marketing, among other things to improve relationships with customers and to further increase loyalty. This is surprising inasmuch as more frequency and larger and more valuable shopping baskets generally ensure higher added value. In addition to greater planning security, communication strategies can be more targeted, more relevant and thus more valuable on the basis of existing data. Customer satisfaction leads to credible recommendations, especially via social media and in real social environments - an essential success factor in saturated markets. Customer orientation creates customer loyalty - above all through cooperation in new service dimensions, the comparison of products and services and service excellence.

Online marketing via digital media and platforms is becoming more and more important for the advertising industry due to the media usage behavior and provides considerable advantages compared to traditional media, as the advertising media can be adapted to corporate or communication needs within a very short time and with significantly less effort.

Concentration on new customers is made considerably more difficult under data protection law beyond the "Walled Gardens

Basically, it is a truism: companies will grow most effectively if they retain existing customers, expand and gain new customers. That's why these operational goals should always be in balance - also from a financial point of view. Nevertheless, many do not act according to this logic.

Since the DSGVO, the latest ruling of the European Court of Justice and in all probability in the context of the implementation of planned ePrivacy regulations, addressing existing customers has been and remains less complicated under data protection law and benefits from the customer confidence that has already been built up. So there is much to be said for at least a proportional, if not a disproportionate, concentration on customer relationship management. By processing cookie and existing customer data together, all marketing measures can be made more targeted and efficient; CRM customer data should be used for even more precise segmentation. Even small data analysis projects can lead to success and growth rates. A Telekom study from 2017 showed (Digitalization Index for SMEs) that even small data and digitization projects led to revenue increases for 35 percent of the companies surveyed. 45 percent of the companies were able to noticeably increase customer satisfaction and half of the respondents stated that their internal processes had been simplified thanks to the use of data driven marketing.

In summary, it can be said that Sustainable growth is important - also for the customer base. Too much focus on acquiring new customers and too little on existing customers limits this growth and is economically challenging. Sustainable results can only be achieved if CRM knows what online marketing has "done" so far. The isolated market cultivation in each case often results in the loss of synergies that could now be technically implemented. 

Those who focus exclusively on acquiring new customers lose existing customers because they do not feel valued or because they do not become so. And of course the reverse is true. It therefore makes economic sense and is indispensable to rethink silos and let online marketing and CRM work together so that new customer acquisition and existing customer management can grow together in the long term.