Customer service is customer acquisition

The traditional way of seeing customer acquisition and customer retention as separate disciplines is an extremely dangerous way of running a modern business, because it traps you in a public lie.

So says Sandra Galer, Consulting Director for Merchants, South Africa's largest business process outsourcer. "If, for instance, you offer new customers free handsets but offer your existing customers nothing new, no reward for loyalty, you're sending a very clear message that your existing customers don't matter and that customer service is an empty promise.

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"Consumers get that. So, they will be as expedient as you are, by taking your handset now but moving on as soon as something better comes up with another provider.

"Not only are you being hypocritical about customer service, you're teaching consumers that their best option is disloyalty to their service providers. You're creating a market you don't want; a market in which you will have to keep increasing your marketing spend to attract increasingly disloyal customers.

"It's actually far more cost effective to spend a good portion of your marketing money on customer retention via great customer service. It may feel less glamorous and as though you are abandoning your branding efforts. But, every time you use customer service to prevent the loss of a customer, you have acquired that customer's willingness to do more business with you - and you have reinforced your brand. Cross or upselling the customer on additional products and services equates to the acquisition of a new customer.

"The cost and effort of building a long term relationship with your existing customers translate into sustainability for your business. You are building a market you can rely on."

Drive revenue differently

This approach to customer retention converts it from its traditional and often resented position as a cost centre into a revenue driver.

It does, however, require the organisation to behave differently - not only in terms of refocusing attention on what constitutes customer service but also in terms of allocating funds in more effective ways.

"Customers who are brand advocates are your cheapest marketing tool because they market you voluntarily," Galer says. "And your existing customers are your largest source of brand advocates. New customers will talk about your great discount or new handset while your existing customers will talk about their long term experience of your customer service. It's a much more convincing and credible conversation.

"So, it's worth diverting funds from your customer acquisition campaigns to customer retention activities. In effect, it's putting your money where your mouth is."

Today, great customer service comes down to personalising your relationship with each customer as an individual. To achieve this, you need to segment your customers not only to understand where they are, what they do, and which of your services they have but also to predict their future behaviour.

The ability to offer relevant products and services to customers at the time when they might be most disposed to purchase them comes down, therefore, to business intelligence and analytics capabilities.

Know the future

"Analytics is a game changer because it gives you the ability to get customers to adapt their behaviour," Galer says. "A customer who might not ordinarily buy additional vehicle insurance can be persuaded to take additional cover for their tyres by an sms from you showing that you know they are more at risk because they travel a great deal on back roads.

"Or if you are a car dealer and have installed a sensor that tells you when the car has hit a pothole, you can sms the owner you would not see between services to come in and have his tyres checked. While he's there, you can offer a special or simply reinforce your interest in him.

"The key is to offer the right thing for the right reasons. Sending all your customers information on your latest insurance deal simply doesn't work anymore. It's marketing money going to waste. It's far better to spend that money on the best analytics technology available."

Analytics highlights another significant benefit of focusing at least as much on providing great service to existing customers as on campaigning for new ones. You already have large amounts of information on existing customers, whereas it is going to take time and effort to gather the same level of detail on customers you haven't yet acquired.

As Galer says: "You're sitting on information assets that will enable you to target future strategies very accurately and to develop products and services your customers really want.

"It's the kind of information that enables you to offer your high value banking customers concierge services or lounge access at airports, building their loyalty through relevance to their lifestyle needs.

"The key, always, is to make your customer's lives easier.

"Most important of all, however, is to do the right thing. Take the time and trouble and spend the money necessary to acknowledge the value to your organisation of existing customers by finding out what they need from you and then providing that.

"In this digital time, none of this is difficult. You have the budget. It's sitting in your marketing campaigns. So, all you really need is a little executive focus on customer service."