Upside Down Marketing Keeps Customers on the Conveyor Belt

"Upside Down Marketing" Keeps Customers on the "Conveyor Belt"* (Marketing Memo, June, 2005)

Companies should devote more time selling to current and former customers than to seeking new customers, George Walther claims in Upside Down Marketing. The cost of winning a new customer is four to ten times the cost of salvaging an existing customer. Complainers are twice as likely to buy again as non-complaining, but dissatisfied, customers. If you resolve complainer's problems, they are six times as likely to buy again. If you resolve their problems quickly and professionally, they are nine times as likely to buy again, according to studies from TARP.*

All customer-facing employees should help keep "wavering" customers on the "conveyor belt." Walther writes about the CEO of an industrial products company who values preserving relationships with "wavering" or lapsed customers. To the CEO, lapsed customers are a source of trend information. He finds that converting dissatisfied customers decreases negative publicity.

TAKE ADVANTAGE OF COMPLAINERS

Calculate the lifetime value of your customers, and focus on the most promising. The "biggest untapped profits" can come from former customers, who often leave without complaining. American Express called customers who had cancelled their American Express cards and succeeded in regaining 16% of these customers. "Satisfied complainers" sometimes become exceptionally loyal, TARP reports.
"Treat complainers as valued researchers." Use the "Three Ps" to win them back: Be "persistent," "professional," and "personal."
Be on the alert for early warning signs of troubled customers. Late payment or non-payment may mean that you need to resell customers on your value proposition. Contact customers before they leave.
Eliminate negative or judgmental words from the "accounts receivable vocabulary," and train your bill collectors to help get the customer back on the conveyor belt.

"MARKET BY CALLING CUSTOMERS"

Query customers and former customers about their needs and wants. "You can only fix what you know about," observes Walther.
Listen for good ideas. Train all employees to listen and probe when they talk to customers.
Ask how you can improve, not if you can improve. Proactively call customers, and provide 24 x 7 feedback systems that encourage customers to give positive and negative feedback.

* George Walther, Upside Down Marketing, McGraw-Hill, Inc., 1994.

Winett Associates can help you keep customers by obtaining customer feedback.