By M. Isi Eromosele

Marketing thinking is shifting from aiming to maximize a company’s profit from each transaction to maximizing the profit from each customer relationship. Marketing’s future now lies in personalized marketing, where acquired information is utilized to make timely offers customized and personalized to each customer. Instead of seeing a customer in every individual, companies will encounter every individual in every customer.

Of course, all customers are important. However, some are more important than others. There are the high value customers. Customers can be divided into financial categories: platinum | gold | silver | lead. Better customers should be given more benefits in order to retain them for the long term and to give other customers an incentive to migrate upward.

A company could also classify its customers in another way. The first group will consist of the Most Profitable Customers, who deserve the most attention. The second group is the Most Emerging Customers, who deserve the most long-term attention. The third group will be the Most Vulnerable Customers, who require early intervention to forestall their leaving.

Not all customers should be retained. If customers are unprofitable or profits are too low to covers their cost to the company, an attempt should be made to make them profitable.

Be conversant to customer complaints. Do not underestimate the power of a very angry customer and their ability to damage your company’s reputation. Reputations are hard to build and easy to destroy.

Customers who complain could be your company’s best friends. Their complaints would alert your company to problems that you are probably unaware of which are causing you to lose customers. This gives you the opportunity to fix them.

Market share is a backward looking metric. Customer satisfaction is a forward looking metric. If customer satisfaction starts to fall, a company’s market share will soon follow. Companies need to constantly improve the level of customer satisfaction. The higher the customer satisfaction is, the higher the retention rate. The following are four facts that support the above:

• The acquisition of new customers can cost as much as 10 times more that it would cost to retain a present customer
• Companies lose an average of 25 per cent of their customers every year
• A customer defection reduction rate of 5 per cent can increase a company’s profit by 30 to 80 per cent
• The customer profit rate increases over the life cycle of a retained satisfied customer

Customer satisfaction is a necessary but insufficient goal. It is a weak predictor of customer retention in highly competitive markets. Companies need to focus on customer retention. At the ultimate level, a company needs to aim for a high level of customer loyalty. As such, the company should aim to delight customers, not simply satisfy them. Strive to exceed customer expectations and you will reap a multitude of benefits.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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