Customer Retention Is the New Acquisition

Engaged customers are the best source of new customers. Companies should adjust their marketing accordingly.

"There's something inherently out of whack with the traditional marketing funnel," Joseph Jaffe writes in Flip the Funnel: How to Use Existing Customers to Gain New Ones. "There are better ways to optimize it."

In this excerpt from Flip the Funnel, Jaffe provides an overview of one possible solution: flipping the funnel completely.

Why not turn the funnel on its head? Instead of ending with your customers, why not begin with your lifeblood, the single biggest-if not the only-reason you're in business today? We need not abandon the customer acquisition process or minimize the role that awareness and/or action play in terms of moving prospective customers from unawareness to paying customers. The same could be said for my championing of new media over old, or conversation over communication-one does not necessarily replace its predecessor or counterpart. However, it does bring with it new and differentiating thinking. From the standpoint of investing in both human and financial resources, it also reprioritizes strategic thinking and mind-share from an otherwise saturated space to one that essentially represents virgin territory in terms of upside, potential, and impact. It's also an acknowledgment that the proposed space in question is significantly evolved:

  • The sharp and clinical scalpel of digital trumps the blunt hatchet of advertising.
  • The fluid and pervasive conversation washes away the unidirectional current of communication.
  • The meaningful and long-lasting commitment of retention deeply resonates over the superficial and materialistic attraction of acquisition.

I am saying that there is a better way. There just has to be. And if we're able to elevate retention (customer service, dialogue, and customer outreach or affiliate 2.0) to the point at which it becomes a strategic imperative at the expense of the traditional acquisition efforts from an optimization and budget allocation standpointthen maybe, just maybe, we'll be able to change the way we do business for the better. Forever.

On one hand, this represents starting with your customers, and if there's time, effort, energy, and budget remaining, hop on over to the pool of uninitiated prospects. On the other, it speaks to repairing the holes in the net to assure that you'll enjoy more fruitful results the next time you go fishing.

There should always be room for both acquisition and retention. Why can't the respective potentials of both be achieved simultaneously? Why does it have be a zero-sum game? Or what about the really radical thought that we might never NEED to invest in acquisition again if we're able to deliver effectively on retention?

When I was Down Under in Australia-the perfect place to be flipping anything on its head-I proposed this thought to one of the nation's largest banks when they told me that they ''didn't really need'' any new customers (they had enough). What if you announced that you would not be taking new customer accounts or applications (at least for a period of time)? What message would that send to your existing customer base -- and to those who weren't yet part of your family in terms of aspiration, motivation, and desire? Would it make them want you more or less?

Radical thinking aside, any changes you make to your existing methodology and process-however small-will have major organizational implications when it comes to budget allocation, prioritization of objectives, time, and initiatives. That doesn't mean it's not worth doing-on the contrary. But your decision will ultimately depend on the company's tolerance for risk (usually low) and its fervent belief in the power of its customer base-in terms of both staying and buying power. Regardless of whether you flip the funnel on its head in one decisive motion or experiment with tilting it just a few degrees, I hope you'll acknowledge that the hypothesis on offer is a shift of the very foundation of marketing management as it relates to consumer behavior. At the very least, it's an enhancement on existing theory and best practices; at the most, a complete and utter rethink.

Ultimately, where it fits and how far you take it is up to you, but I hope you'll give this serious thought in terms of making permanent changes that permeate your organization. Of course, I believe that this could be the X factor for which you've been searching so hard. It certainly is not going to come from a new advertising campaign or manifest itself in an obtuse new website, either.

+ + + + + + +

About the Author: Joseph Jaffe is president of Crayon and author of Life After the 30-Second Spot.

Reprinted by permission of the publisher, John Wiley & Sons, Inc., from Flip the Funnel, by Joseph Jaffe. Copyright 2010 by Joseph Jaffe.