The Lengths to Retain

In this week’s class, we touched on how a company spends more to acquire new customers than to retain current ones.  In fact, information management provider Attivo states that it costs 5x the amount to attract a new customer than retain a current one.  If you need more proof, according to Gartner Group, 80% of most company’s future revenues comes from 20% of existing customers. Both of these statistics highlight just how important retention is to a business’ bottom line. 

The first thing I thought after learning these facts about retention, was whether or not all these stats were still true.  They’re not that old, but with the changing economy and job market, I immediately thought it likely that people are now most concerned with chasing a deal.  In fact, this Forbes articles asks ‘is brand loyalty dying a slow and painful death?’ 

I’m not sure brand loyalty is completely dead, but I do think that retailers have started and will continue to woo their targets with more and more free special treatment and have to reset their expectations.  A few retailers I think are doing this specifically well right now include Zappos and Bloomingdales.  

Both companies offer free shipping, impeccable customer service and other special offers for their most loyal members.  In fact, as a Bloomingdale’s loyalist, I will always check there first when I need an outfit for a special occasion.  While in the past shoppers might have ONLY gone to one store, maybe now going to a certain store first will have to be the best most companies can expect.