The Dilemma: Attracting New Customers vs Retaining - and Rewarding - Current Customers

Once again it happened. One of those moments where you are customer and suddenly you feel that you are not being treated the way you would like. We're not talking basic customer service here - we're talking about that constant dilemma: can a company make a special offer to new customers without upsetting current customers.

Here's what happened. I got an email advertisement from a company I have made previous purchases from (they sell logo clothing and promotional items). I liked the price, I liked the item and I clicked through to purchase. Just the way the email was supposed to work, right? Don't you wish it was always this easy? The offer was so attractive to me because there was only a small minimum, and there was no set up fee for the logo.

I clicked to buy and there in my shopping cart was an additional $100 charge for logo setup! Wait a minute... Didn't I see the words "no set up fee?" I picked up the phone and called (it's already going down hill at this point, I am a click and buy girl; now it getting to be time consuming). "Oh yes" the young woman one the phone told me, "We do offer a low minimum, no set up fee offer. But it is only for new customers."

Only for new customers? So, in other words, new customers get a better deal that long standing repeat customers? Guess how that made me feel! I said, "Well, this is a new customer, with a new logo. It just happens that I am the one ordering." (All true). In that case I was told, I would need to set up another new account with a separate email address and then I could go back and repeat the entire ordering process. In the end, I did make the purchase, but I was less than thrilled with the company or the process; in the end I got the items at the price offered; however paid a price in time and additional effort. I doubt that was the company's goal.

Now don't get me wrong - I understand the other side as well. Here you are - a good business, but one that needs new customers as well as regulars - to survive, let alone make money. It is a tough time right now - sales are hard to come by. You need to do something to attract these new customers. Why not try a "special offer?" Something enticing - maybe take less profit - or even none - just to get them in the door. Then you'll wow them with your product and service and they too will become regular customers! It's perfect. Until your regulars hear about it.

They say it takes $10 of new business to replace $10 of lost business. So what is your answer? I believe the wineries have a pretty good model with wine clubs - it is often the benefits or rewards that are part of the allure of joining. "Wine Club Only" event invites, the deepest discounts. Is this an example we can carry into other industries? Hotels often have "frequent traveler" pricing, however it is also often possible to beat the pricing with some of the "discount" booking sites. Are any restaurants making a model like this work?

I'd like to hear from you! What have been your experiences - either good or bad? Let me know! I'll share what I hear. Email me at margie@otlconsulting.com

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Comment by Margie Tosch on January 14, 2009 at 4:04pm
Great example of exactly what I am talking about!

Non-Operator
Comment by Keith Bernhardt on January 14, 2009 at 3:17pm
Margie,

I've always been a believer that retention was just as, if not more so, important than
recruiting or attracting new customers.

Here is an example : In college, I got to help in the admissions office. There was an announcement of a new scholarship program for incoming new students AND transfer 9regardless of rank, frosh, soph, jr, senior).

Well, some of us wondered about the current students. What was the incentive for us to return. ?The Admissions Director spoke to the President of the College, the Financial Aid Office, and maybe a memebr of the Board of Trustees. By the end of the week, a scholarship program was in place for returning students !

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