Out of the Box

Holding on to a Precious Customer

By Menachem Lubinsky on June 29 2009

Natalie was hired six months ago as a saleslady in a fashionable Los Angeles dress shop. In addition to her expected duties to help customers and hopefully conclude a sale, she was given a very specific assignment. If the customer was new, she should to the extent possible, serve this customer “hand and foot.” Her boss put it plainly: “Your job is to make sure the customer comes back again and again.”

Natalie would routinely make light conversation with the newcomer and gain a better understanding of who they are. It worked well the other way around as well as the customer had the feeling that the store was bent on offering exceptional service.

Natalie’s bosses say that they built their business not only on courting new customers but also on “hooking customers for good. “This kind of loyalty to the store can make the difference between success and mediocrity. Once a week, Natalie goes over her customer list and calls those that she has not seen in three months. Her success rate in bringing customers into the store within a week or so is a remarkable 25%.

Holding on to a customer is a marketing challenge many businesses simply neglect. The excuses are many, most notably that they are too busy to do what Natalie routinely does. There are oft times that people may visit a store to browse or perhaps to keep out of the rain. If someone at the store were consciously watching the traffic, they could presumably win over many new customers.

Even a recession is a good time to practice this policy. Walmart, for example, recognizes that it has picked up many new customers who are there to save money in this deepening recession. The $401 billion company is actively working to keep these customers even after the recession. Their new slogan of “Save money. Live better” is designed to make customers feel comfortable with the store in all circumstances. Who after all does not want to live better?

Walmart, not known as a big advertising spender, is actually spending money these days and winning over customers who are grateful to the giant for helping them through the tough times. Said Walmart’s Chief Marketing Officer Stephen Quinn: “I’m proud of the story here, because I think it’s showing how marketing is making a really big difference to a company that maybe didn’t take it as seriously as they do today.” He added: “I think marketing is at the forefront of championing the customer internally and doing something about it.”

Too many businesses have an almost cavalier-like attitude when it comes to their customers. They have the sense that there is plenty of business out there and customers are easily replaceable, but the evidence particularly in a down economy, is the opposite. Those that covet each and every customer are having an easier time weathering the storm.

Through loyalty cards and other affinity programs, retailers routinely track some of their best customers. In today’s technologically advanced business environment, it is possible to track a customer’s buying history and to contact a customer with custom-made messages.

Too often businesses do not invest into programs to win over new customers and to keep old ones. This is not just about service, which contributes to overall positioning of a store. This is a specific marketing program that puts a face to the customer. Natalie knows that her job is to get to know the customer and to make sure that the customer remains loyal to the store.

At every opportunity I have, I try to remind businesses just how important it is to keep their current customers happy. It is so much easier to cater to existing customers who know the business than to start from scratch with new customers. I believe that the investment in a person like Natalie is not only well worth the money but that it can bring back returns many times the salary and commissions that she is being paid.

Publications are a prime example of a business that fight mightily to keep their customers. An expired subscription to a publication is a signal of a possible lost opportunity. It is infinitely harder to sign up a new subscriber than to keep an old one, even though the new subscriber may have come on board because of a price promotion. The objective is to keep the subscriber in the first place.

Many businesses define a customer as someone with whom they do repeat business, as opposed to an occasional shopper. Such a shopper might even get the cold shoulder because they are “not a regular.” The correct approach should be to view the occasional shopper as a “new opportunity.” It is important to think of such a walk-in (if it is a retail establishment) as a potentially loyal customer and the welcome accorded should be consistent with such an opportunity.

Walmart is doing just that. They have suddenly found themselves in a position where they have many walk-ins, far more than they normally do. The challenge for them as would be for every business is to convert these walk-ins into loyal customers. They know that all these customers may be there to save money in hard times, but if it becomes habit-forming, their loyalty can outlive the recession.

A good loyal customer is a priceless commodity.

Out of the Box is a collection of strategic marketing articles that Lubicom has published on various topics, trends and ideas in the marketing world. The articles have been published in the Hamodia weekly newspaper circulated on three continents to a readership of well over 100,000.

The name, "Out of the Box" is a term used frequently in business nowadays to describe creative thinking that is not the norm. It is meant to help a business pull away from the pack or separate oneself from the competition. It is to some extent fraught with risk, simply because it is not the run of the mill thinking, but it is at the same time the key to reaching the next opportunity.