Acquiring new clients or customers is five times more expensive than retaining existing ones and the average company loses more than 10 percent of its customers each year. It seems a no brainer then that any business today—at least any that wants to stay in business—would be focused on keeping the clients it already has.

Client retention is an interesting concept. Most businesses talk about it and want to be proactive in improving the customer experience and satisfaction.  But caring for, developing and re-engaging clients to maintain revenue growth seems to be easier said than done.

My colleague, Beth Fischer of The TCI Group and I have been following recent studies that shed new insight into retaining and improving the business-client relationship. One that caught our attention was recently conducted by the Chief Marketing Officer (CMO) Council.  With all that is available to us regarding client relationship management (CRM), the CMO Council sought out to understand why retention remains an elusive goal for companies worldwide and why we still don’t understand how to fully utilize the customer knowledge base at our disposal.

What they found is alarming. Only 6 percent of marketers say they have excellent knowledge of the client when it comes to demographic, behavioral, psychographic and transactional data. Fifty-one (51) percent say they have fair to little knowledge of the client.

Did you catch those statistics? From the 450 marketing executives surveyed worldwide and from detailed one-on-one interviews with CMOs representing 19 leading international brands, over half “have a significant lack of knowledge” about who their existing clients are.

Further, to improve customer retention 65 percent of those surveyed indicated they are improving customer communications, 54 percent are enhancing the customer experience, and 51 percent are addressing complaints and problems.

Obviously, there are companies from this study who are blindly implementing initiatives to retain customers. The May 5, 2008 issue of B-to-B addressed the study in an article by Kate Maddox. According to the executive director of the CMO Council, Donovan Neale-May, companies are “spending money on demand-generation programs but they are not taking their existing customer data and leveraging it.”

What are you doing right to retain clients? Do you know your existing client profiles? Could you identify your best customers as well as those who cost you money?

Let me know what you think.

In our corner of the world, some of the biggest news would lead one to believe we’re headed for a recession. Delta and Northwest have merged. Metro Transit reported its highest ridership in decades. Minnesota's unemployment rate grew to 4.7% in March. Parker Hughes Cancer Center is filing bankruptcy. St. Paul-based insurance company Travelers is laying people off. Piper Jaffray reported a first quarter loss due to slow underwriting, and US Bancorp earnings dipped due to the fallout from the mortgage market collapse. 

If you’re in business, you’ve probably already looked at your budget and been considering what to cut back. Many businesses reduce or eliminate marketing from their budgets when times are tough. But smart businesses know the value of marketing during bad times as well as good.  

Some very successful innovations have been launched and marketed during a recession. We all know of the following products and services, but we rarely remember when they were introduced to the marketplace: 

  ·      During the Great Depression, Procter & Gamble Company ushered in the concept of brand management and in 1933 the company launched the first national radio soap opera and its first synthetic detergent brand, Dreft.

·         Home Depot opened its first stores in 1979 and continued to expand its concept as the 1980-1982 recession set in. In 1981 the company went public and by 1989 had built 100 stores.

·         Ted Turner founded CNN in 1980 and MTV launched a year later. Both networks were poised to reshape media by the time the economy rebounded. In 1981, Lee Iacocca turned around Chrysler through the launch of fuel-efficient K-Cars.

·         Just after September 11, 2001, Steve Jobs unveiled the first iPod. Taking risks and moving forward with marketing have had great payoffs for these companies.  

I’ll admit that not every business is comfortable taking risks when the economy is shaky. But I’d also encourage the business that wants to be ahead of the competition on the other side of a recession, to 1) keep marketing in the budget and 2) focus on marketing that can be measured.  

What to Keep in Your Marketing Budget 

Public Relations - Public relations is one of the most cost-effective tools available in a marketers toolkit. Anything that is newsworthy is likely to be picked up by the media—local and national business outlets, trade industry magazines, professional association newsletters—and will cost you nearly nothing. Plus, the coverage will be great third-party credibility for your product or service. 

Loyalty Programs – Reach out to your existing customers with a loyalty program. Why? Loyalty programs imply that the customer will save money. It isn’t enough to simply have a loyalty program or to hand out a reward for the customer’s purchases. A loyalty program must have real value to your customers. You can start by making it easy to do business with you.  

Offer Discounts and Coupons – New customers come from somewhere; usually from your competitors. In a recession, people don’t want to pay more. Offer discounts to get them in the door. 

Market Research – To implement the best loyalty program and choose the best pricing strategy, you will want to budget for market research. This will help you nail two important bits of information: 1) what your best clients want and 2) what your competition is up to. I have one client who is positioning her business based on a growing customer trend and a void in her industry’s ability to meet their needs. 

Website Maintenance and Search Advertising – The Internet is fast replacing print and broadcast advertising. According to the New York Times, Pepsi-Cola North America is using the Internet to launch its latest beverage, Tava. Their target audience is 35- to 49-year olds. Your website is a perfect vehicle to implement a loyalty or discount program. In fact it is preferable because it allows prospects and existing customers to see all that your business has to offer. 

ALL of the suggestions above are measurable.  

Don’t trash your marketing efforts during a recession, rather be smart with what you do. You’ll be grateful when the recession is over and your business hasn’t lost any ground in being competitive.

Mike Schrock

I recently attended the memorial service of a friend who was struck and killed by a car. Mike Schrock was a father, husband, son, friend, volunteer and architect. And though I hadn’t seen him in a number of years, he was someone who had always made living and caring seem easy. The many stories shared about him at the memorial service showed how often he had touched people with his humor, his caring, his being. 

Mike was an individual with a clear purpose for living and he had 7 Rules of Architecture that were important in his life and in his work as an architect. I found a common thread in Mike's rules that can be applied to marketing a business. It is so easy to get lost in the tactics and gimmicks of marketing that we sometimes forget "why" we're marketing in the first place. Mike's 7 Rules offered me a new perspective--or perhaps reminded me of what's important--about marketing's role in business today.  

Below are his rules along with my thoughts on how they relate to marketing.

Mike Schrock's 7 Rules of Architecture 

1. Know where you are from – Architecture is of the earth and should honor the earth.

2. Know who you are – For now we must obey gravity. When we learn to fly, we can create flying architecture.

3. Know why you are – Architecture is first and foremost the guardian of life safety.

4. Respect your benefactors - Without those who hire us, there would be no architecture. 

5. Honor the environment – Architecture must contribute to, never distract from, its surroundings.

6. Architecture must serve those who occupy it – Function trumps art.

7. There is beauty in functional, economical, safe, environmentally responsible, owner driven architecture.

How Mike's 7 Rules of Architecture Can Be Applied to Marketing

1. Know where you are from – Passion is the heart of our business; marketing is the tool that promotes it.  

2. Know who you are – Our uniqueness can be differentiated from our competition's.

3. Know why you are marketing - When marketing is a necessary function of our business, it's value--and our company's bottom line--increases.

4. Respect your benefactors – Without clients or the prospect of clients, we wouldn't be in business.

5. Honor the marketplace - Not everyone will want to buy our products or services, but we can’t be afraid of losing a client we don’t have yet.

6. Marketing must serve your clients and prospective clients – Our clients and prospects hold the "secret" to our success. Asking them what they value, how they buy, and what they want helps us understand how to serve them better.

7. At its core, marketing is about people. The heart of marketing is about building and maintaining relationships.

Thank you, Mike, for your insights. You are missed.