Managing Customer Relationships in Uncertain Times 5 of 13

Option 3: Increase focus on customer loyalty and retention programs

Over the years, much has been written about building customer-centered companies. There is an old saying: “When all is said and done, more is said than done.” This has certainly been true in customer relationship management. There have been many studies on the relative costs of customer acquisition versus customer retention. The most famous of these was done by the Harvard Business Review, which showed that the cost of acquiring a new customer was six to seven times greater than retaining them. Other analyses put the cost ratio at between three and twenty times.

In the current business climate, the cost of customer acquisition is likely to increase. Each existing customer relationship is sacred, since attracting new customers may become more difficult. Investments in loyalty and retention programs should increase as a percentage of overall spending. This is particularly true in customer analytics. We anticipate that there will be a significant increase in initiatives that enable companies to better understand and anticipate the business needs of their customers in order to maximize the value they provide to them.