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Sell to Your Customers
Why market to people who aren't interested?
The cost of acquiring new customers is far greater than the cost of retaining current ones. So why do some companies put nearly all of their marketing efforts into trying to attract new customers, and almost none into retaining the ones they already have and selling them complementary products and services?
Turnover — "churn" — is a problem in any business, and gaining new customers is a must, but some companies put too much effort into marketing to people who are not interested in their product.
Newspapers are a good example. People can get their news online whenever they like, so newspaper readership is in decline. A few years ago, one major-market newspaper conducted a series of focus groups and identified young females who didn't read a daily newspaper as their target. They initiated a marketing campaign focusing on the paper's "utility," which they defined as its value as a resource for making choices about shopping, entertainment, and other diversions. The function of the newspaper as a source of actual news was a distant second in the campaign.
They ran TV and radio spots, but it was hardly a saturation effort. The result: Circulation actually went down.
But if they had, instead, focused on the real reasons that people use their product — to stay informed or follow favorite sports teams; because it's a nice way to start the day or a good tool to acclimate to a new city — they might have had a chance. They would have been playing to their strengths. But to pursue people who didn't give a rat's ass about the things that a newspaper actually provides was a losing strategy.
If your product is failing in the marketplace, try to fix it. And while you are doing that, make sure you hold on to your current customers. Duh!
Turnover — "churn" — is a problem in any business, and gaining new customers is a must, but some companies put too much effort into marketing to people who are not interested in their product.
Newspapers are a good example. People can get their news online whenever they like, so newspaper readership is in decline. A few years ago, one major-market newspaper conducted a series of focus groups and identified young females who didn't read a daily newspaper as their target. They initiated a marketing campaign focusing on the paper's "utility," which they defined as its value as a resource for making choices about shopping, entertainment, and other diversions. The function of the newspaper as a source of actual news was a distant second in the campaign.
They ran TV and radio spots, but it was hardly a saturation effort. The result: Circulation actually went down.
But if they had, instead, focused on the real reasons that people use their product — to stay informed or follow favorite sports teams; because it's a nice way to start the day or a good tool to acclimate to a new city — they might have had a chance. They would have been playing to their strengths. But to pursue people who didn't give a rat's ass about the things that a newspaper actually provides was a losing strategy.
If your product is failing in the marketplace, try to fix it. And while you are doing that, make sure you hold on to your current customers. Duh!
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