Page 100 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Unit 4: Customer Retention, Acquisition and Expectation

pursue as prospects and retain as customers. Your CRM solution should provide you with the Notes
tools and flexibility to support that quest on an ongoing basis.
Intelligent analysis of data can indicate whether a company’s activities are in line with its goals
for customer acquisition and retention. It can be crucial to both the speed and the quality of the
company’s response, and it can influence the future direction of your product and service offerings.

Most importantly, a well-developed data strategy and its effective use in concert with your CRM
system will allow you to be selective in the types of customers with whom you choose to deal.

Common Mistakes in Customer Acquisition Strategies

Understanding these common mistakes is an important step toward overcoming them and
toward developing effective customer acquisition programs.
1. Confusion Regarding New Customer: Marketing professionals have long recognized the
semantic confusion over the concept of “new.” The question is what is a ‘new’ customer?
The most frequent answer is that a new customer is someone new to the community.
Individuals just moving into the community are important to the business, and most
retailers would like to capture as many of these new customers as possible. However,
“new to the community” constitutes a narrow definition that leads many retailers to
mistakenly underestimate the opportunity to attract new customers.
Demographic information about many communities suggests that the number of new
households or individuals moving into markets is small. In some markets, the
demographics may suggest that the community is losing population. With such
information, it is easy for marketers to conclude that the opportunity a ”new customer
acquisition” strategy provides is small at best.
A substantially broader definition of new is new customer for the business. Effective new
customer acquisition programs recognize the importance of capturing new relationships
among individuals and households already in the market who need some type of new
product and are not currently customers of the company. It is important to capture a major
share of customers, “new to the community” as well as the “new accounts of existing
residents” who are not currently customers.
2. Targeting Promotional Messages Poorly: Often, retailers that pursue an active customer
acquisition strategy tend to have a marketing strategy so broad that it produces little
success. These broad customer acquisition programs tend to use newspapers as their
primary marketing medium. In some markets, newspaper advertising efforts are supported
by television or radio advertising.
In reality, the best opportunities to attract new customers are directly associated with
their geographic proximity. The closer the customer is to a business establishment, the
more likely it is that the marketers can turn that non-customer into a new customer.

The best medium to deliver promotional messages to a clearly identifiable set of customers
or prospective new customers is direct mail. However, many marketers refuse to consider
direct mail seriously because they continue to associate it with “junk mail.”
But direct mail provides a cost-effective, highly targeted way to get promotional messages
to specific groups at a desired frequency. It avoids the substantial waste of broader
promotional media, including newspapers.
3. Paying Inadequate Attention to New Customer Products: The new customer promotional
programs of many businesses tend to focus on one product. This approach fails to recognize

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