Business model renewal, creativity, strategy, futurism and product management.
Strategic Market-Based Planning (PDF)
Designing & Managing Marketing Research Projects (PDF)
Marketing Management: Guiding the Market-Focused Oranization (PDF)
Connecting with Customers
B2B and Considered-Purchase Marketing
Branding survey highlights
Succession Planning Your Brand
Build a Pricing Toolkit (PDF)
Pricing and price-volume change formula (PDF)
Opportunity audit questions
Marketing Your Station (PDF)
Connecting with Customers
©Linda Gorchels (2008)

Imagine doing a warehouse audit for your company and discovering that 15% of your products are missing. What would you do? Most likely you’d launch an investigative study to determine what happened.   Why don’t companies to the same when they lose customers?   What steps should YOU take to connect with customers, both current and prospective – as well as re-connect with lost customers?

Let’s start with a quick quiz. Respond to the following statements before jumping ahead to the answers.

T F      1. Your top customers should be your largest customers.

T F      2. The customer is always right.

T F      3. Customer loyalty results from customer satisfaction.

T F      4. It’s wise to develop separate strategies for acquiring new customers and retaining existing customers.


T F      5. You should plan carefully to be in charge of your company’s future.


Let’s see how well you did. “Your top customers should be your largest customers.” This statement is false. Although large customers might be A-customers, it’s not always the case. Your top customers should be your highest-equity customers. Many companies have key account programs, but the selection of these accounts is often based on size rather than strategic importance. Typically, high-equity customers are those whose needs fit your capabilities, who can grow with you, and who you can honestly define as strategically important. Revenue and profit are just two factors to consider in this evaluation. Your strategy with these types of customers is to increase share of wallet, extend the length of their relationship with you, and/or avoid losing their business to the competition. To increase share of wallet, look for cross-sell and bundling opportunities. To extend the length of their relationship with you, explore time-based (cumulative) reward offerings. To avoid losing them to the competition, demonstrate appreciation for their business.  

“The customer is always right.” This statement is true only if you are listening to the appropriate customers. In other words, the customer is always right IF it’s the right customer. Identifying high-equity customers (as discussed previously) helps in this task. Consider what the target (high-equity) customers want in terms of products, services, advice, price points and buying factors and build those into your strategies. Focusing on the right customers will help you use your resources more effectively (with less waste), and increase customer profitability. But you may also need to say no to the wrong customers. All companies have customers who demand special services (with no additional revenue generated), who demand “rock-bottom” prices for everything, or who require changing the basic product or service to fit their unique needs. When this is the case for non-target customers, there are only a few options available: raise the price, reduce the cost of servicing the customer, or discontinue doing business with the customer. 

“Customer loyalty results from customer satisfaction.” False. Although customer satisfaction is a necessary prerequisite to customer loyalty, it is insufficient in and of itself. How strong are your competitors and how easy is it for customers to switch to the competition? Sometimes customers seem to be loyal because it is currently too hard or inconvenient for them to switch to competitors. Once the switching costs (monetary and non-monetary) are reduced, turnover begins. Frederick Reichheld, in his December 2003 Harvard Business Review article, argued that perhaps the best question to determine loyalty is to ask customers if they would recommend you to their friends and colleagues. Customers who are willing to promote your company or its products become “sales ambassadors” for you. These are the truly “loyal” customers. 

“It’s wise to develop separate strategies for acquiring new customers and retaining existing customers.” This statement is true. Different customers require different marketing approaches. Customers who don’t know what you stand for have different information needs than those who are familiar with you. If you discover non-customers with needs and profiles similar to customers, ask yourself what is preventing them from buying from you, and work to make changes in those areas. You may need to establish new channels or expand media coverage to reach new prospects. And in addition to the acquisition and retention strategies implied here, you might also consider separate strategies to re-connect with lost customers. The first step in the process is to determine whether the lost customers are “high equity” as defined earlier. If so, determine why they left you, acknowledge their past patronage, and point out what you have done to re-earn their business.

“You should plan carefully to be in charge of your company’s future.” Another false. You should plan carefully, but realize that customers are in charge of your company’s future. Too often companies look into the rear-view mirror of historical data to anticipate probable tomorrows. How will your customers of today be different five or ten years from now? Is a generational divide, a shift in lifestyle preferences, or a different attitude toward certain technologies taking place? Not everything about the future is knowable, but there are clues out there if you are open to them. Identify catalysts to and predictors of change in your customer base and prepare for the impact of the changes.

Understanding and managing these customer connections is at the core of successful strategy and competitive differentiation. Identify and profile your high-equity customers and use the information to grow you business. Determine whether acquisition, retention, or re-connection strategies and tactics are most important and allocate resources accordingly. But don’t get so caught up with the present that you ignore the strategies necessary to be successful in the future



© Linda Gorchels 2011-2017
Linda Gorchels & BrainSnacksCafe homeBusiness Model RenewalCreativity & InnovationProduct ManagersProduct Development Channel ManagementMarketing Blog posts