The 2020 Mid-Year Economic Update_long

ISA Speaker: Retention is the New Acquisition

Obsession with sales-driven acquisition is 'unhealthy'
Angela

The traditional acquisition model, an incremental and progressive system of turning “cold” prospects into customers, is losing some of its relevancy in today's market, according to Joe Jaffe. Jaffe, author of Flip the Funnel: How to Use Existing Customers to Gain New Ones, spoke at the Industrial Supply Association Product Show & Conference in San Diego.

“We have un unhealthy obsession with acquisition,” Jaffe says. Companies often focus most of their resources on acquiring new customers only to downgrade the importance of these new customers once they’re in the door.

This is a big mistake, he says, since for many companies, the vast majority of sales come from repeat customers. (Read more in Uncover Unexpected Cross-Selling Opportunities.) Repeat customers also have a unique ability to sell others on a company’s brand, an ability that has grown more prominent because of improving communication technologies.

Customers who have the greatest ability to act as brand ambassadors lie at the intersection of two categories, according to Jaffe. The first category is made up of the 20 percent of customers that he says can generate 80 percent or more of a company’s sales. The second category is made up of what Jaffe calls the influencers, those making the most noise in the social space of a company’s brand.

Companies are often already familiar with the 20-80 customers, but Jaffe says it is critical to identify those that fall into both groups in order to reward their brand activism and to amplify the good things they’re saying about your company. Sometimes all it takes to encourage and reward these customers is little things, like giving them a first look at a new line of products. Sometimes, he says, it’s as easy as saying “thank you.”

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