Many a time I hear managers talking about how they want to explore new markets and bring in new customers.  It is often the case that they engage in these exercises because their current customer base will not be as profitable as they would want it to be as it will have a low customer lifetime value.  It is very tempting to engage in expensive activities like advertising campaigns in the bid to attract new customers.  However, it is better to make more money from the customers that you already have by increasing their customer lifetime value.  It is common knowledge that it is cheaper to get business from your current customers than to attract new customers.  This is because your existing customers trust you, have used your products before and because purchasing your product has become more of a habit in addition to other advantages.  Let us talk more about this below.

Customer Service:  In many markets, especially emerging markets, providing good customer service is still seen as an option.  Evidence of this is seen in the average to poor customer service that we receive on a daily basis.  How many a time do you actually receive customer care that shocks you in terms of how good it is?  Excellent customer service will help you get a higher customer lifetime value as a better relationship will make them purchase more of your products, will make them more receptive to products that you launch and most of all will increase the barriers that they will face should they think of migrating to a competitor.  So go ahead, be nice!

Research:  Firms usually conduct research as part of a remedial exercise.  They want to conduct research when sales start dwindling or when the level of customer complaints gets too high.  The truth is research should be conducted consistently in a proactive manner.  This will help you to identify potential problems before they become problems, discover potential customer needs and wants so you can fill those gaps and it will help you to engage your customers on a more personal basis as you discover how your products impact their lives.  This will help you increase your customer lifetime value as they will feel like your partners in business making them more loyal to you.  They will probably spend more on products that they feel like they helped to develop.

Top Management Support: It is surprising that this is a tactic that is rarely used in African markets even though it has the potential to have a lot of impact given the fact that African consumers are not very demanding as compared to their western counterparts.  In many of the big African firms even the employees themselves do not get to see their own bosses.  The effect is that a rift develops between the customers and the firms as the customers do not feel valued.  Business becomes a formality as opposed to being a relationship.  The effect is the same in that it will be more expensive to either retain the customers or to offer them new products.  Increase customer lifetime value by doing the exact opposite.  Top management should meet up with customers and talk with customers for the simple reason of making them feel more valued in addition to gaining insights on their perception of the firm.

Loyalty Benefits:  Customers who have been with you for a long time deserve to be recognised as they are probably the reason why your firm exists.  Various options are available ranging from loyalty programs to prestige lounges.  It all depends on the resources that you have at hand.  You should however be careful in terms of how you execute this strategy as it can do more harm than good.  For example if you implement a loyalty points program in which the points accumulate very slowly in relation to the value of a customer’s transactions the customer will see it as a scam.  I would opt for a situation where you surprise a customer from time to time with a free gift or product as opposed to them going after a certain target.  Programs such as this, if implemented correctly, will ensure that you get more from your current customers as they will remain loyal to you and will spend more.

Product/service strategies:  In African markets it is surprising that firms employ as ‘plug and play’ approach in terms of their product strategies.  A product is launched and is left to the mercy of the market.  In most cases there are no deliberate strategies that are in place to ensure that products survive or reach their targets.  Most of the times there is no deliberate scientific exercise that is being carried out for the product in the background.  This will make it difficult to get more from the customers as they are not satisfied with the products most of the time.  Get more from your customers by doing the opposite and ensuring that they will spend more now and in the future.  Always know about the product’s lifecycle, performance and the perception that the customers have of the product at all times.

As they say charity begins at home.  Make sure that your current customers are as happy with your products as they can be.  This will not only increase your Share of Pocket in their minds and bank accounts but it will also help you to acquire more customers at a lower cost as you will get referrals from your customers.  As they say, word of mouth is the most powerful tool as far as customer acquisition is concerned.

Cheers

RM