Retaining customers is important, especially for media companies, as the cost of acquiring new customers could be 6 to 7 times more than retaining existing ones. To keep them is to get them hooked to your content and service, as a superior experience always ensures high attachment rates. Not only fewer subscribers will leave you, you may even be able to win back the lost ones.
Winning new customers is a big investment. Getting them addicted to your service once you win them over ensures a stable, or even growing, customer base over time.
Know them to get them hooked
Knowing your customers’ preferences and behaviour is the foundation for a relationship that lasts. People have different media consumption patterns and you should cater to them all. For example, a common strategy in the music industry is to “hold” content on the provider’s platform, so that customers need to continue to subscribe in order to enjoy the music they love.
If media companies don’t truly understand their customers, they are not able to provide services that customers really want and enjoy. Examples of features that people really enjoy include the option to receive customised content based on specific interests, and the ability to incorporate their feedback in future services.
Four elements of addiction
People stay with their service providers for four reasons: content, contract, inertia and superior experience. The last element ensures high attachment rates. Customers get addicted to a media outlet when they find the experience superior to its competitors. The quality of the content, customised information, and timely engagement drive customers to addict to your service.
After customers are aware of you as one of the many media outlets, they first go through a phase when they feel indifferent about you. If the experience is good, they feel positively about your brand. Then they move on to a phase of needing you, before reaching the final phase of “can’t live without it”.
In order to get customers hooked, you need to move them at least to the stage where they really care about you. You also need to design an experience that takes into consideration their needs, desires and expectations.
Addicted customers don’t easily defect
Good services get people addicted to them. People judge a service provider by the quality of all their interactions with it. Knowing what happens during these interactions throughout the customer lifecycle helps media companies be proactive and minimise defection.
By investing more in perfecting actual experience and identifying addiction elements for different customer segments, media companies can be ensured a stable customer base over time. They should aim at creating an experience people won’t want to live without. Getting people addicted should become a priority over acquiring new customers.
It makes sense for start-ups or new entrants to spend heavily on customer acquisition. But if you are already in the industry, and you are facing increased competition, the best strategy is to focus on retaining customers and winning back the lost ones. Instead of allocating a certain portion of revenue to acquire new customers, organisations should step back and think where in the customer lifecycle they can get the most out of their investment. This can lead to a significant shift in budget from sales and marketing to operations and customer support.
Acquisition costs more than retention
Digital media companies tend to spend more on customer acquisition than retention. However, the cost of acquisition is usually six to seven times higher than that of retention, suggesting the latter has a higher profit margin. An effective retention strategy also means less investment is needed to recoup lost customers. Therefore, a right retention strategy, combined with a higher budget for operations, enhance user experience and ensure a bigger net customer base without increasing investment.
Acquiring new customers is expensive and time consuming. So, it is prudent to invest in services that get them hooked. A retention strategy built on the elements of addiction enables you to design an experience that customers are unwilling to leave you. When fewer people defect, you won’t need to invest much in winning new users.