April 2023 - 41

POHMER ON...
Keeping New Customers
But it's not just about the difficulty and challenges you
face in attracting new customers; an even bigger problem
is mitigating the customer churn of your existing customer
base, as we experienced in 2022. The reality is that retail
is a numbers game; you start off with a base of customers
and some leave the fold for a number of reasons. Some may
go down the street to Big Blue or Big Orange; some may
leave gardening and floriculture altogether; others may just
decrease their use of the products you sell. Unless you can
replace these defectors with new customers, it becomes a
zero-sum game for you, and there's no mathematical way
you can increase or sustain your business model.
From a profit standpoint, your existing customers are your
lifeblood, and your No. 1 goal is to do whatever is needed
to keep them happy. Trolling for new customers should
provide future growth opportunities to develop, and build
on, new potential. You're familiar with the fact that it is six
to 10 times more expensive to attract a new customer than
it is to maintain a current customer. And these existing
customers provide some significant benefits to you - they
are less sensitive to price than new customers who are
making their decision as to where to buy based primarily
on price value, and they are more likely to become brand
advocates for your business.
Yet too many of the owners and managers of locally
owned garden centers I've spoken with have told me that
they are putting a major emphasis on attracting new
customers through their marketing and advertising efforts.
When pressed to find out why they've chosen this path, they
almost universally stated that their existing customer base
was shrinking and they needed to replace their numbers
with new customers.
I understand the math and understand the sense of
urgency they have in taking this approach. But this begs the
question of why they are losing their existing customers. The
path they're taking, focusing on attracting new customers,
is going to put a serious hurt on their bottom lines based on
the higher customer acquisition costs for new customers.
Happy Customers Are Return Customers
While trying to understand this dilemma, I came across
a recent study conducted by Accenture, an international
consulting group, that studied the same concerns I
identified. Yes, the economy is still struggling and
consumers are more price/value conscious in making their
purchase decisions than pre-pandemic but, as I mentioned
earlier, happy existing customers are less price sensitive
and won't jump ship for a few pennies, so there's got to
be something more significant that's driving the existing
customer churn.
Here are a few key findings from the Accenture study:
* Roughly half of surveyed consumers who stopped
shopping at a given company did so because of poor
service.
* More than half of those defecting customers said that
they would have stayed loyal if they had been rewarded
(or at least felt appreciated) for their loyalty.
Customers strongly sense
that retailers are still
operating from a productcentric
point of view, not the
customer-centric position
retailers think they're
operating under.
* Nearly 70% would have stayed if a problem they had
was resolved in one store contact transaction.
Another study of both retailers and their customers by
RSR Research showed:
* 98% of retailers say that building relationships with
their existing customers is key to success in today's
challenging economic times. Unfortunately, only 39%
say they can confidently even identify who their best
customers are!
* Fewer than 40% of shoppers report that retailers know
enough about them to identify their needs and the
products they like to make offers that might be relevant
or, most telling, make offers based on what they actually
buy - not what a retailer might want to sell. Customers
strongly sense that retailers are still operating from a
product-centric point of view, not the customer-centric
position retailers think they're operating under.
Unfortunately, replacing these lost customers is
commonly treated as an inescapable cost of doing business,
a belief that is seriously detrimental to the bottom line.
While you can't control the impact that a sluggish economy
and the weather have on your business, you do control the
customer service and care, and the overall experience you
provide to your customers.
Superior Customer Care
And there's a positive side to providing great service, as
noted in the recent American Express Customer Service
Barometer Study:
* 66% of U.S. consumers would spend more if they
expected better service, with that group willing to pay
an average price premium of 13% to that end; and
* 75% of customers said that they had already spent
more with a company in response to superior service
provided. When people feel they have less time and
money to spare, superior service has an increasing effect
on deciding where they spend both.
Superior customer care isn't something that can be
dictated from the top down; it has to be incorporated
into a company's DNA and culture. It's something that
April 2023

Table of Contents for the Digital Edition of April 2023
