10 Aug Get Your Money For Nothin…
If you were to approach complete strangers and try to sell them $5 bills for $1 each, how well do you think that would go?
In his book, What to do When it’s Your Turn, best-selling author Seth Godin suggests trying to do just that. Of course, most people who have followed the advice have learned just how quickly a Lincoln can lose its value. Let’s be honest, if approached by a stranger to buy $5 for only $1, your instincts would be on high alert, too. Nobody in their right mind is going to offer you a five-to-one benefit without it being a scam.
The funny thing is, most established brands have the same offer available to them from within their own organization and they still choose to ignore it. No, it’s not magic, it’s retention, and when effectively managed it can work like buying money at a discount.
“Depending on which study you believe, and what industry you’re in, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one.” -Harvard Business Review
In other words, spending one dollar toward retention produces five times the ROI of dollars directed to acquisition.
But, even so, retention has a priority problem. This is likely because, historically, it’s been difficult for brands to know specifically which customers need the extra attention, and which are even worth going to the effort to retain. So, most simply keep all their eggs in acquisition’s basket.
Artificial Intelligence = Real Insight. Really.
However, now that we live in an age where computing is done in the clouds, and artificial intelligence is accessible to the masses, brands basically can buy a map showing where to find their treasure and how deep to dig.
If I handed you a list of customers disclosing who will be gone next week, what would you do with it? Would you throw it away? Would you call them? Would you call me?
Retention is often overlooked because the bargain it promises has been difficult to extract. Kind of like how oil shale used to be.
But now that insight at an individual level can be so easily gleaned, the real challenge is wrapping your team around the concept that acquisition is no longer the only vehicle for growth.
Proactive retention is where the smart money is waiting. And now that AI removes the barrier of knowing where to start, the wait is over.
Which means that too-good-to-be-true 5-1 ROI is yours for the taking.