Are New Customer Incentives Unjust?
Don’t you find it annoying when you’ve been patronising a company for ‘n’ years and instead of rewarding you the loyal customer, they give gimmicks, widgets and other incentives to the johnny-come-latelies? Me too. After reading a post in the Customer eXperience Blog,
I came to wondering about new customer incentives and how they apply in
our world of software. It seems clear that if you operate on a model of
software purchasing, then the natural pull is to dedicate more of your
time to chasing new customers than to serving and supporting your
existing ones.
I wonder if selling Software as a Service might help turn this on its head. How could we shift the balance to making existing customers our priority?
And would we want to? As opposed to customers being ‘in the bag’, a 1
year subscription means you have 1 year in which to convince your
customer to not leave in favour of the competition. A potential
customer is someone who might have a genuine interest in your product,
or they might have a fleeting interest in your product. An existing
customer is someone who definitely has an interest in your product, the
question is are they impressed enough to subscribe for another year?
New customers are important. No-one will last long without
recognising that fact. Focusing on your existing customers will turn
your customer base into a sales tool. Testimonials will flow, forums
will be buzzing with a positive support vibe. I’ve seen support forums
full of angry questions like “Where is the support?” Not a great sales
tool.
Interesting extension to my thoughts…
I like the idea that
you have to keep earning customer loyalty, but I wonder if this model
would work better for ASP situations, where there is nothing to
install. I say this because I just spent a few hours installing and
updating new productivity software… (and still at it, so productivity
is significantly down for the day so far!! LOL)
I would think user forums and ratings should be having some impact on
the ability to obtain new customers for software. Have you noticed
anything like that happening?
Hi Susan, I guess it’ all question of inertia. With a web site,
customers have little inertia either way. They can easily browse to the
web site and sign up, they can easily cancel and never come back. With
desktop apps, customers have more inertia. It’s harder to get them to
try your app and sign up, but the inertia works for you later, they are
probably less likely to uninstall and not repay.
Interesting post, Tim.
From my perspective, it’s entirely about satisfying existing
customers, in that they are the best source of information about market
needs.
By satisfying market needs, you’ll attract more customers both directly and through referals.
By adding more and more value for existing customers, you prevent
your product from becoming a commodity, and both existing and new
customers will have more reasons to choose you over your competitors.
Hi Dave, yeah I think I’d agree with that. As well as existing
customers being one of your best sales tools, I guess they have
invested time in adopting your product, so are in the best position to
help steer it.