Customer retention: The hole in my bucket syndrome

Business growth,Customer retention,New customers,Existing customers

There’s a hole in my bucket, dear Liza, dear Liza,
There’s a hole in my bucket, dear Liza, a hole.
Then fix it, dear Henry, dear Henry, dear Henry,
Then fix it, dear Henry, dear Henry, fix it.

With what shall I fix it, dear Liza, dear Liza?
With what shall I fix it, dear Liza, with what?
With some straw, dear Henry, dear Henry, dear Henry,
With some straw, dear Henry, dear Henry, some straw.

The straw is too long, dear Liza, dear Liza,
The straw is too long, dear Liza, too long,
Then cut it, dear Henry, dear Henry, dear Henry,
Then cut it, dear Henry, dear Henry, cut it.

and so on……the rest of the song is here

The song, a children’s favourite, that I am sure many of you have heard of and may even have sung as a child tells a story where, ultimately, Henry needs water to wet the stone to cut the straw to plug the hole. The moral being that if your bucket didn’t leak water then it wouldn’t need to be repaired in the first place.

Applying this to business and thinking about customer retention ie. keeping customers and not losing them to competitors, sustainable growth companies realise that it’s far more expensive to find new customers than keep existing ones, and so put a lot of their effort and investment into looking after and growing existing accounts. In fact, in the marketing literature it is estimated that to acquire a new customer can be anywhere from 6-8 times more expensive than keeping an existing one.

Less sensible and sustainable companies find themselves spending large amounts of money and effort on acquiring new customers and losing more business than they gain because of poor customer retention strategies and activity.

If we think back to the song and think about our businesses, we need to ask ourselves if our businesses are ‘leaky buckets’ and do they need to be fixed before we embark on strategies designed to acquire new customers. Fixing a ‘leaky bucket’ will save time, money, build brand and a more sustainable business.

Do you have ‘leaky bucket’ syndrome in your business?

Thanks to peasap for the photo

Comments

  1. Hi Adrian,

    I was trying to sing that song as I was reading it, but I can’t carry a tune. It brings back memories though :-)

    I agree that with customers it makes sense to keep the ones you have than attract new ones, just as it makes sense to retain good employees than go out and get one news. There is more than cost to consider in both cases.

    However, I do believe that if your present customers are merely ‘good’ ones, then maybe you should let them go so that you can attract ‘great’ ones to your company. Are all customers created equally? I would say not.

    Karen
    .-= Karen´s last blog ..Using Visualization To Get To Point Z From Point A =-.

    • Hi Karen,
      Thanks for your comment. I don’t think that all customers are created equal so I think there is value in ranking your customers, from time to time, to see which ones are ‘great’, which are ‘good’ and which ones are ‘other’. The big, next step is to then have the courage to sack the ones that are ‘other’, which should then give you time to go look for more great customers. It will also give you the chance to think about how you turn ‘good’ customers into ‘great’ ones.

      Have you sacked any clients lately?

      Thanks again,

      Adrian

  2. Customer retention: The hole in my bucket syndrome http://bit.ly/9VEDXp via @adrianswinscoe

  3. Some companies try so hard to bring new business in that the completely disregard their existing clients.

    In reality if they spent the majority of their time cultivating their existing customers they’d more than likely make more money and get more referrals.

    Yet many still go chasing those new shiny clients.
    .-= Ben´s last blog ..This week’s Personal Development Homework =-.

    • Too true Ben,

      There are so many companies that are stuck in traditional means of marketing and selling (who shouts the loudest and in the most places wins) that it’s quite scary and a huge waste of resources.

      Things are changing fast and I think that our current environment will hasten the change and we are going to see more large and small companies go through some serious strife, if not fail, if they don’t wake up soon.

      Thanks for dropping by.

  4. This is a great post. My company helps business owners “plug the hole” in the leaking bucket. Simply reducing customer defection by half can have an enormous impact of net profits. We manage the customer database and make sure there are calls, greeting cards and video-emails expressing sincere appreciation for the business relationship. This builds loyalty. reduces defection and increases profits! (Available worldwide in English speaking markets !)
    http://dgalcorn.wordpress.com/category/appreciation-marketing/

    • Hi Dan,
      Thank you for your comment and it sounds like you have an essential business.

      Thanks for stopping by,

      Adrian

Speak Your Mind

*