Most marketing specialists and financial strategy managers agree retaining customers costs less than acquiring new ones. However, it is still necessary to give yourself the means to make retention a real management tool — which is still far from being a reality in many companies.
We have all, at one time or another, joined a club, group or organisation as a member. What happens when the company-customer relationship seems to be ‘frozen’ by the company? Often, not much: an imbalance develops between the benefits offered to existing members and those offered to new ‘acquisitions’, sometimes in a blatant manner.
Although this mechanism is well known, it raises an economic paradox: retaining customers—like retaining employees—costs significantly less than constantly seeking new profiles. Far be it from us to suggest that the arrival of new customers or talent is harmful; it is even essential, but a subtle balance must be struck between acquisition and retention, and above all, loyal customers and employees must be recognised and rewarded.
Promotional offers for newcomers are often numerous, as it is necessary to make an impression and stand out from the fierce competition. However, this race forward can become detrimental and only benefits the company if its margins are comfortable enough to absorb the cost of these acquisition strategies.
This logic can be observed in sectors with high emotional value or in the hyper-luxury market, where losing a customer or employee represents a marginal cost due to the large influx of new “members”. In other words, turnover has little impact on these companies, which are aware of this and take advantage of it.
For more traditional companies with lower margins, the challenge is quite different. Their attractiveness is based on criteria such as reliability, recognition and stability — values that apply equally to customer and employee relationships.
Many companies pride themselves on recruiting new talent, often attracted by particularly generous salaries or benefits, while neglecting their valuable internal resources. They take them for granted, sometimes wrongly. Yet a company’s reputation in the labour market is built discreetly: through exchanges between friends, colleagues, competitors or HR managers.
High-quality continuing education, genuine recognition throughout the year—not just at the annual staff party, which is often more formal than useful—attentive management, and genuine consideration for both loyal employees and those who are leaving (because no one knows what the future holds) are all guarantees of stability.
However, HR exit processes are still too often abrupt, lacking in empathy, and even humiliating. Thinking that the remaining employees are unaware of this is one of the most serious and frequent management mistakes.
Retaining customers and employees through respect, reliability and recognition is an essential lever for long-term success. Perhaps the rise of AI will force companies to radically reinvent themselves in these areas, or risk losing their markets quickly.
Enjoy reading and see you soon.