The 6x Myth
Industry commentators tell us that winning new customers is six times more expensive than retaining existing ones. In fact, estimates for this can range from three to thirty.
I often ask myself is this really true and, if it is, can we ever eliminate customer churn and reduce the need for winning lots of new customers?
No matter what we try to keep our customers, a certain percentage will always leave. This is business, the consumer is king and can choose where and when to engage.
We also know that companies will struggle if they don’t bring fresh clients on-board at the same or a higher rate than customer churn.
So, does the “6X myth” ring true when winning new customers and, if so, what can we do to drive that cost down?
Customer attraction. This falls into a number of categories, such as product or solution marketing costs, advertising, promotions, gifts and discounts. The majority of these are essential for any business, so eliminating them is nigh on impossible, but reduction in value and frequency can address part of the cost, making it more palatable.
Price sensitivity. Being competitive means focusing on your own prices and the prices of your competition. You can differentiate on service, but in tight markets with similar products, price can often be the deciding factor, especially in challenging financial times like these. There is no easy fix here, other than ensuring the service and product you offer stands out ahead of competitors and gains a commercial premium for the extra value provided.
Setting up new accounts. This is the biggest cost and time factor for most companies. Customer on-boarding can mean multiple data collection points, multiple back end systems, complex contracts, letters and documents and can be time consuming, costly and a real pain for the consumer and for the company. Embedding a document automation solution into the customer journey can solve a lot of these issues and costs, as well as controlling the process.
Offer the customer a single portal to capture their data – easy to use with simple questions and start/stop functionality, so they can work at their own pace, on any device and at home, work or in your branch/office.
The customer can choose their preferred medium, they can fill in the questions as and when they have the time and access to the answers. Who always knows what their spouse’s date of birth is, or what their monthly outgoings come to?
A single point of data collection can feed multiple mouths – once you have the information, then you can use the document automation tool to speak with the many complex back end systems and processes for on boarding a new client, such as:
- Credit and risk checking to Experian and other credit bureaus
- ID validation by scanning passports, etc and validating against government data
- Creating automatic customer accounts in internal CRM or billing systems
- Generating customer contracts for in-branch signatures or electronic signature
- Producing customer welcome letters
- Creating customer security or lending proposals
Using all of the above, multiple documents can be created simultaneously, compliantly and error free, reducing risk, creating operational efficiency and fast-tracking the on boarding process.
Picture this – your prospective customer is sitting in the warmth of their home, sipping coffee, and perusing your website. Purchase decision made, the prospect inputs their own data into your easy-to-use portal, avoiding the 20 minute walk in the cold and rain to the local branch to ‘fill in the forms’, only to find they need to come back next day with some of the information that has slipped their mind.
Don’t get me wrong, if I was presented with a choice of inputting information over the internet and receiving my documents instantaneously to sign electronically or to print versus frequent rain sodden walks to the company’s premises, I’d happily go for the former, accompanied by a nice cup of coffee.
The saving can be significant, as on-boarding costs are driven down. Customer journey is significantly improved and is a much happier experience. Multiple processes are streamlined and operate concurrently from one customer trigger point. Compliance is increased, risk and errors are reduced and efficiency is gained.
You may be forgiven in thinking that this is something that is way off in the future, a piece of technology in a lab being nurtured for release five years from now, but you would be wrong. The solution is here, it is available today and it has been optimised over the past 20+ years to make it the global leader in document automation, enjoyed by over a million users, across 7,000 companies in 60 countries.
The solution is HotDocs.
You only get one chance to make a first impression. What would you like that impression to be?