There’s an adage in business that it’s cheaper and easier to retain existing customers than to find new ones. It’s been estimated that it costs five times as much to acquire a new customer than to retain ones. This explains why businesses work so hard to keep customers happy.
The U.S. Postal Service understands the importance of customer retention. It has ramped up its efforts in this regard, including changing its sales organization, enhancing its use of analytics to see where it risks losing customers, and operating customer retention call centers. Still, customer retention is a challenge in an era of shrinking mail volume. While customer defections decreased from fiscal year (FY) 2012 to FY 2013, the magnitude of this ongoing problem is hard on the Postal Service’s bottom line.
We recently looked at the effectiveness of the Postal Service’s customer retention strategies and explored whether it could do more to keep customers from reducing their postage spend or from leaving altogether. Our report recommended the Postal Service promote organization-wide collaboration and share information on customers at risk of defecting. We also urged the Postal Service to reach out to former customers.
Interestingly, dormant customer accounts, the subject of a separate audit report, provide an outreach opportunity. While the audit report did not look at inactive and dormant accounts as a customer retention tool, it seems like a natural fit. Dormant accounts are advanced deposit accounts for business mailings that have been cancelled and closed. The Postal Service cancels the accounts following a notification process that occurs after 2 years of inactivity. What if these inactive and dormant accounts were used as sales leads?
Many of us are accustomed to hearing from our doctors or dentists if we miss our regular checkups. In fact, we welcome the reminders. Could inactive and dormant accounts trigger a similar “outreach” attempt from postal employees?
What suggestions do you have for customer retention? What does it take to retain a strong and thriving customer base? Or should new customers be the focus as mailing budgets shrink?