Thanks to the Information Age, we are bombarded with so much information that we subconsciously choose to ignore a lot of it. 

We see advertisements for practically everything. Businesses (especially small businesses) find it challenging to compete for mind share. 

According to Teradata, only 41% of marketing strategies are driven by customer engagement data.

Who Are Your Customers?

This is the most important question most small businesses fail to answer. 

Especially if it is in the food & beverage industry, you most likely will not know who they are and why they came to your establishment. Knowing who they are will increase leads and in turn result in more repeat business.

Understanding their needs is vital in giving them exceptional service which will be converted into strong customer relationships and potentially into new sales via positive word-of-mouth recommendations. 

However, understanding who your customers are is not an easy task and requires insightful analysis on their constantly evolving preferences and spending habits so that you can successfully anticipate their needs and exceed their expectations.

What Do They Buy?

Let’s take the F&B industry as an example. 

Do customers return because the food is amazing? Is the front of house staff attentive to the patrons’ dining needs? Is the ambience of the restaurant reflective of the diners’ perception of the restaurant? 

Too many businesses devalue their products/services in order to gain ground in the never-ending war of attrition for market share. 

In reality, customers do not know what they want but instead want what they know. 

As Henry Ford eloquently put it: “Any customer can have a car painted any color he wants, as long as it is black”. 

Rarely is a lower price seen as an incentive for customers to buy from businesses over a long period of time. 

Trust, experience, quality of service, reliability, and even consistency, are seen as primary driving forces behind satisfied customers returning. 

Customer Acquisition vs Customer Retention

Both customer acquisition and customer retention are equally vital in contributing to the profitability of a business. One cannot succeed without the other. 

It is fairly straightforward that to be a successful business, one has to start with first acquiring customers. 

Once that is done, it is imperative that the business retains as many of these customers for as long as possible in order for the business to grow. 

A customer’s lifetime value (LTV) is the projected economic value they will bring to your business over their lifetime as a customer to your business. 

• Customer acquisition may cost up to 5 times more than customer retention. 
  
• An increase of 5% in customer retention rates can easily increase profits by 25% - 95%.
  

Why is it so expensive to acquire customers? 

This is primarily due to the fact that they are still new to the products/services offered by this new business. 

The customer acquisition cost (CAC) is still relatively high. 

Over the course of time, the new customer will transition into a regular customer and once the brand and trust has been built, it is much easier to retain the customer. 

In an ideal world, all new customers will be converted into regular customers overtime. However, in the real world, it is a much different story. Some customers will inevitably dropout for a myriad of reasons (churn rate). 

Once the customer has been identified and value has been provided, the churn rate will be brought down to a minimum.

With a solid foundation of an identified customer base, coupled with a successful customer acquisition and customer retention strategy, businesses are primed to be positioned to be successful in the upcoming future.