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Can the customer save your business? Consider Groupon!

The mantra of looking after your existing customers has been shoved down the throat of many of the clients and followers of our business over the years.   Research after research identifies that keeping your existing customer’s happy costs ten times less than acquiring a new one, and hear this again, 100 times less than getting back a customer you have lost!

So when we heard about the performance problems with Groupon we immediately knew where the issues originated.  Why did we know?  Well we were instrumental in providing the support  culture and customer experience of Keynoir who provided ‘up market’ daily deals to Londoners at the same time as Groupon entered the UK market place 3 years ago.  Keynoir went on to successfully sell their business to Time Out 18 months ago.

What shaped the success of Keynoir was the understanding  from the outset from the then CEO Glen Drury that the lifetime value of the customer was very important and that repeat business provided the base to grow the business.  As loyalty increases your marketing spend on client acquisition can taper off.  However if you lose clients then you are not only paying marketing costs for retaining clients but for acquiring them.  This therefore means ten times more marketing costs for acquiring more customers as discussed above.

So the leaky bucket customer syndrome is a simple analogy to emphasise the importance of the customer.  If your bucket leaks a lot then the amount of water to replace the same water height in the bucket is more than a bucket where the leak is a drip.  The lesson here is to keep your clients happy and they will not leak out of the bucket.  If you mess up the client relationship then you will need to spend more money on getting more customers  to maintain the overall level of business.

Unfortunately Groupon failed in the early years to understand this and their recent poor trading performance has led Andrew Mason to humbly say in his resignation letter to his staff

If there's one piece of wisdom that this simple pilgrim would like to impart upon you: have the courage to start with the customer. My biggest regrets are the moments that I let a lack of data override my intuition on what's best for our customers. This leadership change gives you some breathing room to break bad habits and deliver sustainable customer happiness – don't waste the opportunity! 1

So can Groupon save itself.  Well it will take a seismic shift in working practices to change the culture on putting the customer first at Groupon. But is well worth the pain and maybe, just maybe the customer could be the saviour of Groupon.

Download our white paper on Driving profit through Customer Excellence from our website www.wsqsolutions.com

1 Read more: http://www.smh.com.au/business/intelligent-investor/shock-horror-sacked-ceo-speaks-truth-20130304-2fgdb.html#ixzz2NLkb7ong

on 13th March, 2013


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