News
 How
Guerrillas Attack Customer Loss
By Jay Conrad Levinson
Like sand slipping through your fingers, so it goes
with customers. They get bored. They have a bad
experience and go elsewhere. They move away. They
die.
Did you know the average merchant loses 20% of his
customers each year? With some businesses it's even
worse. Drycleaners can lose up to 40% of their
clientele annually, according to American Drycleaner
magazine statistics. Shell Alpert, an expert in
direct marketing tactics, believes most businesses
suffer a drop in their client base as high as 50%
every 12 months.
What's really sobering is the profit impacted by
this exodus. Think about your average sales receipt
for each customer, times the number of customer
visits per year, times the usual length, in years,
of your customer relationships. Multiply this result
by your net margin percentage, and you'll get the
lifetime value for each one of your customers.
If you're like most retailers, your lifetime value
per customer runs into the thousands of dollars.
Even a loss of 20% of your customers can be
disastrous. So what does a guerrilla do to replace
this lost business?
Perhaps surprisingly, new research shows that the
most productive source of new customers is new
residents. The U.S. Census Bureau states that 46% of
all Americans moved at least once between 1995 and
2000. That's a lot of people. What's more, in the
first months following a move, these people undergo
a "hyperspending" phase during which they spend four
to six times as much as non-movers.
To understand the full impact of these "hyperspenders,"
the U.S. Postal Service surveyed new movers
nationwide. It determined that new residents spend
$7,100 per household on everything from air
conditioners to takeout meals during the first weeks
in their new community. This is in addition to
routine, everyday purchases.
What guerrillas should take to heart, however, is
that these highly desirable newcomers have virtually
no affiliations with local retail businesses. The
first marketer in each category, from car washes to
pizza parlors, to reach out with a strong,
compelling offer, is likely to be the one claiming a
new-and long-term-customer.
When you think about the lifetime value each of
these newcomers represent, isn't it in your best
interest to court them aggressively? Make them an
offer that's commensurate with the value they bring.
It's in your best interest to do so.
Jay Conrad
Levinson is the author of the "Guerrilla Marketing"
series of books. (http://www.gmarketing.com/) © 2005
Guerrilla Marketing International.
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