Why its time to reallocate marketing budget to enhancing customer service & experience

Written by Michael Smith on the 25th of January, 2017

Screenshot 2017 01 24 At 16 55

'You've got to give the customer what they want. In today's climate customer service is No 1' Touker Suleyman

As the dust settles over the post-Peak and January Sales battlefield, customer service will continue to fight a rearguard action to close outstanding issues such as returns, credits and fulfilment.

Somewhere else in the business, a rejuvenated and refreshed Marketing Director will submit his or her budget for 2017 with little understanding of 2016 impact or value that customer service and fulfilment have made to retain the loyalty of the existing customer base.

The chaos created by marketing campaigns such as Black Friday, may also have attracted the unwanted attention of a Finance Director who may seek to improve customer service's productivity by asking a team to deliver more with less.

So why is this so wrong?

A recent report showed that 78% of online retail marketing budget goes on search and display advertising. Yet 41% of revenue comes from existing customers who make up just 8% website visitors. In the EU, this equates with recruiting 7 new customers to match the ‘repeat’ value of an existing customer. Furthermore, for each 1% of shoppers who return, their overall revenue will increase by 10%. In other words, by retaining 10% of the existing base a retailer can double their revenue.

So how should this change the approach to marketing strategy and spend?

Quite simply, marketing investment should be made in supporting the delivery of a customer experience capable of building brand equity and increasing loyalty. Omni-channel support is now the only way in which a brand can be the concierge that we, the customer wants it to be. This requires the right technology, a big push on content-driven initiatives such as self-management, contact centre agents who can genuinely resolve and create empathy and reporting tools to pre-empt what we want.

During 2016, we turned this vision into reality for a number of brands. However for the revolution to properly happen, CEOs need to dispel the myth that advertising delivers a better ROI than good customer service and wake up to the power of relationship marketing as a builder of brand equity.

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