Focus on Customer? New vs Existing

Attended my first Harvard Management Mentor session today. ‘Customer Focus’ was the topic of the day, and I was super excited. This blogpost is the summary of my learning from the class. Usually, I bypass the ‘funda’ part in a session and concentrate on what is most practically possible, however, must say, the Harvard mentors are after all, the best.

Customer Loyalty

Not to mention, the longer customers are loyal, the more profitable they become. Why? The answer has to do with what are known as the three Rs of customer loyalty.


The first R of customer loyalty is retention. An ongoing relationship with a customer creates a steady stream of revenue over time as the customer continues to buy products. The costs associated with marketing decline, and, in many cases, so do the costs of actually serving the customer who becomes familiar with the company, its product lines, and its procedures. Year after year, you save on cost of serving customer become price insensitive.

Related Sales

Loyal customers also generate related sales, the second R. The profit generated by selling new products and services to existing customers is greater than it is for selling to new customers. The forward-thinking company develops new products by listening to its loyal customers. Loyal customers are therefore more likely to buy because the new product has been designed to meet their needs, and because they have a degree of faith in the company already.

In fact, the original product may generate a minor profit compared to related sales over time. New sales to existing customers are less costly, because they require less marketing, no new credit checks, less paperwork, and less time. Furthermore, loyal customers are often less sensitive to price than new customers.


For Positive referrals, the third R, are the best kind of marketing—and they’re free! Positive customer referrals are vital to profit and growth. Research suggests that satisfied customers are likely to tell five other people about a good experience, while dissatisfied customers are likely to tell eleven other people about a bad one. From your own experience, you know that personal referrals carry much more weight than traditional marketing.

Loyal Customers are often neglected

Existing customers share a relationship where it is more likely to have regular and casual interactions. These interactions usually happen with front-facing sales executives and hardly with marketers in the company.

Customer retention, therefore, is more a functional responsibility of sales people. And customer acquisition – to marketing. I hope my salesman friends @saumil and @susrita would agree to it.

I believe, both departments need to collaborate on this – particularly where it concerns nurturing newer, smaller accounts. Maybe there needs to be a separate function that spans both departments and whose sole focus is retention.

Whats wrong with the conventional marketing?

The biggest incentives often go to employees who bring in new customers, not to those employees who work hard at keeping loyal internal and external customers satisfied.

Marketing budgets are driven by the misconception that if you want to make a profit, you must increase market share. And leads to misconception that only customer acquisition leads to more market share.

If you are a marketer or a salesman, would love to have views on this!

Satyam is a Consultant with Infosys Ltd. and editor / founder of When he is not talking about Digital Marketing or dreaming of CRM strategies, he can be found on a treadmill. He enjoys travelling, reading and listening to music! Catch up with him on twitter at @xatyam