Client retention > client acquisition

Why keeping existing clients happy is more important than finding new ones - and how marketing can help

Welcome to IMTW issue № 35. I know what you’re thinking, dear reader. How is it Sunday again?

Here’s your weekly showcase of news likely to impact you - delivered with insight on why it matters and ideas on what to do about it.

📸 But first, flashback to last month when we mentioned BNPL and I asked “why all the hype for a business that is both ethically questionable and very low margin?”. This week, Jemima Kelly reports for FT Alphaville on a report by Redburn, the UK equity research house that concludes: “While BNPL is currently the talk of the town, ultimately it is simply a tool to attract new customers on to new forms of payment, and to continue the move towards a world in which digital wallets reign and the costs are transferred from the consumer to the merchant.”

👉🏻 Now, read on to learn why:

① Generating new business is hard but fate sometimes lends a hand.

② Marketing should be as focused on client retention as it is on client acquisition.

③ Fear of high fines is creating an abundance of caution.

④ Making money in neobanking is really, really hard.

⑤ Your marketing should be courageous, artful, and scientific.

⑥ Brexit is threatening London’s claim to fintech capital.

⑦ Sometimes it pays to get that promise in writing.

What's new?

You probably didn’t hear - it wasn’t widely covered - but it hasn’t been a great week for Facebook…

First, a whistleblower accused Zuckerberg’s juggernaut of misleading the public and investors. Then, all its services went down for six hours - leading to: the loss of $79m in ad revenue; The Economist declaring Facebook near a reputational point of no return; and the company taking its brand off its own VR platform to avoid negative connotations. Oh, and the week ended with Facebook and Instagram down again.

Other social media companies gloated and announced record growth. Telegram in particular says it added 70M new users.

① In short:

“Telegram said on Tuesday that the instant messaging app added a staggering 70 million users yesterday in what he described as ‘a record increase in user registration and activity’ for the service.”
“Telegram, which recently topped 1 billion downloads, had 500 million monthly active users as of early this year.”
“Signal, which competes with both Telegram and WhatsApp, also added new users. It said in a tweet that ‘millions of new users’ had joined the app.”

Why does it matter?

Call me jaded (growing your user base by 14% in a day isn’t to be sniffed out, after all) but my first thought on reading this news was ‘how many of those users will stay the week?’ And that got me thinking… As any marketer knows, acquiring new clients is hard work. Financial services - whether banking, wealth planning, or investment management, isn’t a transactional sector though, so the metric that really matters is how long they stay and therefore how profitable the relationship ultimately proves to be.

It is notoriously difficult to measure the impact of a lot of marketing activity. Teams typically report metrics like reach, engagement, and - yes - leads. But even if your marketing is delivering plenty of new business, it will count for little if your client attrition rates are high. Keeping a client happy is easier - and less costly - than finding a new one to replace them when they leave.

② So, marketing should be just as focused on client retention as it is on client acquisition. In too many organisations, it’s marketing’s job to deliver a qualified lead to the Sales team. What happens after that is neither marketing’s responsibility nor does it form part of marketing’s metics. That’s a missed opportunity.

What's next?

Take action

Have a chat with your head of marketing this week. If you’re not already doing so, there are two obvious improvements you could make together:

Involve marketing in client retention: We’ve talked before in these pages about the need for marketing to have a say in every single interaction a client has with your brand. This is very much part of keeping a client happy. Whether it be through events, relevant and valuable communications, or simply a delightful user experience, marketing has a critical role to play in ensuring that a client feels proud about their decision and - whisper it - might even recommend you to their friends.
Work customer lifetime value into marketing’s metrics: Most firms will have a stab at measuring return on marketing investment by producing metrics like ‘cost per click’ or ‘cost per lead’. Some even measure ‘cost per new business’. But it’s worth making sure you have a precise ‘customer lifetime value’ in those metrics. Not only does it make your KPIs closer to financial reality but it will focus your marketing team on drawing out the all important length of that lifetime.

Get help

I’m looking for a full-time, in-house role but in the post-Covid age of depleted marketing budgets and remote teams with skills gaps, many organisations need marketing and communications support that’s agile, flexible, and risk free. That’s why I founded WhatsNext Partners.

Whether it be as a permanent member of your team or with on demand support, just hit ‘reply’ to let me know if you need my help.

Can I ask you a favour, dear reader? If you found this post useful or know someone who would, please like, comment on, or - best of all - share it with your professional network. It really helps me to grow the readership.

What else?

Three other articles that are worthy of your time.

FINANCE

UK financial firms ditch record number of clients

③ Fear of high fines from the regulator is creating an abundance of caution.

Source: The Financial Times, 7 October 2021

“UK banks, asset managers and insurers ditched a record number of clients in 2019/2020 and reported an increased level of suspicious activity to law enforcement, highlighting the caution inspired by new regulations and high fines.”
“The Financial Conduct Authority said in its latest financial crime monitor that businesses ‘exited’ 761,437 clients in the year from July 2019 to June 2020, more than double the total dropped in 2017/2018, when the regulator first reported the data.”
“Retail banking and lending accounted for the vast majority of SARs, followed very distantly by wholesale financial markets. The data also showed a fall in the number of politically exposed persons on the books of UK financial institutions to 89,000 in 2019/20 from 111,000 in 2017/2018. The FCA said this was partly because of revised guidance on who should be considered a politically exposed person.”

TECHNOLOGY

Monzo withdraws US banking licence application

④ Making money in neobanking is so hard one has to wonder whether it’s worth it at all when there are so many other ways to add value.

Source: The Financial Times, 4 October 2021

“Monzo has withdrawn its application for a US banking licence after it was told by regulators it was unlikely to be approved. The move highlights the caution among US regulators about allowing lossmaking start-ups to become banks, in contrast to countries such as the UK that have handed out dozens of licences in recent years in order to promote competition.”
“Many of its largest US peers including Chime — which was recently valued at $25bn — have grown without going through the expensive and time-consuming process. Higher card interchange fees in the US make it more sustainable for companies to share revenue with fully licensed partner banks, unlike in the UK.”
“The start-up made a statutory net loss of £130m last year, 13 per cent worse than in 2019, and admitted it needed to raise more cash from investors. That led auditors EY to warn for a second straight year that there was ‘material uncertainty’ over Monzo’s ability to continue operating as a going concern.”

MEDIA & MARKETING

12 ways CMOs can simplify B-to-B marketing

⑤ The most successful B2B marketers are courageous, artful, thoughtful and scientific.

This is one you really should click through to the read the whole article. It’s a dozen short lessons on how to be a better marketer. Some were new to me, others you might feel you already know but all are worth being reminded of.

Clear away the clutter
Dare to be distinct
Pounce on your purpose
Welcome ‘we’
Perfect pithy
Delight by design
Engage employees first
Cultivate customer champions
Sell through service
Measure what matters
Automate attentively
Test to triumph

Quotable

⑥ Peter Smith, CEO of Blockchain.com, on London’s reign as the world’s fintech capital:

“With the Brexit, that’s definitely over.”

One more thing...

Source: WealthManagement.com, 6 October 2021

⑦ A doorman at a luxury apartment in New York City has filed suit against a former resident’s estate, claiming the man promised to leave him one-third of his fortune. Instead, he left it all to animal rescue centres. WealthManagement.com has the story.