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A bird in the hand.
We’ve all heard the saying, a bird in the hand is worth two in the bush.
In other words, what you already have – possessions, clients, talents, assets – is twice as valuable as what new things you could possibly get.
We also know that when it comes to new business, retaining existing clients and customers is generally less expensive and more profitable than acquiring new ones. Meaning, it costs less and earns you more to keep your current clients happy than to go out and find new ones.
Businesses should take better care of the bird in the hand.
If those things are true, then why don’t businesses act that way and take better care of the bird in the hand?
For example, home prices have been spiraling steadily upwards for a while now. And until very recently, interest rates have stayed at record lows. Because of that, lots of people (maybe you?) refinanced their mortgages in order to lower their payments and perhaps benefit from some of the increasing assets locked up in their homes.
Knowing this, why hasn’t your mortgage company sent you a note saying they’d happily lower your interest rate for a simple application charge and appropriate fees? After all, if you’ve been a reliable customer, you already are the proverbial bird in the hand. Why wouldn’t they want to demonstrate their value and strengthen their relationship with you instead of inviting you to look elsewhere to save some money?
Sure, they benefit by continuing to fund your mortgage at a higher than market interest rate, but that stops the second you decide to take a better deal from someone else. And since your existing company already knows your payment history firsthand and knows what kind of client you are, their risk factor is much less with you than with someone they’ve never done business with before.
How about video streaming companies? Q1 2022 was the first quarter in history that Netflix reported decreasing subscription numbers and revenue. Why? Because just as Netflix fragmented and disintermediated the video entertainment business when they first came on the scene, all sorts of new competitors continue to offer Netflix’s customers more and more choices of where to get their on-demand entertainment today.
Despite this, I don’t know of anyone who’s received a note from Netflix offering them a better deal, a deeper discount, or something else to keep them happy with the streaming service. In fact, it seems like the only time you can get a better deal from them (or your cable company, or your cell phone provider, or Sirius XM) is if you’re a new customer, not a bird in the hand.
To that point, I just unsubscribed from an online service I’ve been using for years. Why? Because for the past few months I’ve received coupons from that company for a $100 voucher. Each time I’ve tried to cash in one of the vouchers I’ve been informed that the offer is only for “first time customers.” Clearly the company believes that acquisition is more valuable than retention and that a bird in the hand is NOT worth two in the bush.
For the past 48 weeks or so I’ve been using the same online service to create the subtitles for my video blogs. They have my credit card on file and charge me weekly for their service. In all that time, the only time I heard from them is when they asked me to beta test their new software. Interestingly, they still wanted me to pay for their services even though they weren’t going to pay me to provide my input.
But now there’s a new company that can do my blog subtitles, and lots more, for a much lower price. And since the original company never did anything to build our relationship, there’s no reason for me not to move on to get a better price somewhere else. What’s worse, the company won’t even have any idea why I’m no longer doing business with them.
Of course, it’s easy to talk about the times when we’ve been taken for granted and not appreciated. But how about your clients? How about mine? Can we say with certainty that people like you and people like me have made sure that we’re always looking out for the people who are buying our goods and services? Perhaps we are also too busy looking for new business to pay attention to the business we already have.
Or, as Lennon and McCartney’s protagonist discovered in their song Norwegian Wood, “…when I awoke, I was alone, this bird had flown.”
Great wake up call, Bruce!
Thanks Bruce – a nice hint to look in the mirror. I’ll be reaching out to my clients before June 1st!
You have perfectly described my business strategy where keeping long term clients eliminated the need and cost of procuring new business. I also agree the large companies seem not to care about retention.
just an FYI most residential mortgage companies have an automated system that tells them when the current interest rate is higher than the rates they are offering to new borrowers so they can proactively refi existing loans so they don’t lose the customer or the loan servicing rights on the existing loan.
There’s no business like old business