"So the question is: How leaky is your bucket? How many holes does your bucket have that are letting your customers constantly pour out." - Jim Palmer
While listening to a long lecture it is evident that you don't retain everything that is mentioned, but certain elements grab your attention or awaken your interest and the 'Leaky Bucket Concept' was one of those which made me revert my attention from studying the intricate thread-work on my t-shirt back to the lecture.
The name of the concept itself is highly unusual when first connecting it to customer relationship marketing and I wanted to figure out just how a leaky bucket fits into this subject. The theory is quite a simple one, yet it makes alot of sense when looking at it from a customer and business perspective. I hope you enjoy it as much as I did!
The Theory
Imagine a bucket as your business and the water as your customers. Your duty is to fill the bucket with water and keep it full. But then holes start to appear on your bucket, these are problems or issues in your business which makes you lose your existing customers. A leaky bucket will allow the water in the bucket to seep or drain out. In the same way when problems occur in your bucket, you will start losing your customers and this is not desirable.
The argument is that there are two solutions available in this situation. One is that you can keep on filling the bucket steadily so that it stays full even though water keeps draining out. This eventually means you can keep on attracting new customers to your business to make up for the ones you lose. The second option is to keep on filling the bucket but to mend the holes at the same time so as to stop the leak. This means you have to mend the problems and issues whilst attracting new customers since losing existing customers will not be beneficial in the long run.
In the beginning I was wondering how this was relevant to business but right now I have a whole new respect for this concept and one that I will not forget easily.
References:
Palmer, J. (n.d.). The Leaky Bucket Theory. Jim Palmer | The Newsletter Guru | Customer Newsletters. Retrieved November 14, 2012, from http://www.thenewsletterguru.com/the-leaky-bucket-theory/
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