People often use the “leaky bucket" analogy to rationalize a loyalty-first approach to customer experience programs, claiming it doesn’t make sense to focus on acquiring new customers if we aren’t keeping the ones we already have. But this analogy rests on several erroneous assumptions:

1. The holes in the bucket can be easily plugged.
All brands lose customers and mostly for contextual reasons beyond their control — the need is met, the customer changes jobs, relocates, dies, etc. Often the assumption is made that we can meaningfully influence retention without any real substantiation.

2. Filling the bucket and plugging the holes are separate activities.
There is credible research suggesting that the first time purchasing experience is a key determinant of whether people buy again. In other words, improving the path to purchase might have a greater impact on later buying behaviour than separate attempts to retain customers.

3. You fill a bucket by stopping it leaking, not by increasing the inflow.
If you want to fill a bucket what matters is the rate of outflow vs. inflow — you can fill a bucket with a fire hose quite easily even if it leaks. This is an unpopular suggestion because people assume that the cost of acquisition vastly outweighs the cost of retention, but the research supporting those claims is pretty dodgy and the difference is typically massively over-stated.

4. The well won’t run dry while we’re plugging our holes.
If a powerful competitor focuses all their attention on building awareness and acquiring new customers while we’re busy trying to plug our bucket, will there be any water left for us? Most people, most of the time, go with brands they’ve heard of that are easy to buy. If we aren’t achieving that our retention efforts will be for nothing in competitive markets.

Don't take my word for it of course, look at what your data is telling you and do your own research (some suggestions in the notes).

#customerexperience #leakybuckets #sillyhashtags

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