With any economic meltdown, businesses big and small go into panic mode. All seem to be screaming the same mantra: “I have to get more customers!” But do you really need more customers?
Maybe You Don’t Need a Rush for New Customers
Getting new customers costs more than retaining current ones. According to a recent report from Frederick Reichheld of global consulting firm Bain & Company, businesses may lose up to 50% of customers over a five-year period. Acquiring new ones is expensive, costing six to 20 times more than retaining existing customers. Businesses that increased customer retention rates by as little as 5% saw a 5%-95% rise in profits. The ROI from customer retention initiatives can be tremendous, which is why businesses may look for digital marketing agencies such as Conversant Media and many more in aims to increase their retention rates and create genuine relationships with valuable existing customers, however many businesses focus on new customers…
So why is retaining existing customers often ignored in favor of obtaining new ones? The lifetime value of existing customers is not always understood. Believe it or not, many businesses take existing customers for granted. That is a mistake. Outside of yourself and your sales force, your best sales people are your existing customers. They know your business and how you treat them. Continually communicating with them demonstrates you care about them after the sale. You could also invest in a product like hr portal that can strengthen client relationships and boost retention while giving clients 24/7 access to the resources they need. If you use products like this then you can help bring in more money from already existing customers without the need to spend it on looking to reach new customers.
Try a Customer Survey
If you are unsure of your customers’ level of satisfaction or uncomfortable approaching them to buy more, consider a simple current customer survey. This inexpensive program can help you find your strengths and weaknesses and help determine who would be a good referral source for your business.
Satisfied customers will be motivated to let not only you, but friends and family, know exactly how they feel about you and your business. These are the customers who are most amenable to offering referrals to your business. But don’t be afraid of any negative response that may come in. Take this opportunity to get in front of any issues and resolve them before they become major problems.
What to Do With the Positive Survey Results
Once you identify your referral sources, begin a formalized referral program. Recognize and reward your customers for referrals and keep them motivated to continually act as your very effective, off-the-payroll, sales team.
Most every business should have a formalized customer-for-life program. Staying in front of your customers via phone, e-mail, postal mail and in person is vital to building the relationship that keeps them coming back. It’s inexpensive to design and implement and will pay dividends in diamonds.
Remember, you are building a stronger relationship with your customers, not just selling them a product or service. Your marketing efforts and customer service should be designed to develop long-term relationships. Turn one-time transactions with a shopper into a fruitful, long-term relationship that benefits both you and your customer.
Guiding Potential Customers Toward Becoming Raving Fans
All customers start out as suspects. Then they became prospects. When they make their first purchase, they move up to becoming ashopper. It’s not until they purchase from you more than once that they become a customer. You start to reap the true benefit – a real relationship — when the customer graduates to an advocate and finally a raving fan!
A typical business might expend 50% of its resources moving suspects to prospects. 35% takes them from prospects to shoppers. 10% takes them from shoppers to customers. The remaining 10% will raise customers to advocates and raving fans. There is a much higher ROI the higher up the ladder your customers go. Advocates and raving fans bring you new prospects.
So the question is not “Can you afford new customers?” but rather “Can you afford not to create raving fans?”