You have probably heard the saying that it is cheaper to keep the customers you have than to acquire new ones. Now is the moment to take stock of an often overlooked asset: your existing customers. A lot of companies focus too much effort on growth through new customer acquisition, when there is plenty of opportunity in their existing customer base. See if your company is doing everything it can to improve customer retention and selling to existing customers.
According to Frederick Reichheld of Bain & Company, it costs at least 6 times more to acquire a new customer than to retain an existing one. Larger companies have complex calculations to figure all this out, but smaller companies can do this too. Look at the total cost of new customer acquisition: marketing, sales costs, time, creating new accounts, hand-holding, etc. Compare it to the amount of money you expect to earn from these customers over time. You are expending resources on building a new relationship, and that’s a good thing. But you already have a relationship with your existing customers. So keeping existing customers is more a more efficient use of resources.
Is your company doing everything possible to keep current customers happy? You should be gathering information regularly by being a good listener. What is on their minds? What kinds of problems are they having that your company could solve? How do they feel about your current offerings, and what would they like to see in the future?
Make sure you are getting feedback with:
- A suggestion box
- A feedback button on your website
- Occasional surveys
- Social media (Facebook, Twitter, etc.)
- Communications from everyone at your company who comes into contact with your customers (sales reps, customer service, technicians, instructors, managers, etc.)
- Directly talking to customers
Be sure to stay in touch with your customers via email and social media. Send out information your customers want in a professional-quality, mobile-friendly email a couple of times a month. For example, a dance studio can email information about upcoming classes and performances, links to photos, and links to articles about dancing. Perhaps an occasional special offer will keep them coming back. Using a system such as Constant Contact or iContact, the email can be pushed to social media automatically. Recycle your material on social media, and share related material to build the relationship.
Current customers will be less price-sensitive than new ones. Your customers already know you and trust you. You should not have to slash prices to keep them. Keep giving them value for their money. Give them the best products and services you can while turning a profit.
Take a look at your offerings, and what you could be offering, to identify ways to further service current customers. Could your company add to its offerings? Could you partner with a compatible company that services the same market but doesn’t directly compete with you? Use your communication channels to show how these new products or services will help solve your existing customers’ problems. This will be less expensive than building your base, and an easier sell.
Make sure your offerings are current and priced correctly. Review all the numbers to find out what is working for your company, and what isn’t.
Increasing retention of current customers does not negate the idea of acquiring new ones. Do both. But strike a balance between them to ensure you are not throwing away opportunity. As you saturate a market, new customers become more difficult to find – and more costly. Be thankful for the ones you have and keep them coming back.