Business owners seem to worry most about bringing in new customers, a lot. But they forget about the customers they already have.
They don’t realize that their best, easiest to sell prospects are people that have already given them their hard-earned dollars in the past. It has been estimated that the chances of selling to an existing customer are 60-70%, but the chances of selling to a brand-new customer drops to 5-20%.
If you are still skeptical, here is a telling infographic:
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According to the infographic, it costs 6 times as much to find a new customer as it does to retain an existing customer.
So, what are the best ways to retain the customers you already have?
Here are 5 good steps to start:
The probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is 5-20% (from Marketing Metrics). Research also shows that a 10% increase in customer retention results in a 30% increase in the value of the company (from Bain and Co.) Many marketing plans are so focused on customer acquisition that they largely ignore customer retention.
Step #1 is COMMUNICATION. Regular communication with past customers is crucial. Dan Kennedy estimates that every month you don’t communicate with your customers, you will lose 1% of them. This doesn’t have to be hard or time consuming. A newsletter, a quick follow-up phone call, a coupon only for past customers, a fridge magnet, anything to make sure the customer has seen your business recently will be a big help. You can even outsource your newsletters.
Step #2 is CUSTOMER SERVICE. Bad customer service accounts for 70% of customer defections. Sometimes, you can still make the save even if your business dropped the ball. Has your customer ordered less and less over time? Have you not heard from a regular customer in a while? Call them and find out why. If you don’t follow up, one of your competitors will be happy to snatch that customer away from you.
Step #3 is to LISTEN (then talk). Most people, when they have a bad experience, will never tell the business, they just won’t come back. People that let you know about a problem should be treated as an unexpected gift and an opportunity to make things right. Don’t blow the gift by being defensive. Monitor what people are saying about your business online. Do you really want to hear about a bad review from a potential customer?
Step #4 is to set up a LOYALTY PROGRAM. Rewarding customers for repeat business or referrals is a great way to encourage them to do it more. Plus, you can track who your very best customers are and make sure they feel special. Some ideas on setting up a customer loyalty program are here:
How Customer Loyalty Programs Can Bring You More Business
You want to acknowledge and reward the people who help to support your small business — and keep them coming back for more. An effective way to show your appreciation is through a carefully designed and implemented customer loyalty program.
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