New Business, new business, new business! When thinking about fresh and exciting ways to grow your business, your plans probably revolve around finding those ever elusive new customers. But why? No seriously, why focus all your efforts on selling to someone who has never heard of you, when you have an established group of consumers who have given you their money, and may very well do so again?
For small or relatively new businesses, the emphasis is all too often put on getting new customers when it should be on developing the ones you have. Retention marketing, loyalty programs, customer referrals, these are all tools you can use as a business owner to leverage the hard work you’ve already done and still continue to build revenue. Not convinced? What it I told you that “61% of SMBs report more than half their annual revenue comes from repeat customers[i]”? Or that the probability of converting a new customer is somewhere between 5-20%, whereas the likelihood of converting an existing customer[ii] ranges from 60-70%? Do I have your attention now?
The fact is, customer retention is far more cost effective than acquisition. The channels of communication are less expensive when compared to generating new leads. You’re also dealing with a market that is more informed about who you are and how you operate. They’re the ideal target! Think about it, by purchasing from you once, they’ve handed you the ability to cross sell or upsell additional products and services.
Plus, if a consumer liked you enough to purchase, there’s a fair chance they’ll refer you to someone else if their experience was a positive one. In fact, over half of US consumers express brand loyalty[iii] by recommending brands and companies to family and friends. With the right planning, your business can capitalize on this valuable word-of-mouth marketing. Existing customers can be your greatest supporters! Having done business with you, they’re the ideal candidate to provide positive feedback and reviews to others who may need a similar solution. A happy, existing customer base can act like an unpaid sales force, constantly promoting your business and singing your praises to those who listen to and trust them. Few forms of marketing can compare with that kind of exposure.
At the end of the day, this all really comes down to how your business utilizes retention marketing tactics. Retention marketing refers to campaigns that target previous customers or “retains them”, so that you can make additional sales. This doesn’t just mean throwing a coupon code their way every other week, you need to engage. You need to provide something of value. Give them reasons to keep working with you. That being said, there’s nothing wrong with rewarding customer loyalty. Put together a program that has exclusivity attached to it. Make it so the only way they have access to the benefits is to interact with you, whether that’s by email, social media, on your website, or even in-store.
There are many ways to do this but the point is, if you haven’t planned to market to your existing customer group and just assumed they were going to come back, you may be in for a rude awakening. Mining for new business is fine, and obviously encouraged, but if you’re not working to develop repeat customers, you’re going to run into the same issues next year… and the year after that, and so on.
So as you piece together your strategy for 2018, don’t forget to focus on the customers who helped get you where you are today. They may be worth more than you think!