This post is actually a follow up to our previous post regarding Guerilla Marketing and particularly selling to your existing customers. Just to give you a gist of that particular article, guerilla marketing has a simple rule: marketers should spend 70% of their time and efforts focusing on pleasing existing customers, 20% on bringing new leads and only 10% searching for future clients. In this post we’ll provide a deeper insight, specifically on retaining existing customers so you can increase your sales, and ultimately, your profit.
Keeping a solid customer base is essential to any business, especially with the current economic downturn and the increasingly competitive marketplace. As a business owner, whether your enterprise is small scale or a huge company, you must have learned from experience that it’s a lot easier to boost sales by consistently providing quality and value to your existing customers.
Consider this: if you do not provide good reasons for your customers to stay, it’s quite likely that your competitors will find enticing offers to reel them in and leave you for good. It is no secret that customer satisfaction and retention are the ones that effectively drive profits. This is even proven by statistics which reveal that even a five percent decrease in the rate of customer defection can boost sales by as much as 25 to 125 percent, although this depends on your particular niche. Moreover, it has been found that a 2% rise in customer retention yields a similar effect on revenue as cutting overhead costs by about 10 percent.
Figures don’t lie and they only mean that it is more difficult to acquire new customers than keeping existing customers happy and satisfied. It is much cheaper to retain existing customers and sell more products and services to them than seeking new customers that are likely good for only a single transaction. Most surveys and studies across different industries indicate that keeping an existing customer is about seven times more profitable as compared to attracting a new one. Finally, it’s more likely that old customers will buy from you than new ones.
How to Cultivate Your Customer Base
Sometimes when you acquire a new lead or make a solid contact with a promising prospect, you tend to waste time hammering back and forth about your next “perfect” follow up effort. In so doing, you actually achieve nothing and what initially appeared as an excellent lead and contact soon turned ‘cold.’ The moral lesson: Simply stay in contact. You can do it once a month, and if you opt to do it more often, make sure that you respect other people’s time.
The main point is to stay in touch even if you use some weak or lame email or phone call it’s fine for as long as you are keeping in contact. This means you are staying within the “Top-of-Mind” zone. You are just reminding your customers that you are still in business and you still have more to offer. The key is to just keep at it and do so for six months to a year, then assess the outcome of your sustained efforts. If during this period, your competitor drops the ‘communication ball,’ then you’ve won half of the battle and you’ll likely rocket blast ahead and keep the profit flowing. You know why? Simply because you exerted the effort to keep in touch…
Finally, in regard to the above, bear in mind that not everyone is your customer. So concentrate on the ones that are. Cultivate and nurture those relationships and back-end sales.
P.S. Thanks to Mac Bull for providing the original idea and inspiration for this post.