What does this popular country song by Johnny Lee have to do with this blog post? Well, this week my neighbor received a really attractive offer from a company with whom I’ve had a long standing relationship. When I called the company and asked if I could get the same offer, I was told “Sorry. That’s for new customers only.” When I then asked what offers did they have for current customers, I was told they’d get back to me on that. I have yet to hear from them.
So, with that in mind, have you noticed how many companies offer deals only to new customers? Sign up for our new program and the first month is free! Special gift for new customers only! Try our new product and we’ll give you more than you asked for! Here’s the problem with those type of offers: They focus on new customers and not the ones you already have. As a loyal customer of that business, it would be nice if you could take advantage of some of those special offers too. Trouble is that they’re for new customers only. You, on the other hand, have been supporting the business for years but you get nothing. Nothing for your dedication and loyalty.
Most people think that growing a company’s sales means getting new customers. Well, yes and no. Yes, new customers are constantly needed, but truly successful companies prosper on their ability to keep the customers they’ve already acquired. The reason is simple. Finding new customers is expensive and time consuming. For example, let the following research statistics wash over you….
- The cost of acquiring a new customer is estimated at 6 to 7 times what it costs to maintain a current one.
- The probability of selling to an existing customer is 60 – 70% while many companies consider a “get new customers” campaign successful if just over 5% of the prospects contacted end up buying.
- You are twice as likely to close business with a lost customer than you are with a prospect.
Not to mention that current customers give invaluable feedback on “how we did” or “how the product/service is doing” along with being a major source of referrals, etc. That’s why losing a good customer to the competition is always a bad thing. You have to work more than 10 times as hard to get enough new customers just to make up the revenue lost with your departing one, and forget about profit.
Which brings me to the question that begs to be asked: “Why do customers leave?” Curiously, most business owners and managers have the exact wrong idea about why customers leave. Most people believe that customers leave because:
- They found a lower price.
- Their needs changed.
(Drum roll please)…Wrong!
According to an in-depth study by the research firm CRMGuru, the reasons customers give for taking their “business down the road” are:
- Bad customer service: 74%
- Poor quality of product: 32%
- Pricing: 25%
- Functionality/Needs change: 15%
As you can see, when it comes to keeping your existing customers, customer service is 3 times more important than price–and 5 times more important than functionality. Which obviously means that if you want to keep the customers that you’ve got, you should think about reversing priorities and pay more attention to customer service and quality–and, consequently, less attention to functionality and price. I fully realize that this runs contrary to 90% of what most people think is important, probably because price and functionality can play a large role in new customer acquisition.
So what can be done to maximize the value of your most valuable asset? Here are five quick thought starters:
- Anyone can “satisfy” a customer. But only when you continually make them happy will they keep coming back. Do this consistently, and you will have a customer for life.
- Give personal attention to customers who are going to reciprocate by being consistently good purchasers of your product or service. The more your customers feel as though you are treating them individually, the more likely they are to continue their relationship with you.
- Provide a meaningful, and I mean meaningful, loyalty program. Whether it’s in the form of preferable rates, bonus products or service offerings, to programs that promote multiple purchases, etc., do something to show them you care.
- Keeping in touch with your customers is about relationships. Customers are most likely to keep buying from you if you have a strong relationship – if they trust you and your product/service. “Reach out and touch them” through email, social media channels, etc.
- Ask them for referrals and then show them your thanks…you know how to do that, right?
Regardless of what you’re selling, your long-term profitability is largely dependent upon your ability to keep current customers, rather than acquiring new ones. While it’s fine to try things to attract new customers to your business, be sure to spread a little love around to those who are already in your camp and are supporting your business. Don’t forget, every now and then, to “dance with the one that brung ya.”