June 10, 2013
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….
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:
(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:
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:
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.”
Posted in Advertising, Blog, Direct Response, Marketing, New Business, Online Marketing, Research, Sales & Marketing, Strategic Planning | 3 Comments
Tags: Advertising, Customer Service, LA ads, Marketing, Marketing Plan, Messages, New Business, Relationships, Response, Retention, Sales & Marketing, Social Media, Strategy, Value proposition
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I find this post very valuable. Being a marketing entrepreneur, i must say i see companies making the same mistake over and over.
Excellent post…do you think funeral homes apply this to the families they serve?
I have always had any offer or special open to all customers. You are right on the money about bad customer service being the reason customers leave, I have found that even smalls things help keep customers coming back. For instance, “Its great to see you again. You have brought in a sizable sharpening order so let me do those two smaller knives at no cost for you today!”
When a customer has purchased a few of my custom culinary knives I will spift them with a small custom paring knife.
People always enjoy feeling like their business is appreciated! I do small things like this with my current customers rather than spending a lot on discount and freebie advertising that tends to bring in people that are only after the deal and without it you will never see them again.
Focus on your current customers and their word of mouth referrals keep the new quality customers coming in the door.