To grow your business, “Love the one you’re with,” then target new customers

This article was originally published in Sacramento Business Journal on August 12, 2016.

Customer-Retention

We are living in the age of “shiny objects” and very short attention spans. Couple that with a smart phone in almost every hand in the United States (according to the last Pew Research Center study, close to 70 percent of all Americans own a smart phone), consumers are experiencing information overload at every turn. Today’s marketers have an ever-increasing hard time reaching their current customers much less new ones. So to borrow from singer-songwriter, Stephen Stills, it might make more sense for marketers to “Love the one your with.”

A common trap for entrepreneurs and sales organizations is to focus too much time and resources on business development while forgoing the opportunity to nurture current clients. I am not at all suggesting you reduce your focus on new business, but rather that you increase your focus on the loyal customers you’ve already acquired.

As any good business person knows, every new customer is added revenue, and the more customers a company brings in, the more revenue it generates. According to an Econsultancy survey, 44 percent of brands focus intensively on customer acquisition, while only 18 percent concentrate heavily on customer retention. Although this strategy may seem effective on the surface, that 44 percent is overlooking a huge opportunity.

 

Customer retention is a game-changing principle for business growth.

 

The White House Office of Consumer Affairs reported that loyal customers are worth 10 times the value of their first purchase—which makes them a fundamental source for increasing revenue. Lee Resources Inc. stated that acquiring new customers costs an average of five times more than retaining existing customers. Marketing Metrics reported they’re only five to 20 percent likely to buy; on the other hand, existing customers are 60 to 70 percent more likely to buy, so it’s important to consider the real cost of taking customer retention for granted before finalizing a “new customer priority” approach.

The first step to keeping your current customers happy is great customer service.  This is vital to strengthening customer retention; however, strong customer service alone isn’t enough keep current customers coming back.  Your customers are looking for more than a few pleasant experiences.  They are looking for you to step up and out of the crowd—to make them feel a part of your business and brand. They are looking for you to move beyond typical marketing tactics and connect with them on a more meaningful level.

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So how do you better connect with your current customers? By keeping it simple but compelling. I recommend the following three steps:

Engage

When your business brings in a new customer, you haven’t “closed” a sale — you’ve “opened” a relationship, and that relationship needs to be nurtured. Email marketing is an efficient, user-friendly way to keep customers up-to-date with your latest products, events and specials. Better yet, provide them with something of value to them, not just to you. Segment your email list to provide exclusive announcements and deals to loyal customers first, demonstrating sincere appreciation for their brand loyalty. Like any good partnership, nurturing customer relationships takes time, effort and communication.

Listen

When you know what your customers are saying about your business, you can move them in the right direction. Advocate programs are a worthwhile investment for companies because this type of influencer marketing has a considerable impact on customers that brands alone cannot deliver. Show your appreciation for their unsolicited positive feedback by sending them a meaningful gift or a handwritten thank you note; you will undoubtedly stand out from the crowd.

Respond

What do you do if you find your customers are displeased and telling all their followers on social media? Renowned digital marketing expert Jay Baer emphasizes in Hug Your Haters that negative feedback is a unique opportunity to turn the tables — especially on social media platforms. Publicly respond to every single complaint in a systematic and timely manner. By validating the customer’s concerns and providing solutions to rectify the situation, you are giving the brand another opportunity to earn the customer’s trust.

With every customer interaction, consider how you can keep them engaged with your brand and turn one sale into a lifelong connection and source of long-term revenue. Although all of us get distracted with the “shiny object” of new customer acquisition, for real results, be sure to “Love the one you’re with.”

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