Retaining existing customers Vs acquiring new ones

One of the big questions small business owners ask, particularly when they are starting out and resources are limited: is if marketing budgets are small, but there are revenue targets to hit, where should efforts be focused?

You’ve probably got a pool of existing customers ranging from loyal repeat purchasers, lapsed clients and one-time buyers; they may or may not be currently spending money with you, that doesn’t necessarily mean they’ll never spend money with you again, they likely came to you for a reason and so have previously engaged positively with your brand.

But, what about those shiny new customers that you hear of, out there with full purses waiting to buy your product or service? Yes, these do exist, and you’ll get to meet them in time, but before you start ploughing all your money and efforts into finding new customers it’s worth putting a plan in place to retain the customers you’ve got.

Stats show it costs five times more to acquire a new customer than it does to retain your existing customers. Have you ever sat down and considered how much your customers are worth? Figures and spreadsheets might not be the most exciting part of marketing but it’s certainly important. Consider two things:

1. What is the value of your average customer?
2. How much does it cost to acquire a new customer?

Having a plan in place to keep happy customers on board for as long as possible is important before you go out and start welcoming lots of new people to your brand. Yes, it’s great to get as many sales and customers on board, but what about when they stop spending money or look elsewhere? Having a solid customer communication strategy that keeps customers with you will prevent you chasing around and trying to win them back at a later date. Think about it, the customers you already have, previous or current, have already bought from you, they like what you offer and know what they’re getting – so by keeping them on board, you’re actually saving yourself time and effort.

What about customers who have had a bad experience? It’s not ideal, but these things do happen. It’s often the way you respond to them in this situation that is more important than what has actually gone wrong. Having a plan in place for when hiccups happen could help to limit the damage and win the customer round with your amazing customer service so all is forgiven.

Think about how you’re currently engaging with your customers, is there anything you could change which would boost communication and increase loyalty? With the opportunity to track, automate and personalise, we are huge fans of SMS and we’ve got lots of handy blogs and tools if you want to give it a whirl.

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