“Every company’s greatest assets are its customers, because without customers there is no company.”
– Michael LeBoeuf
Investment in the retention of existing customers lags behind the investment that companies make in customer acquisition. A common line of thinking is that a company’s products or services are great enough for customer retention to be automatic. While this vein of thought might work short term, customers who don’t feel a connection to a brand or feel undervalued won’t remain as long-term clients.
That being said, customers leave a company for reasons other than feeling undervalued or disconnected. Customers die, they leave your market completely or possibly receive the same services or products via a friend or acquaintance. Perhaps a customer is persuaded to work with a competitor or is simply dissatisfied with your company’s service.
For all of these reasons, brands need to continuously earn their customers’ loyalty. Especially given the number of studies that have found it is easier and less expensive to sell to existing customers compared to new customers. More specifically, let’s look at reasons why you should cater to your existing customers.
Why You Need Existing Customers
1. They average better conversion rates than new customers.
Unless a consumer had a poor experience with your brand, odds are good they will purchase from you again. Your previous interactions have inspired confidence in your services or products and you’ve established a solid level of trust with those consumers. Those earlier sales also make it easier to target consumer needs and predict their purchasing behaviors.
2. They yield higher profits than new customers.
The Gartner Group states that 80% of your brand’s future revenue will be collected from 20% of your existing customers. Consumers who are familiar with your brand and the value proposition offered by your products or services are less focused on price than prospective customers. Because of the relationship you’ve built with them, it is easier to persuade them to invest more through cross-selling and up-selling.
3. They require fewer marketing dollars than prospective customers.
Having captured a customer’s personal information and providing them with your website and social media as resources, you can utilize less expensive means of marketing to continue your communications. Email campaigns are absolutely free and organic traffic can be easily created on your social media accounts.
4. They are a channel for suggestions on how your brand can improve what it does.
Serious mistakes a business can make is first, to not seek out client reviews on their buying experience and, second, to not listen to what the consumers have to say. Ask for customer feedback on your customer service, your products, and so on then respond to any helpful and constructive criticism.
In short, never underestimate the value of customer retention. A proactive approach to retaining your customer base is the most effective way to maximize your brand’s revenues. Strategies that provide solutions to consumer problems, as well as other benefits, are key. Let’s take a look at some more techniques that will help you cultivate and strengthen your base.
1. Don’t just sell, build relationships.
It takes time to cultivate authentic relationships. Businesses with a longer sales cycle have more time and opportunities to get to know their clients. Businesses with shorter sales cycles must dive right into relationship development in their initial interactions with clients by providing prompt service, asking relevant questions, and showing an attitude of concern and competence. The stronger the business-client relationship, the more likely it is you’ll be able to work through any situations where the sales process doesn’t go according to plan.
2. Deliver targeted messages.
You’ve heard the saying – deliver the right message to the right person at the right time. You should differentiate the messaging delivered between different segments of your existing customers. Consumers are more likely to continue their relationship with your brand when they feel you understand their needs and how your specific products or services will help them address those challenges.
3. Provide all of the information your customers need to make informed decisions.
Information about anything can be found with a few clicks and keystrokes. However, you have little control about what information about your brand may be available on the Internet or social media platforms. To assuage consumers’ needs to be educated, be sure your sales staff and all employees are well informed about your products and services and able to confidently and accurately relay that information to your customers. Provide all relevant information consumers need to be able to make informed purchasing decisions.
4. Keep high-quality customer service as your number one focus.
Providing consistently top-notch customer service throughout all portions of the buyer’s journey is essential to retaining and cultivating loyal customers. The customer service switch should not be flipped on only when a customer expresses dissatisfaction or raises a concern. Every interaction with every aspect of your brand should be a positively memorable experience for your customer base.
In today’s world of technology, many of your customer retention efforts can be assisted through the utilization of a Customer Management System (CRM). A CRM provides a centralized place from which you can manage your business relationships and all of the data and information associated with them. These software systems can help you understand who your customers are and what sort of marketing they best respond to.
CRMs give you the tools that will help you manage all of your customer engagement activities. A solid customer database provides your business with a solid foundation from which to build customer partnerships and continuously grow your business.
1. Individualize your approach to each customer.
CRM software provides information regarding each customer’s purchasing history. You can use this information to understand what kinds of offers will be most relevant and attractive to individual customers. Targeting customers with special offers such as new products, special discounts, or other types of additional values will not only help keep your brand in the front of consumers’ minds but will also help revitalize their interest in your products or services and increase conversion rates.
2. Offer VIP standing and special discounts to your most profitable customers.
Your CRM will help you determine which of your customers bring in the most revenue. This information will let you more efficiently allocate your resources to focus on continued relationships with these consumers. It also allows you to focus on up-selling and cross-selling efforts on customers most likely to be convinced they need to expand their purchases.
3. Make follow-up communication as personalized as possible.
A follow-up email that tries to convince the customer to take action or is filled with spammy trigger words will rarely elicit a response. Highly tailored follow-ups help a consumer feel they are an important part of your customer base and not just another number. Utilize the specific information your CRM provides to craft follow-up communications that show your knowledge of the individual consumer and understanding of how your brand can best provide service to that person’s needs.
4. Do what you’ve said you will do when you said you would do it.
CRM software allows you to schedule follow-up communications in advance whether they be in the form of emails or phone calls. The system helps you manage and keep track of appointments, communications, and any additional tasks you’ve promised a customer you will handle.
5. Proactive efforts work best to prevent the loss of a customer.
Your CRM can help you notice any warning signals that you may lose an existing customer. The CRM tracks important variables like customer service inquiries and purchase patterns. By analyzing these elements, you can become aware of any concerning changes in customer behaviors and proactively communicate with that customer to work on re-engaging him and fortifying the business-client relationship.
New customers require more time, effort, and money to convert than do those people in your current customer base. And, existing customers are more likely to purchase your products or services than prospective customers are thereby giving you the greatest chance to increase your revenue.
So, while you are working on bringing in new clients, remember to also concentrate on cultivating your current customers into brand-loyal, life-long clients. Focus on personalization and providing top-notch customer service. Invest in a CRM to help you collect and manage not only customer information but also your brand’s customer engagement activities.
The team at Strategy Driven Marketing knows firsthand the importance of retaining existing clients. We’d love to learn more about your brand, your business goals, and formulate a customized marketing plan focused on cultivating your current client base. Contact us today to get started!