Keeping Customers
Most businesses focus major efforts to attract new customers. Marketing strategy, advertising, public relations, sales and all sorts of activities are geared to getting new customers.
But successful businesses know that the real benefits come from keeping existing customers.
When you have loyal customers, ones that do business with you on a regular basis, your business is thriving. It means that you are in sync with your market. You are providing the value that your customers want.
Research has shown that it is four to six times easier to do business with existing customers than new ones. All the marketing cost associated with trying to get the market to even notice you and understand what you offer is not there. The cost of getting customers to switch from your competition is not there. Finally, the cost of making that new sale is not there. The 80/20 rule usually applies to customers. That is when 80% of your profit frequently comes from 20% of your customers.
Why then do businesses spend more effort and money in trying to obtain new customers rather than keeping the old ones?
I believe that too many take their existing customers for granted. You need to take care of these loyal souls. They are the heart of your business. The dream of lots of new customers is elusive. It can come at the expense of your existing ones.
Customer service is how you keep the ones you’ve got. How do you do this?
First you have to understand why your customers are buying your goods or service (market research again). What do they like and what don’t they like. Remember to keep asking them.
Next, develop some sort of loyalty program. These are frequent purchase benefits like 10 punch cards (a free purchase after 10). Restaurants, cleaners, lube & oil shops-many do this. Reward loyalty. Be creative. If 10 cards don’t work for you, give your regular customers something else. Try to personalize your reward program so that you give them something they want. Make it easy for them to keep purchasing.
Finally, thank them for their business. This is the opposite of taking them for granted. Show them that you care. Always do this verbally. But go out of your way with a written note-something special. Be personal and sincere (not a form-letter or automatic email). One of my SCORE colleagues, Ralph Young, in his business, frequently sent out a thank-you post card. In this electronic age, this was different. Be different.
Be careful that you don’t confuse “satisfied” customers with loyal ones. Satisfied are just barely your customers. They are indifferent and may go elsewhere. They have no loyalty to your brand, no commitment. Try to turn satisfied customers into loyal customers.
One critical step in maintaining a loyal customer program is understanding what went wrong when someone leaves. The first phase is to even know that they have left. Do you track your customers’ purchases including frequency and amounts? Sometimes there is just a misunderstanding or a minor bad experience. This is correctable if done on a timely basis. Wait too long and it becomes more difficult. These customers are worth a big effort to get back. Even if you can’t get them back, learning what went wrong is invaluable.
Make sure you are spending the appropriate share of your marketing budget on keeping customers loyal. Loyal customers make successful businesses. They are also fun to work with. Don’t take them for granted.
This article was written by Seattle SCORE Chapter member Fred Parkinson for the Kitsap Sun in Bremerton.