Over 90% of small business owners are letting money walk out the door of their business each day. Small businesses work hard to acquire new customers, yet many are missing an untapped source of sales. Are you one of them?
Studies have shown that it’s easier to sell a customer the second, third or fifteenth time than it is to sell them the first. And with each sale, your costs go down. You don’t have to work so hard.
It’s ten times more expensive to acquire a new customer than it is to retain an existing one, according to a Bain & Company study. Do you know how much it costs you to acquire a new customer? You should. Add up your tangible (printing, ad costs, etc.) and intangible marketing expenses to determine the total cost, then divide it by the number of new customers you acquired. Don’t forget to put a monetary value on your time and include it in the total.
When I ask small business owners what action they are taking to keep in touch with current customers, the answer is normally “we don’t.” You’re missing a gold mine of opportunities to make easier sales and create a loyal following of customers that will return time and again if you don’t use your existing customer base to grow your sales.
A 5% increase in customer loyalty can result in 60%-80% greater profits, according to an Insight Technologies report. Yes, really. And you don’t have to work as hard to sell an existing customer as you do to sell a brand new customer. If you had 100 customers that typically made purchases for $1,000, you’d have $100,000 in sales. If five of those customers (5%) were loyal customers who made additional purchases amounting to $12,000 each in any given year, you’d have $60,000 more in sales (60%) – with a lot less effort than it would take to acquire 60 new customers who each buy $1,000 of your products or services.
Customer loyalty is not rocket science. So, where do you begin? There are three keys to creating customer loyalty.
Key #1: Know Who They Are
Do you? Compile and maintain a list of your customers. Track their habits – what they buy, when they buy, how much they buy. Monitor your list so you know when they are doing business with you differently.
Key #2: Know What They’re Worth
I overheard a remark the other day. "Oh, that lady. I barely pay attention to her. She comes in twice a week, but only spends about five dollars. What a waste of my time."
Have you had the same thought about any of your customers? Before you dismiss the customer that only spends five dollars, take a look at her long-term value. If this customer visits your business twice a week and spends five dollars each time, her total contribution is $520 dollars for one year. If she purchases the same amount over a ten year period, that's $5,200 dollars. Not a bad sum of money. And it doesn't stop there. If she's a happy customer, she'll more than likely tell a few friends. Let's be conservative and say she tells ten friends who have the same spending habits she does. Do the math. Over ten years that would amount to $52,000 dollars. Your five-dollar customer is worth $57,200 dollars!
Key #3: Take Action
Your customers are busy people. They need to be reminded that you exist and how you can eliminate their pain (wants or needs). Have you ever received mail from a company and decided to save it so you could “check them out later?” Then you find that piece of mail in your “to do” stack months later and realize you never contacted them. Your customers do that, too.
Your success is dependent upon consistent contact with your customer. Set up a standard system that will keep your business in the mind of your customer on a regular basis. At a minimum, your contact intervals with your customers should be 30 days/60 days/6 months/12 months. Your contact system should include standard reasons why you contact your customer and how that contact will be made. Don’t just send "buy" messages.
Remember, your customers are people, not just someone you want to sell your product or services to. Connecting with them on the personal level will help them recognize how much your company values the relationship and create long-term loyalty.
Create an action plan that defines what you will do each month to keep in touch with your customers. This is the most critical step. None of the other activities will matter if you don’t act on them. Start today.
How do you maintain contact with your customers so they remain loyal to you? Let’s talk about it.
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June 30, 2009
Creating a Customer Loyalty Strategy Will Benefit Your Future Bottom Line
Over 90% of small business owners are letting money walk out the door of their business each day. Small businesses work hard to acquire new
