Are you spending all your marketing dollars and time tweaking your website, developing landing pages, researching keywords, putting up anything on social media and giving fistfuls of cash to Google and Facebook for advertising?.
Of course online marketing is crucial to your future viability. There’s no doubt about that. But it can become so all-consuming, that we can forget about the most important, fundamental thing we should be doing which will make us more money and be infinitely more satisfying than chasing new clients all the time.
What Is the Most Important Thing?
Looking after our existing customers. That’s what.
And here’s three irrefutable and compelling reasons why we suggest you divert some of your effort into Retention Marketing.
Marketing to your customers – or retention marketing as it is known - involves keeping your existing customers engaged.
Why Retention Marketing is Worth it
1. It’s far more profitable
Research produced by Harvard Business School states that increasing customer retention rates by just 5% increases a business's profits by 25-95%
Because it costs far less to market to your existing clients than it does to attract new ones. The generally accepted rule of thumb is that it costs five times more to acquire a new customer than it does to generate repeat business from an existing one.
The cost per sale is lower because:
- Communicating with them is cheaper. You have the choice of emails, newsletters, social media posts, social media customer groups, direct messaging and good old fashioned phone and mail.
- Response rate is higher. As they have already purchased from you and you have gained their trust, the cost per sale is much lower because the response rate is higher. The probability of selling to an existing customer is 60-70% while the probability of selling to a new prospect is 5-20%.
2. Revenue is higher
Existing customers are 50% more likely to try new products and services and spend 31% more when compared to new customers.
The secret is to focus on the potential lifetime value of every new client, rather than the immediate sale value. It’s a mindset shift, and if you can make that leap, you’ll find it will have a significant impact on your future revenue and profit.
3. Customers recruit new business for you
Delighted customers will sing your praises to their friends, family and colleagues - in person and on social media and review sites.
The Danger of Not Implementing Retention Marketing
You may be thinking: “if someone is already my customer, why should I spend extra time trying to keep them engaged -- isn't the fact that they're a customer proof enough that I've done my job? “
Good question – and one we often get.
The thing is, the fastest way to lose customers is to ignore them. Once they have paid, it’s time to build your relationship with them, not end it.
Indifference is the biggest cause of churn. If your customers don’t feel appreciated, they will soon take their future business elsewhere.
- The first thing to consider is how you treated them and made them feel. This is even more important than doing a good job.
- The second thing to consider is how you treat them after they’ve purchased. Ignore them at your peril.
Tips for Effective Retention Marketing
So how do you integrate retention marketing into your business?
- Revamp the culture within your company so that everyone is focused on how you make people feel.
- Implement retention marketing into your marketing strategy and campaigns.
We’ve prepared a free checklist of 34 things you can be doing right now to improve customer retention.
Download it now and see how you can increase repeat and referral business and reduce your overall marketing costs. You will be kicking yourself for not doing this a long time ago.
Seth Godin summed up today’s topic oh so beautifully.