In this new economy it will take more than having the best product, the best location, and the nicest and friendliest staff to keep customers. To thrive we will have to change our business practices from transactional to relational. Business owners can sometimes be like that greedy dog in Aesop’s fable that lost its bone. Right now you might spending thousands of dollars advertising in newspapers, the yellow pages, radio, billboard and on the internet trying to capture that new customer (patient/client). While this is going on, clients are leaving in droves to go to the competition. You figure that it must be the economy why your business is failing.
Here’s a true case in point. I have a shipper in Central Florida that I have used a few times over the years to send barrels to Trinidad. The owner was a pleasant guy and provided good service. He has never communicated with me over the years even though he had my name, address and phone number. My mother needed to ship two barrels to Trinidad. Whilst she was reading a Caribbean newspaper, she saw an ad for another shipper and tore it out. Thankfully for my shipper, I found out about her plans. I went hunting for him on the internet, got his phone number and referred my mother to him. Guess which shipper she used?
Not all customers are like me – loyal and willing to go the extra mile to track a business down so that they can refer others to you. As you already know, a referred client is more likely to use your services than one who might have seen your ad on the internet. How many of your customers have left you for the competition, because when they had a need for your product or service you were nowhere around? You’ve never bothered to stay in touch. How many of you are just as guilty as my shipper?
So why should every business spend time and money focusing on existing customers? I’m glad you asked. According to marketing guru Dan Kennedy in his book No B.S. Direct Marketing, “If you leave your customers alone for very long, if they feel ignored or underappreciated, they are more easily lured away.” It is a given that we do need to get new customers to replace the ones that may have moved, died or unsubscribed. Or to just grow our business. Nevertheless it costs much more money to get a new customer than it is to market to an existing customer list. According to the late business guru Peter Drucker:
- Your business has a 1:14 chance of doing business with someone with whom you have never done business,
- You have 1:4 chance of doing business with someone with whom you have had a relationship but have stopped and,
- You have a 1:2 chance of doing business again with an existing customer.
I am not a gambler or prone to take high risks, so I like the 1 in 2 odds better.
In short, a client who knows who you are (because he has spent money with you before) needs less convincing that someone who has never used your service before. I am taking it for granted that, as a business owner, you are providing a good product and/or service. Therefore, your clients can become your main source for new business (i.e. referrals). So from a financial standpoint it’s more profitable to spend some of your marketing dollars on your existing clients.
Regardless of the business you’re in (day care provider, accountant, mechanic, medical practitioner, contractor) – to be successful, you must also become good at: acquiring customers, keeping customers, and influencing customers. The business owner who sets out also to master these areas will never be a casualty of the economy.
Sherry Daniels is the manager of a 20+ irrigation business in Central Florida. For a FREE REPORT on “How to build a fence around your customers” email her at [email protected]
