In a dream world, a small business would start each new year with the knowledge that it will retain 100 percent of the previous year’s business. Unfortunately, the odds of that happening diminish the larger your business grows. Consumers move away or business-customers may change jobs or ownership. Each year starts knowing that you first have to replace the “leaky bucket” of lost business. Unfortunately, the expense of acquiring new customers far outstrips the cost of retaining old ones. Research reveals that by shifting even small amounts of your marketing budget to reaching existing customers can have a positive and significant impact on your company’s sales. So how do you maximize the retention and loyalty of current customers and clients?
This data about marketing doesn’t add up
A couple of years ago, Adobe analyzed 33 billion visits to 180 major online retailers worldwide. Here’s what they discovered:
80% | Percentage of digital marketing budgets spent acquiring traffic (banner and search ads)
20% | Percentage of digital marketing budgets spent on communicating with existing (returning) customers
8% | Percentage of traffic from existing customers
40% | Percentage of revenues coming from existing customers
Let that sink in | The average online retailer spent 80 percent of its marketing budget on a category of shopper that generates 60 percent of its revenue while spending the other 20 percent of its budget on a category of shopper that generates 40 percent of its revenue.
Bottom line | Adobe analysts estimated that among these major retailers, each 1 percent of shoppers who return for a subsequent visit represent and increase in revenue by approximately 10 percent percent. Or, said in another way: If the online retailers invested in keeping another 10 percent of their existing customers happy enough to keep buying, they would double their revenue.
How to reward the loyalty of your current customers or clients
Add value to your product in simple ways
Don’t just sell products or services to an existing customer or client. Teach them how to use those products. A great example of a big company that does this is Williams-Sonoma. They are a company that used to focus on selling pots and pans. Now, their company mission says they are a company that helps their customers become better cooks and entertainers. Customers don’t just buy your product. They buy your help to accomplish what they were seeking when they purchased your product. Find your version of what Williams-Sonoma does: Don’t just sell pots and pans, help customers become better cooks and entertainers.
Add value to your product in creative ways
Customer appreciation comes in many forms. Add value to your product or service by adding something special. Be creative. We know of businesses who have provided their most loyal customers free parking in their parking lot for after-hour events like high school football games, Fourth of July fireworks, and arts and crafts shows. Finding that hidden bonus of being your customer will be like an Easter egg hunt. It’s there but you may have to search hard to find it.
Reward and celebrate loyalty
Don’t be like the cable and mobile phone companies that spend most of their marketing dollars on trying to get new customers to break contracts with their existing carrier. Have special sales for long-time customers. Offer special classes or prizes or other promotions to show your appreciation for loyalty. Surprise recurring customers with the kind of rewards only they can receive.
Go Offline
You’re not a mass marketer, you’re a local or tightly-focused industry vertical business. While you should use digital tools to serve your customers, realize that one of the reasons customers want to support you is your size and proximity to them. Go out of your way to find ways to meet face-to-face. Use the phone and talk, not email. Use paper to communicate. Use handwritten notes, not typed ones.
Support your community or industry in partnership with your most loyal customers.
When charities seek your support, find a way to involve your most loyal customers in targeting the causes they support. Consider starting a customer advisory committee that will meet once a year to help you focus your major community support efforts.
(HT: Yodel Insights)
Illustration: ThinkStock