Understanding the Importance of Customer Retention in Your Marketing
For most small businesses, marketing campaigns focus primarily on turning prospects into purchasers. However, you shouldn’t neglect your existing customers who already contribute revenue to your business.
Why should your marketing strategies pay attention to existing customers? Keep reading to learn more about this surprisingly simple, yet hugely effective, marketing tactic.
It’s cheaper to retain an existing customer
As a small business owner you’re undoubtedly concerned with the return on investment that you receive from your marketing efforts… and that’s one of the top reasons you shouldn’t ignore existing customers in your marketing.
Back in 2013, Econsultancy and Responsys released a Cross-Channel Marketing Report designed to prove the value of fostering customer relationships. 70% of the respondents surveyed agreed that “it is cheaper to retain than acquire a customer”.
When asked to compare the ROI of acquiring a new customer versus cultivating an existing relationship, 49% of the respondents agreed, “pound for pound, we achieve better ROI by investing in relationship over acquisition marketing”.
Take a moment to think about your own customer base — would it be more cost effective to focus the bulk of your efforts on people who already love your brand? Determine your average spend for gaining a new customer and do the math to find your break even point. What you find could surprise you.
Many consumers are “tuning out” marketing efforts
The Econsultancy report had another interesting finding: 61% of the people surveyed felt that consumers were ignoring, or tuning out, traditional mass marketing messages.
This is extremely important to remember. Consumers are becoming increasingly savvy and aware of the marketing messages being presented to them, so your business should approach marketing differently to win over newcomers.
Thankfully, existing customers can help you approach your marketing in an effective and “non-salesy” way.
Existing customers can enhance your customer acquisition strategies
Happy, loyal customers are among the most effective marketing tools that you have. Social proof is a powerful thing and current customers can provide new customers with the information they need to commit to purchasing.
How can they do this? Through testimonials.
By taking care of your existing customers and making a commitment to their satisfaction you ensure that those consumers will come to love your business. Then, you can ask them to write testimonials and leave reviews. New customers will feel more confident seeing this proof and will be more likely to want to work with your company.
Existing customers have dramatic profit potential
Your current customers are most likely going to spend more than any new customer will. How much more? According to Inc.com, a repeat customer will spend 67% more than a new one.
This figure doesn’t mean that you should completely ignore new customer acquisition, but it proves an important fact of business: your existing customer base helps form the backbone of your brand. Use your marketing and outreach efforts as a way to keep them happy and loyal. If you play your cards right, the prospects will follow.