I regularly work with small business owners who are so focused on growing their customer base that they ignore their existing customers.
What most don’t realize is that existing customers are far more profitable than new customers. In fact, it can cost you 5 to 10 times more to get a new customer than it does to service an existing customer. In addition, if you can increase an existing customers’ loyalty or purchase frequency by just 5%, you can increase your profitability between 25% and 85%!
So why is that? Well, when you consider how much effort goes into getting a new customer on the books, it becomes very clear. Think about how many prospects you phoned or emailed. How many quotes did it take to convert one of those prospect into a customer? How many appointments did you have and far did you have to drive and still not get an order? So when add it all up, getting new customers can be a very expensive proposition. But of course we never take those costs into consideration. That would be too painful.
Now compare that to your existing clients. They already know and trust you and that makes it far easier and quicker to get in front of them again and introduce some of your other products or services. In other words you have history with them.Of course you can only do this if you have been collecting their contact information all along. I know of companies that have done business with 1000’s of customers but have not taken the time to collect and manage these customers contact information- What a shame!
So let me ask you a couple questions. What would you do if you couldn’t get any new customers and could only sell to your existing clients? How would change the way you do business?
I’m Greg Weatherdon and this has been your Small Business Minute.
Copyright © Greg Weatherdon 2016
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