Knock on Old Doors: Your Very Best Customers are the Ones You Already Have
I said in my last post that failing to connect and cultivate your existing customers means that you are missing the chance to grab some easy incremental profits. Deepening your involvement with your current customers and increasing their average spend as well as locking them in for life (relationship marketing) is the real key to building an increasingly valuable business.
I call this strategy “knocking on old doors” because these customers are already in the tent (which means there are no new acquisition costs) and you’re already touching them (hopefully on a consistent basis) so now you simply have to up the ante and the incentives and you’ll see some amazing results. And, by the way, upping the ante and improving your connections with these current customers doesn’t have to cost you a dime more – it’s usually just a matter of attention and focus.
Instead of spending money chasing new customers (conquest marketing) or trying to steal customers from the competition (often by competing on price – which is a bad thing to do any time), you should stick to your knitting and direct your energies and your efforts to the lowest-hanging fruit – the people you’re already doing business with. Just do a better job of that and they will take care of the rest.
The other equally wasteful activity is to spend too much time fretting about why customers who do leave left. It hurts, of course, to lose any customers (especially when you're small), but when you do the math, you quickly discover that customer defections (unforced by errors) account for a few percentage points of total revenue - an amount that can quickly and exponentially be offset by redirecting the same funds and resources used in the "why'd they go" exercise to engaging more deeply and meaningfully with the next higher tier of remaining customers which is always a much larger and more valuable population. A small overall improvement in this pool of customers will mean a lot more economically than trying to chase a few people who've left.
And if that math doesn't convince you in and of itself, here's the closer from one consumer survey we did for our large banking customers. More than 55 percent of customer defections on an annual basis were caused by two uncontrollable and unavoidable events - death and job transfers or other geographic relocations. All the fretting in the world won't keep the family in town if father's new job or position is halfway across the country.
None of this is rocket science – it’s just common sense. Happy, “cared-for” customers spend more. And “organic” customers (basically home-grown) spend LOTS more than customers acquired through one-off marketing spends, promotions, and other incentives that may attract incremental customers, but don’t create lasting connections to them. And sometimes customers leave you for reasons beyond your control. But what you may not realize is that the happy customers who stay with you also boost your business and your profits in a multitude of other ways. Here are some of the basic ways that your customers increase your profits when you “knock on old doors”:
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Yep, it’s a fact. You can even charge your happiest customers more for certain types of status and premium offerings and they will stand in line to pay the tab. And they’ll bring their friends, family and co-workers as well. So, the bottom line is that the care and feeding of your customers is even more important and valuable to your business than you imagined.
Constantly migrating your customers up the spending curve needs to be an on-going part of your marketing strategy even though it's technically "internal" marketing and, for that reason, it often gets overlooked or pushed aside. But if you want to "own" your customers for life, great service, careful listening and continual customer maintenance are crucial.
PP: “You Get What You Work for, Not What You Wish for”
