ARE YOU ACTING JUST LIKE most other small businesses out there? Do you ignore or fail to communicate to your existing customers often enough?
I'm not talking about saying “Hello” and “Thanks for doing business with us” when a good retail customer comes in. Or about automatically sending another catalog to a current catalog customer. Do you mail to them? Do you change things? Do you send them new offers? Do you call or write them?
- Accepted Fact No. 1
For the average company, 80% of its new business comes from existing customers. This is true for business-to-business as well as business-to-consumer operations.
- Accepted Fact No. 2
You're most likely to get strong referrals from customers in the first three months after their last transaction. Do you ask for a referral or send a pass-along offer they can give to a friend?
- Accepted Fact No. 3
A new customer or recent buyer tends to buy from you again in the next three to six months. So it seems like a good idea to spend at least some of your time promoting to and selling to your present customers. You put a lot of time, effort and money into getting them. Why waste it by making no attempt to keep track of them?
Do you want examples of how profitable that market can be? Look at how good direct marketing companies work that segment: Lillian Vernon, Dr. Leonard's, Michigan Bulb, BMG Music Service, Hume Publishing and so on all constantly mail to their customer base. Yes, they do test new lists…but always together with their base.
You must continue to do things to attract new customers. People are so mobile now that many neighborhoods experience population changeovers ranging from 10% to 15%. The average small business can expect to lose up to 15% of its customers every year. A pretty good reason to work at getting new ones — as long as you remember that profits come from those you already have.
- Accepted Fact No. 4
It costs five times as much to make a sale to a new customer as it does to get a regular customer to buy from you.
To get a new customer you have to educate them on why they should do business with you. You have to gain their trust and fight their resistance to change to entice that first purchase. That takes time — and it involves a lot of effort.
Have you thanked them for buying from you? Have you checked to make sure they're happy with the purchase they made or service they received? Have you offered them an incentive to come back? Have you let them know about new products or services?
It's impossible to overemphasize the need to promote to your customer base. Your future depends on it.
