There is no doubt that new customers are the lifeblood of any business because once you stop growing you are effectively starting to go backwards. As a consequence, a significant amount of marketing budgets are focused on attracting new customers, together with issues such as brand awareness, but don’t forget your existing clients.
The cost of new customers
It is very useful to sit down sometimes and take a look at the expenses associated with running your business and the cost of attracting new customers. For example, if you have a marketing budget in the region of £5000 to attract new customers, and immediately 100 customers sign up then the simple cost per customer is £50. Over the life of their relationship with your business, you would expect to make significantly more than £50 profit per customer, but this is down to the quality of the products/services which you offer.
Communicating with existing customers
If you were ever to neglect your existing customers in favour of attracting new ones, then there may be significant cost implications going forward. If you lost for example 10 existing customers due to a lack of communication and a lack of offers then, in theory, using the figures above, it would cost you £500 to attract the same number of new customers. So, what do the statistics tell you and how can you keep your existing customers happy?
Newsletters, emails and even telephone calls where applicable offering your regular customers discounts on products for a particular period, freebies and incentives to recommend friends and family may reduce your short-term profit margin but could improve your overall profits. Regular communication with your customers not only breeds loyalty, and makes them feel “special”, but it will also reduce “leakage” of customers.
When you bear in mind how much time, money and effort you have spent attracting your existing clients, it is crazy to forget them to concentrate on new clients. You will need to find a balance; you will need to compare and contrast how offers are accepted, and while new customers are the lifeblood of any business going forward, all customers should be treated equally.
Incentivise customers to recommend friends and family
If you work out that each new customer costs you in the region of £50 when taking into account marketing costs, why not incentivise your existing customers to recommend friends and family. What level of incentive you offer them is open to consideration but remember that a recommendation to friends and relatives from an existing customer is a rubber stamp of your quality services/products. Nobody in their right mind would recommend a substandard company to friends and family; therefore, this type of recommendation is worth its weight in gold.
It is very easy to get caught up in the quest to increase the number of new customers but never forget your existing clients. There is a cost in attracting new customers in terms of time, money and effort; therefore, those that do purchase from your company are as important going forward as new clients. Simple regular communication, offers and incentives will build brand awareness and brand loyalty which will reduce the chances of your existing customers looking elsewhere. That is the key to long-term success!