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The focus for many entrepreneurs is often on securing new customers.
While this is clearly important and warrants a strategy and associated resource, many business owners overlook the importance of retaining existing customers.
Existing customers have already spent money with your company, which means you’ve already earned their trust. In addition, if you have a good product or service, the chances are that existing customers would trust you enough to buy from you again.
According to Bain & Co. it costs anywhere from five to 25 times more to acquire a new customer than it does to retain a customer. They also found that increasing customer retention rates by 5 percent increases profits by between 25 percent to 95 percent.
To adapt a quote from the famous 1967 Cat Stevens song The First Cut is The Deepest: In business, the first customer is the hardest. So, once you have a customer, it is important to double down and keep that customer — or, better, increase how much that customer is spending with you
Here are three ways to encourage existing customers to do more business with you:
Assuming you have a product or service that solves the problem of your target customer group, customers will likely give you the first opportunity to help them before going elsewhere. As such, you need to take advantage of that window.
One of the ways in which you can do this is through upselling them on products that complement what they have already bought from you. If they’ve already purchased an online training product from you, for example, then they might also welcome one-on-one coaching for more tailored business advice.
Typically, your upsell will be a higher-ticket item and will allow you to continue your relationship with your customer.
Some businesses intentionally sell initial products or services at a loss so they can win over a customer and gradually sell them higher-margin products.
If you’ve not already planned upsells in your business, you need to start considering what you could offer.
2. The loyalty program
A loyalty program is nothing new, but it works really well. Many of the world’s most successful businesses have been using them for year.
A good example of a loyalty program is Amazon Prime. Prime gives users two-day shipping for eligible purchases, unlimited streaming of movies and TV shows with Prime Video and the ability to borrow books from the Kindle Owners’ Lending Library for $99 a year.
3. Customer service
Somehow, customer service continues to be an underestimated tactic for business growth. However, in order to make an impression, excelling in providing great customer service is the key.
In fact, poor customer service is one of the main reasons that many consumers switch suppliers leading to customer attrition.
Employing these three strategies in your business will compound growth by reducing customer acquisition costs while, at the same time, allowing you to sell a broader product set to help your customers and solve problems important to them.