Too often I see small businesses concentrate only on getting new customers and neglect their existing customer base. It certainly is easy to focus on bringing in new sales, but you must not forget about retention and upselling efforts.
Best practices tell us that for most businesses, new customers should represent only 10 percent of sales. The other 90 percent should come from existing customers. With existing customers generating the bulk of your sales, it’s crucial to have strategies for keeping and growing these existing accounts.
One secret to growing and retaining customers: Make sure you have regular contact with them. One of the best ways is having a loyalty program.
Many companies already use loyalty programs to cultivate repeat business, but I have found that some are set up to help the firm and not the customer.
Never miss a local story.
10 percentBest practices tell us that for most businesses, new customers should represent only that percentage of sales. The other 90 percent should come from existing customers.
For example, I was recently in a pet store buying a treat for my lab, Sophie. After I paid, they gave me a rewards card that stated if I spent $200, I would receive 10 percent off my next purchase. I immediately threw the card away because I knew it would take me more than a year to spend that amount. Plus, 10 percent off simply wasn’t much of an incentive.
To have a successful loyalty program, rewards must be easily attainable and have direct value to the customer. Movie theaters, for example, frequently offer discounts on ticket prices. In addition, loyalty members can get popcorn and drinks upgraded to a larger size when showing their loyalty cards.
In addition to loyalty programs, e-mail communication can be effective as a retention strategy. A recent study showed messages that were sent via e-mail were more effective than social media. The key is communicating frequently but not over-communicating. If you have not heard from a customer in a while, it can be effective to send a note to reinforce that relationship.
One secret to growing and retaining customers: Make sure you have regular contact with them. Another way to cultivate repeat business: Delight your customers in unexpected ways.
Another way to cultivate repeat business: Delight your customers in unexpected ways. Sending a box of cookies or a gift certificate is an easy way to tell a customer you appreciate them.
When customers feel valued, they are more likely to remain loyal and do more business with you. In fact, another recent study showed the longer you keep a customer, the more products and services they will use, which makes your profitability higher.
For example, I hired a landscaping company to do routine maintenance – mowing and shrub trimming. After some time, however, I came to trust the company and enlisted their help for putting in a driveway extension and for reworking our landscaping. What started as routine service became a much more profitable relationship, and all it took was time and keeping me as a customer.
Now go out and make sure you have implemented effective strategies for retaining and growing your existing base. By doing so, you will improve the quality of service you provide and increase your profits as well. And, as most of these strategies have minimal costs, there is very little risk.