Keeping existing customers happy can be a great way to decrease marketing spend, although this isn’t always obvious. Most clients that I work with want to attract new customers. They talk to me because they want to grow their business – increase turnover, sell more products – get greater bottom-line return.
But almost all of them are ignoring a significant asset and tool for growth potential that they already possess – their existing customer base. Pretty much everyone knows the truism that it costs at least 5 to 8 times as much to attract a new customer as it does to sell to the ones you already have yet most businesses ignore this lucrative source of new business.
And if you can’t confidently answer and quantify the question: ‘Are you losing customers?, you could be wasting marketing money attracting customers who will leave in a few weeks, months or years’ time.
Measure your losses
Until you have quantified the cost of lost customers you are unlikely to do very much about it. But once you do – it could change your marketing strategy – because once you understand what you are losing you realise why chasing after new clients is like pouring water into a leaking bucket.
How can you measure whether customers are leaving you? Of course, this will depend on what or how you sell but one simple way would be to take a list of your top 20 or 100 customers (by spend) last financial year and compare it to this year’s spend. Are there any names missing on this year’s list? Are there any significant decreases in spend which might indicate that although they are still buying some things from you they have decided to take their business elsewhere.
Talk to your sales people, reception staff – anyone who would have contact with customers and ask them if they are aware of any customers who have let them know that they are ‘leaving’.
Keep a record of any customers who notify you that they are leaving and make a note of the lost revenue in each case.
Understand why customers leave
A look at the common reasons that customers leave is enlightening and reveals a startling picture. Most customers leave because they have no reason to stay…NOT because they have a reason to go as these figures show:
Reasons customers leave
- Move away or die 4%
- Personal relationship with competitor 5%
- Competitor activity 9%
- Unresolved conflict 14%
- Product dissatisfaction 15%
- No contact, indifference, poor attitude 67%
(Source: McGraw Hill Research)
Do you know why you are losing customers? Really why, not just the fact they have gone to a competitor – chances are you’ll never really know if they are leaving because of indifference. So, you need to plug up this hole first before you worry about the ones who have been lost because your competitors are aggressively making offers or providing better products.
Talk to your customers
If indifference is the biggest reason customers are lost even more frightening is the fact that for a customer indifference means not hearing from you for 6 weeks or more.
The good news is that you can of course do something about the most common cause of lost customers. You can talk to them, write to them, make them offers, ask their opinion and generally show that you want them as a client. Regular customer communication is certainly worth considering whether it’s a newsletter, a personalised or mail merged text or email – it might even be something that you include with their monthly invoice.
Lots of businesses spend thousands of pounds producing new brochures or websites and forget to tell their existing customers about them. There are any number of reasons, or you might say excuses, to contact your customers. All it takes is a simple system – to diarise the contact, to draft up a message and to administer the mailing. The important thing is to value and treat as valuable the customers you have before you go searching for new ones.