Too many people over complicate business growth because in reality there are only 2 ways to grow your business.
- Increasing Revenue from existing customers.
- Adding Revenue from new customers
Now I am sure that many of you will think, but what about adding new products or increasing prices, but these ideas, whilst valid, still fall under the two options above. If we increase prices or add new products we’re still going to be selling to new or existing customers.
Now whilst we need to attract new customers we also need to see the value of customer retention, as existing customers are one of only 2 sources of revenue for us. Which makes you wonder why so many companies treat their existing customers so badly, especially when you consider the cost of acquiring new customers. According to research carried out by Flowtown and documented in this spoken report, the cost of acquiring a new customer is 6-7 times that of retaining existing customers, so it makes financial sense to treat our existing customers well.
How we treat our existing customers is also going to have a knock-on effect to our new customer acquisition success too.
Existing customers can refer us, and people are 30% more likely to buy when they are referred to us, but also existing customers to whom we provide poor service can also destroy our reputation in the market.
I remember at one restaurant where I received particularly bad services the manager dismissed my claims, and actually said ‘I don’t care, there are plenty more customers where you came from”.
Which was true, but I was now going back to where I came from to tell those exact same customers how awful the service had been, and in today’s internet age it’s not just us telling one or two friends, we can post on social media and let thousands of people know in seconds.
This infographic from Flowtown does a great job explaining the value of existing customers.
Now I am not suggesting that we focus solely on customer retention, but I am suggesting that we need to have a specific strategy set up to manage it.
If we don’t then we run the risk of making those customers one-time only customers. In which case, we need an outstanding customer acquisition strategy and a never-ending supply of customers.
If we can build brand loyalty it will help build our reputation and increase profitability because the cost of sale significantly reduces with existing customers and their referrals.
We also need to have a solid strategy for customer acquisition too as we cannot neglect this other source of revenue growth.
In today’s world where people have limited attention spans and thousands of things vying for that time, to attract new customers we need to add value right from the get-go in order to catch their attention.
I am constantly approached by companies looking to offer my services, but more often than not it requires me to do something, to make an investment in order to see the value that the company can bring.
However, just recently I was approached by a company USB Memory Direct and they had an interesting offer. They made it very easy for me to get access to their products, to be able to see some sample which really helped me see the value that they could bring to my business.
Their product was excellent and they really focused on making the whole experience simple for me.
When we make things simple for our potential customers, and we add value, it makes it so much more attractive a proposition for them to do business with us.
I want to contrast that with another experience, again I was approached by a company, this time their product was definitely something that I wanted, yet when I wanted to pay they didn’t take credit cards.
They told me that they only accept bank transfers and then proceeded to give me their account details. Now as didn’t have my laptop with me, it wasn’t convenient to do that, and by the time I’d gotten home, I decided that I couldn’t be bothered.
I just googled the product, found someone else that offered it, who accepted credit cards and I proceeded to by it from them.
Can you imagine the real costs of customer acquisition for that company if the majority of people choose to go with their competitors just because of a complex payment method, especially in an age when it’s so simple to get things like the Apple Square in order to be able to take credit card payments?
So in the FAST Approach to Business Development, we need to focus on retaining existing customers, on adding value as quickly as possible and on making it exceptionally easy for new customers to do business with us.