Look, I get asked things like “why would I bother with my existing customers. I can just go out and get new ones?” New customers are vital for a business and if you can’t get them then you will starve. Beyond that, customer retention becomes far more important than customer acquisition for three reasons.
Reason 1: Existing customers are more responsive than new customers. Existing customers can be up to ten times as responsive as new customers. So retaining them means you can sell more to them in higher volumes.
Making retention a priority means that you have an opportunity to do this for longer. This has got to be an ongoing focus if you want to create real wealth in your business.
After all, selling more to highly responsive customers is going to be more profitable than selling small quantities to less responsive customers like you do when you first acquire a customer.
Reason 2: The sale price of your business is driven by the ongoing value of your customers. It is called goodwill. Think about this, a real estate agency is valued entirely off of its rent roll. The commonest valuation is three times the rent roll. Sales volume counts for zero because it is an event – there is no equity in selling a house. It doesn’t create any future income.
Having customer retention strategies in place demonstrates that you are building ongoing value from your customers and that there is real value in buying that business from you.
Reason 3: Your existing customers will buy other products from you as well. Regardless of what you do, there are downstream opportunities to resell to your existing customers. Most of the time this is opportunity is neglected or prevented by the limiting beliefs of the business owner.
The one opportunity that every business will have access to is referrals. It is very likely that a good customer can refer other good customers to you.
Say you can get your customers to refer at a rate of one referral per customer per year. You’ll never have to find another new client another way. You’ll get all of your business by referral and that is the best way to get new customers. Don’t just take my word for it. Any seasoned business owner dreams of it but most don’t do the work in order to get the referrals.
Understanding the maths and reasons behind customer retention can mean massive changes and advantages for you and your business.
I bet you can find any number of related products to offer your customers aside from getting them to refer. To find out more about what other opportunities your existing customers represent go to www.morebusinessandreferrals.com and download the “The Business Owner’s Guide to Getting More Repeat Business and Referrals.”