The CEO's Guide to Marketing
By Mark Cipolletti, Pinch Hit Partners Founder and Fractional CMO
It’s very difficult to get a new customer. And of course difficult translates to expensive. Research on this topic provides a wide range of figures on the costs associated with acquiring vs. retaining a customer, but most agree that it’s at least five times more costly to convince a new customer to buy than it is to get an existing customer to buy again.
So, why do so many businesses quickly forget about the customers they already have – the ones they’ve paid so dearly to acquire? Do they think that just because someone bought from them once that they will automatically buy again? I hope not. Other brands are constantly selling to our customers so we must continue to engage with them too. Maybe it’s because most agencies that support our companies are focused on customer acquisition. When was the last time you heard an agency tout their latest award for an email they created for existing customers? Uh…never.
Regardless of the reasons, the sad truth is that we often forget that most of our revenue comes from a small, but loyal, segment of our existing customers. Every marketing plan should include strategies for identifying our best customers and selling them more stuff.
Here are some customer retention strategies to grow your business with the customers you already have:
A thoughtful customer experience is the key to your customer’s heart
I’m not a big fan of traditional loyalty programs that reward repeat purchases with points and discounts. That’s just bribery. You can do better than that. Loyal customers are usually willing to pay more for your product or service – so, let them. Make your customers feel special, like they’re a part of the family or an exclusive club. Make it easy for them to do business with you. Simplify your processes and remove customer satisfaction barriers like cumbersome return policies or the need to carry a loyalty card. Customer experience is especially important for B2B focused companies. Creating a relationship with your client will make them less price sensitive and less willing to entertain pitches from competitors.
Anticipate your customer’s needs
I recently purchased a gift certificate from a day spa to give to my wife for Mother’s Day. It’s her favorite spa so this is probably the third or fourth time that I’ve made this annual pilgrimage. The lady behind the counter expressed her surprise at how many men had been coming in to buy gift certificates for their wives and mothers. Hello. It’s Mother’s Day! They should have anticipated this need and emailed me the month before. I certainly would have appreciated the reminder. Get creative. Customers love it when they think you know them better than they know themselves.
Create brand ambassadors
Your best customers may be the ones that spend the most money with you but they also have a huge impact on influencing others to do business with your company. Find ways to encourage your best customers to become brand ambassadors. Try a “get one, give one” offer so they can share your product or service with others. Celebrate your customer’s loyalty with a “surprise and delight” gift. They will almost certainly share these experiences with their online and offline social network.
Loyalty is created after the sale
I’ve already mentioned removing cumbersome return policies to improve your post-sale customer interactions. How a company treats its customers after they’ve gotten their money demonstrates just how much they value their past and future business. Keep the conversation going with emails, newsletters, special events and previews of new product offerings. Send birthday cards or mark other special occasions.
Reconnect with lost customers
Don’t be shy about reconnecting with customers you’ve lost touch with. Everyone likes to hear that they’ve been missed. Invite these folks back, remind them about what attracted them to your business in the first place and let them know what’s new since you last did business together. By rekindling your lost customer relationship you may be able to find out what mistake you made. Chances are it was as simple as you stopped communicating with them.
Before you kick off a big customer retention effort, be sure to benchmark your churn rate and understand what is causing your customers to leave. You may find that in addition to a customer retention problem, you may also be acquiring the wrong customers in the first place. That sounds like a topic for another day…
Pinch Hit Partners provides fractional marketing leaders to growth-oriented companies.