Customer Retention: The Biggest, Easiest Profit-Generating “Secret”
Here’s the big “secret” about making money in your business:
Getting new customers is not where you make the most money.
Certainly customer acquisition is critical for business growth – that’s why so many successful businesses even lose money in new customer acquisition.
But they’ve always got a plan for making that money back . . . four- or five-fold at least . . . over the next few years.
They’ve got a plan for keeping these customers, keeping them happy and increasing how much they purchase.
This is where many marketers lose focus. There’s nothing like the thrill of a launch . . . or finding a goldmine of customers from a good list or media buy . . .
But no customer makes you more money than the one you already have.
The worst part about this rampant customer neglect is that you’re losing out on the low-hanging fruit. Selling to current customers is less expensive, easier and – when it all gets added up – much more profitable.
Noah Fleming wrote a book on this: Ever Green: Cultivate The Enduring Customer Loyalty That Keeps Your Business Thriving. He’s worked with thousands of businesses and he points out how many cost-effective things you can do to increase your customers’ lifetime value.
He tells of one story where he helped a client develop a campaign to bring back lost customers. They sent out mailings to 3000 “lost” customers and got 140 customers to buy from them again. But the CEO wasn’t so pleased . . . He complained that they’d only gotten back 140 customers over the 5 months they’ve been running this campaign.
However, when Noah dug a little deeper he found the company had made $50,000 on these revived customers. And only spent $3000! A pretty nice return on investment, wouldn’t you say?
Now think about how much money you spend on getting new customers. How much the list rental costs, the media buys . . . How much harder the sales package has to work to get the conversion . . . how much more copywriting you need for this and how much more this costs . . .
Isn’t it insane not to invest some money into keeping this customer a while after you’ve acquired them?
To put effort, time and creativity into holding onto this lifeblood of your company . . . And seeing how long you can keep them close?
Or even pull them back when they’ve started to part ways with you?
As marketer and copywriter, Dan Galapoo a.k.a. Doberman Dan argues in his newsletter, “You can’t afford not to do this! Look the costs of doing this are marginal. But the costs of not doing this are much greater than you can possibly imagine.”
Think about it.
So, here are a few simple things you can do to hold customers close and grow their value:
- Thank them
First simply thank them. Independently from when they get the order, make sure they hear that you appreciate their business.
- Make them feel wise
In the same thank you letter, you can reiterate why their purchase was such a good idea. Highlight the benefits, put in a few testimonials and make them feel super smart about buying from you. And cherished.
- Build Your Relationship
A good customer knows and trusts you. That’s why they buy from you repeatedly.
But this rapport that allows for multiple sales doesn’t just pop up out of thin air. You’ve got to let them know a bit about you and build that relationship.
- Sell the upsell – really sell it.
Many businesses are reluctant to push another sale on a customer soon after they bought from you. But the truth is, that is when you should push the hardest. They’re feeling excited about what they just purchased from you and they have already made the hardest step to trust you to buy from you.
- Make it worth their while
Reward your loyal customers for their loyalty. Make them feel appreciated. Send your customers a special free product, gift card, coupon or access to exclusive information after 3 months or six months.
- Keep them current
Finally, don’t overlook the value of a simple monthly snail-mail newsletter.
It doesn’t have to be a lot. A page is fine. But it can have a big impact. A newsletter keeps you positioned as a helpful resource. It keeps you in their mind, reminding them of what you offer. It affirms you care about them. It confirms that you’re a decent company worth doing business with. And it builds their belief in your products and solutions.
Don’t hold out on your customers and they won’t hold out on you!
I may be saying things you already know. But if not, you’ve just laid eyes on a goldmine under your feet.
Now go grab it!
If you’d like some help in increasing customer retention and lifetime value, I offer a customer retention audit.
When I perform an audit, here’s what we do:
Step #1: We have an intake discussion with you and your team about where you are on customer retention, where you’d like to be and what ideas you think may help.
Step #2: I methodically go through all your communications with your customers from acquisition on. This included mailings, electronic communications and phone calls. Also I go through any customer intelligence you have i.e. demographics, buying patterns, preferred communications, etc.
Step #3: I prepare a report that covers a review of your current situation along with a plan for improving on customer communications to improve retention and overall CLV.
Step #4: Together, we review the plan, using it as a springboard for further discussions about what might work to improve customer retention. The initial plan is refined accordingly.
Step #5: Implementation – an audit does nothing if you don’t take at least some of the steps I recommend. This includes testing, tweaking and further assessing the steps we’ve undertaken to keep your customers close.
Ready to get going in unearthing the treasure chest sitting right under your feet – your existing customers?
Contact me to schedule an initial phone call to find out more how this audit can help your business.
Send me an email for your FREE introductory problem-solving consultation. (30 minutes).