If there is anything that entrepreneurs across the world would unanimously agree on, it would be on how important customers are to their business. Because there would be no business without customers. More often than not, new business owners tend to focus only on gaining new customers in a frantic attempt to expand their customer base and establish a notable presence in the market. Once a customer has made a purchase, their focus shifts to acquiring the next new customer and seldom towards bringing in the converted customer for subsequent purchases. Remember that repeat buying is a sign of a loyal customers and it is only with their backing that you can build a successful business. Also, statistically, acquiring a new customer costs five times more than retaining an existing one! So, here are four reasons why your business should stop chasing after new customers and sell more to existing ones in order to grow and prosper.
1. Customer loyalty for business growth: When is it safe to say that a customer has become loyal to your brand? When they consistently choose your brand’s products or services over those offered by your competitors. Loyal customers bring in a steady cash flow, and as a business owner, knowing that there are customers on whom you can always bank on is proof of how efficiently your business has grown. Loyal customers also tend to become very vocal advocates of your brand, thereby bringing in more customers for you! They also give valuable feedback that would aid your business’s further growth.
2. Improved pricing strategy: When you are a loyal customer of a brand, it wouldn’t matter if another competitor is marking down their products, no matter how great a discount they’re offering. Getting the biggest discount is what matters to a new customer while existing ones tend to be a tad less price sensitive, allowing you the opportunity to price your products better.
3. Better understanding about target market: Your existing customer base is an untapped source of information when it comes to understanding the market. Only they can offer answers to questions such as how they found you, what features of your online store they liked, what they liked about your brand’s product/service etc. This data can be used to fine-tune all aspects of your business in the future.
4. Better budgeting: When your business stops spending a bomb on ways to acquire new customers and focuses on retaining the existing ones, less money tends to get wasted. For example, spending thousands of rupees on social media campaigns and ads with just a sliver of conversion rate isn’t going to do your business any good. Because there is no guarantee that your target market would even see your efforts! On the other hand, you already know the ways and means to contact your existing clients, making it easier for you to serve ads/promotions to them efficiently.
There is no denying that acquiring customers in big numbers in a short period of time will look good against your short-term revenue goals. But if you don’t continue to treat them properly, or in other words, do not focus on customer retention, they might just leave. Business owners think that 20% of customer defection happens because of poor customer service while, in reality, it is a staggering 70%. Hence, that’s all the more reason for you to take care of your existing customers. Nurture good customer relationships and hold on to your loyal customers because ultimately, they are the ones that form the backbone of every successful business out there.