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Your existing customers are your most important asset

Easily forgotten, but at your peril, for those customers who have shown the foresight to buy your product or service and then shown the loyalty to stick with you, are crucial for the continued success of your business.

It's worth remembering, that when it comes to business these are the key facts: 

Fact 1.  It costs between 4 and 10 times more to attract a new customer than keep an existing one (Chartered Institute of Marketing)

Fact 2.  Unhappy customers will tell 8-10 people, whilst satisfied ones will tell only 2-3 people (White House Office of Consumer Affairs).

Fact 3.  Recommendation from the people we know is the most influential form of marketing (Neilsen, "Under the Influence" Report, 2013).

Fact 4.  The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20% (Marketing Metrics).

Fact 5. A 5% reduction in the customer defection rate can increase profits by up to 95% (Bain & Company).

Winning Customer Strategies

So armed with this knowledge, here are 5 ways you can harness the value of your existing customers:

1. The active reference. They've bought from you, so it's worth asking them to be a reference point for potential customers who are considering taking the plunge. See FACT 3 and 4 - increase the likelihood of a new customer coming on board. This can turn your customer from a passive recipient to an active advocate
2. The advocate.  Advocates are a precious commodity and should be treasured. Enthusiastic advocates will refer new business to you, thus reducing acquisition costs (see FACT 1).  For some advocates they may generate little revenue themselves but will more than pay their way through introducing new opportunities.
3. The collaborator. If you have new ideas and market propositions, reduce the risks and costs of launching them through working with your customers (see FACT 4).  
4. The critical friend. Extracting useful feedback from our customers is difficult - they normally leave first, and then tell everyone (see FACT 2). So if you can harness their feedback in a structured way you have a better chance of obtaining specific and useful information.  Remember to thank them - they could have contributed to increasing your retention rate (note FACT 5).
5. The radar.  With limited resources, you can't be everywhere at once and you won't be able to anticipate new market trends.  Why not engage your existing customers and suppliers to better understand what is coming round the corner?  Pick those who are farsighted and creative, ones that can differentiate between game changing developments and incremental improvements.

Chris Lorimer is a Director of South West Growth Service Limited.  For further information contact Chris at [email protected]