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By Jeff Kear
"If I could only get some more new customers in the door..."
This is a phrase I hear day-in and day-out from both prospective and current clients, and every time I hear it I'm still struck by that word "new".
Why is this? Because if most people knew how much more it costs to attract a new customer than it does to keep an existing customer, they'd probably be saying something more like "If I could only get more existing customers back in the door..."
In truth, we've discovered it costs approximately five to six times more to land a new customer compared to keeping an existing one. With most companies losing an average of 10% of their customers every year, it only makes sense that the first audience to market to would be your existing customer base, and it makes sense in several specific ways:
1. Your customers are much more receptive to your message.
With all the advertising and marketing clutter that exists in the marketplace (see our article on marketing-resistant consumers, it's important to take advantage of every edge you can get when trying to be heard and get people to act. What's ideal about marketing to your existing customer base is that you already have a built-in edge.
Think of marketing to your existing customers in terms of cold calling versus a very warm lead. Reaching out to a new prospect is like cold calling - there's no relationship in place, so getting them to even acknowledge your e-mail, mailers, radio spots, etc., takes a significant effort - whereas getting a current customer to come back is vastly easier because you don't have to build recognition and trust from scratch.
2. Your current customer list is better than any list you can buy.
Your own customer list is the perfect list because the companies on it:
* Have shown a need for your products and services
* Can easily recognize and recall the name of your company
* Are more inclined to read/view/interact with your materials and ads
What's more, you don't have to pay to use this list and can use it as many times as you want (although I'd advise not to overdo it and spam the daylights out of people, which can actually drive customers away).
3. Your current customers are the most likely to refer new customers to you.
I've had some clients tell me not to bother creating campaigns to entice existing customers because those customers typically only buy once every so many years. That may be true, but those customers know other people who might need your products and services, too.
A recent study has shown that, on average, happy customers tell 4 to 5 other people about their positive experience. So multiply the number of customers you have served by 4 or 5 and this is the potential number of referrals you can receive if you simply continue to keep your name in front of your happy customers.
We've covered a few key points on why it's beneficial to market to your own customers, so now let's delve into the "how".
Because your existing customers are already more receptive to any message you put in front of them, you don't need to beat them over the head to get them to buy again. You just need to regularly remind them of the continued value of your products or services and stay at the top of their minds.
But first you need a database of your past customers. If you have an existing database in electronic form, excellent ... your work is half done. However, if you haven't been keeping track of customer information, I advise to start now and manage the information using either an Excel spreadsheet, a contact management software like ACT! or Goldmine or, if you wish to be really ambitious and gather copious amounts of customer information, a more robust database application like the ones used by mail houses and list vendors.
Now comes the fun part ... developing programs for reaching out to these customers. There is a wide range of things you can do, which include:
E-mails/E-newsletters - Send out an e-newsletter to customers that provides them with useful information (reminding them you are an expert in your industry) and that offers product updates as well as special offers available only to them. I would recommend sending this out a maximum of once a month, as anything more approaches spamming.
Direct Mail - A postcard or brief letter with an offer, reminder of an upcoming event or anniversary of a purchase always helps keep you in front of customers.
Special Event - Sponsor an event, organize an open house or hold a sale that is only open to previous customers. Attendees will be flattered by the red carpet treatment, and even those who don't attend will feel special by being remembered and invited.
Customer Rewards Program - Can be as simple as a punch card for a discount after so many visits, or can be more elaborate and include electronic swipe cards, purchase/customer behavior tracking, different levels of rewards, etc.
Customer Surveys - After every purchase or after a customer has spent a period of time using your product or service, you can send or e-mail them a short survey (or even conduct a short telephone survey interview) asking about their level of satisfaction. It's a disguised way of staying in front of them, but it shows you care about how they feel and is yet another way to touch a customer.
Customer Referral Program - Give your current customers incentive to refer their colleagues to you by providing discounts on future purchases, free gifts or some other benefit they will enjoy.
There are dozens of other ways to reach out to existing customers, but these ideas are a good starting point for launching a solid customer contact program that keeps you in front of your most important audience.
About the Author
Jeff Kear is a principal at Kear|Stevens, an integrated marketing communications firm in Denver, CO. During his career in marketing and advertising, Jeff has created revenue-generating marketing communications for nationally recognized brands such as Budget, MetLife, Moosehead Beer, Qwest and Toyota. Before his work at Kear|Stevens, Jeff served as a senior-level creative at a few well-respected Denver ad agencies as well as a marketing and communications specialist for a Fortune 500 company.
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