You’ve probably heard it before. “A bird in the hand, beats 2 in the bush”. What does this really mean? We personally think it specifically pertains to business. That is our opinion, atleast. Well as small business owners the truth in this is substantially magnified. We often subconsciously compete for more. More sales, more exposure and surely more customers. When is it ever enough? A lot of small business owner’s goal is to get as many customers as they can. Surely getting new customers should be a great thing for and business. Well…there are exceptions to every rule. Could new customers have a negative impact on your bottom line? How could that goal be their downfall?
It is impossible to build a strong brand and constantly chase new customer.
There is an adverse effect created when you are constantly seeking new customers. We know what you’re saying…”no way”. Well we’re here to tell you…”yes way”. The first is having no regard for an important rule in brand development. You can’t be everything to everybody. When you’re constantly chasing new customers the chances are that you’re trying to do that very thing. It is easy to lose focus on who your ideal customer is. Even worse you tend to put less effort in nurturing existing customers and gaining their loyalty. No small business can afford the effects of losing a customer and dishing out the cost of attaining a new one simultaneously. That is not an ideal position to be in. Who are you going to build your brand with if your customer churn cycle is always activated?
The Fact is Acquiring New Customers is Costly
On average, the cost of acquiring a new customer is 6-7 times more that retaining a current customer. A 5% increase in customer retention can lead to anywhere from 95%-125% increase in profits. 80% of your future profits will come from 20% of your current customers. Need we continue? How about a current customer spends on average 67% more than a first time customer. Umm, yeeah not focusing on increasing customer retention rates will cost you. A lot
Customer Retention is Great for Business
Customer loyalty is alone is probably the greatest driving force in brand building. Loyal customers advocate, appreciate and support great brands. You ever wonder why some companies seem to have higher conversion rates and ROI stemming from marketing efforts? Yep, they have retained a good number of customers over time. When your brand messages hit home with your audience, great results follow. We advise you pay close attention to customer retention. Every brand strategy should have a specific plan for growing custom retention rates. Sustainable success depends on it.