In an article written by Laura Schneider, titled “Customer Relationships Are Key to Your Marketing Strategy” July 2003, she states that she could show a business how to increase sales by 50% without increasing a marketing budget. Her research indicates businesses have inactive customers that the owners believe will stay with the company, without maintaining or trying to grow in the relationship. Business owners often wonder why haven’t they heard from a customer or if they left, why did they leave? There are many reasons a customer or client may leave, but the ones heard most often are:
They felt prices were too high or unfair.
They had an unresolved complaint.
They took a competitors offer.
They left because they felt the business didn’t care.
The last two options make up the majority of why a client or customer will no longer use a service or a product. Laura believes this makes sense because customers often purchase a service or product because they have developed a relationship with the company, or they owned another product, or a friend or associate referred them to you.
When given with the aforementioned information she ponders the reasons why businesses spend 80% of their marketing dollars going after new customers and clients rather than nurturing, retaining, and maintaining the customer relationships they already have? She suggests before spending time and money going after new customers and clients that a business does not have a relationship to consider the following statistics:
Repeat customers spend 33% more than new customers.
Referrals among repeat customers are 107% greater than non-customers.
It costs six times more to sell something to a prospect than to sell that same thing to a customer.
Laura believes the marketing dollar will go further if it is used to build, nurture, and develop current customer relationships. Building these relationships means treating customers and clients as if they are strategic partners and showing them that they are appreciated. It’s important to try to satisfy them with the right products and services, supported by the right promotion and making it available at the right time and location. Customers can easily detect indifference and insincerity and they simply will not tolerate it. Long-term client and customer loyalty is a long-term challenge that you must strive for every day and with every transaction no matter how big or small.
While a growing business needs to constantly capture new customers, the focus and priority should be on pleasing the existing customer base.
Companies that fail to nurture and retain their customer base ultimately fail. You will also spend twice as much to get new clients as you will in maintaining your existing customer base. You will also be limited in your ability to attract new clients if you can’t hold onto and satisfy your existing customers and clients.
The bottom line is that one of the key components in marketing and business growth is to spend the majority of your time and effort nurturing customer relationships, so that you get business from existing clients and customers. This is a strategy that will move you forward in increasing your sales by 50% without increasing your budget.