Most businesses accept loss of customers as a fact of life — a cost of doing business. But it costs much more to obtain a new customer than to keep an existing one. If you can increase your customer-keeping rate by as little as 10%, you can increase your long-term revenues by more than 50%. An amazing increase in income, if you think about it.
One of the reasons for this is that it costs five to 10 times as much to acquire a new customer as it does to sell products and services to an existing customer. Once you’ve acquired a customer, you no longer have to convince them that you’re the company to buy from. Your primary goal is to let them know how much you appreciate their business.
I read somewhere that a jeweler once said, “If I lose the diamonds, the insurance company will pay for them. But if I lose my customers, I’m out of business.”
Something to always keep in the front of your mind is: A business only has two functions: to serve its customers better than anyone else and to make a profit. If your business fails in either function for any length of time, it will fail. This is true in boom times and in depressed times.
Why do customers leave or buy once and never again?
A consumer Services Institute study showed that:
- 1% die
- 3% move away
- 5% buy from friends instead of from you
- 9% prefer the competition
- 14% judge your business by a bad encounter
- 68% leave not because of anything you did. They’re not angry or dissatisfied with you. They left because they thought you didn’t care about them. You didn’t make them feel special.
The solution is simple — Treat all of your customers like they’re special. This is called Relationship Marketing and is something we’ll discuss in more detail in later posts. But basically the secret to Relationship Marketing is simply having Regard
And Appreciation for your customers
And, most important of all, letting them know that you do!