Why Keeping an Existing Customer is More Valuable Than Acquiring New Ones
From the outside looking in, people always assume that for any business to become a huge success, it must acquire new customers month after month. However, the key part to a successful business that most people don’t usually see is the money that the existing customers consistently bring into the business. In order to keep this going, then you must be able to create a fantastic working relationship with them and build up a sense of trust and loyalty with one another. Several studies have shown that customers are more likely to become go out of their way and purchase from brands that they know and love compared to those that they have no connection with.
In recent times, companies are seeing the value of rewarding existing customers by creating platforms and reward schemes which incentivise behaviours that contribute directly to B2B customer retention. It both shows existing customers why you value them and potential customers what your future relationship could look like.
Read on to find out more about why keeping an existing customer is more valuable than acquiring new ones.
Cost-Effective
As a business, the overall aim of the company is always to make a profit. A lot of business owners are sucked into the idea that acquiring new customers will give them the highest chance of a profit. This is wrong. New customers do mean more revenue. However, the cost of actually acquiring those customers in the first-place costs 5x more than retaining a customer. Selling to a new customer only has a success rate of between 5% – 20%, whereas up to 70% of customers that you have retained are more likely to purchase whatever you’re selling. This is due to the relationship that you have already built up.
Familiarity With the Customer
After the customer makes their initial purchase, this is when your relationship has officially begun. The best part of this relationship is that you can learn all about their needs and wants, whilst they can learn more about your business and the model that you operate under. Knowing a consumer’s buying history and what they are looking for is crucial and a great way to maximise sales as you can organise a personalised plan in the hopes that they will purchase from you. If you keep bringing in new customers, the process of creating personalised sales plans for all of them can be a tedious task with little return on investment.
Long Relationship
Once you acquire a new customer, they are targeted towards your short-term goals. This is great to earn a quick buck and keep you going by that month. What you should be looking for as a business is to tie down your retained customers to long-term plans that will allow you to ensure sales for the future. This means that there is less pressure on the business to constantly hunt for clients as your retained customers are helping keep the business afloat.
People Will Fall in Love With the Brand
Industries today are faced with some of the fiercest competition in recent times. If you are able to retain customers, then it means they are more than happy with whatever you are selling them. If they are happy, then they are more likely to pass this information on to their peers and actually refer your business. This allows people to fall in love with the company and can generate more leads.