While, as with all things in life, there must be a balance between the two, it behooves the small business owner not to forget about current customers while working hard to gain new ones.
In his Inc. post, Geoffrey James has advice for the business owner: “Most people think that selling means getting new customers. That's part of the job, of course, but truly successful companies thrive on their ability to keep the customers they've already acquired.
“The reason is simple. Finding new customers is expensive and time consuming. Many companies consider a ‘get new customers’ campaign successful if more than 5% of the companies contacted end up buying.
“By contrast, selling to existing customers is cheap and easy. Sales campaigns launched at a base of existing customers often have success rates as high as 70%, according to the fascinating book Customer Winback.”
James goes on to say, “Curiously, most business owners and managers have the exact wrong idea about why customers leave.”
While business owners often conclude that their customers left because they found a cheaper price or their requirements have changed, in fact a study by the research firm CRMGuru received multiple responses from customers:
- Over 70% listed their top reason for leaving was bad customer service.
- Over 30% left due to poor quality.
- Price and needs changing were sited only 25% and 15% respectively.
So, by the numbers, customer service is triple the importance over price in retaining your customers, and FIVE times more important than what customers cited over changing needs.
Strategies to gain new customers DO strongly rely on price and the fit of your product to meet that new customer’s needs. BUT strategies to retain and build your base of current customers are very different, and worth the effort to grow your business!
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