I read an interesting statistic the other day and I have seen and heard similar figures in many different studies. The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20%. These figures were reported by Marketing Metrics and there are many others out there that I could have used.
I have also read many times that it costs five times as much to acquire a new customer as it does to retain one.
Almost 15 years ago I worked on a dissertation about Relationship Marketing and I covered this issue within it. From a commercial point of view, if you were to step back, it would make sense to invest time and effort retaining existing customers and make sure that they are happy as well as selling to new potential customers.
Interestingly, this doesn’t seem to be the popular choice with many companies focusing all their energy and resources at attracting new customers. I am always baffled when companies shout out about “Introductory Offers” and “New Customer Deals”. It is just a major irritation for loyal customers who actually support the organisation and have helped them achieve their success so far.
There are so many reasons to acknowledge your current customers. They may tell all their friends and family about how wonderful you are. They may provide useful feedback if you ask them about their experience. They can become a reliable source of income for you if they order regularly. They are less likely to take up time and resources with questions and problems. New customers, by definition, have shopped around to find you so they are a lot less likely to remain loyal. So how can you reward existing customers? Loyalty discounts and free products are normally appreciated, but communication can equally be fruitful. You could let customers know when you launch a new product or service, maybe offering an exclusive preview or early ordering.
Customers like to be appreciated and little gestures go a long way. If you are in a position to consider customer relations, please thank your loyal customers.