The endless pursuit of new customers to grow a business often distracts us from looking after our existing ones.
This pursuit can unintentionally cause a downward spiral. Spending more on marketing, while neglecting existing customers (and their sales needs), can put pressure on pricing. This can lead to a reduction in prices or a change in product mix, resulting in less sales and the apparent need for more marketing… so the spiral continues. This is not the answer.
The Answer?
Did you know that it’s six times cheaper to sell products and services to existing customers than selling to new customers? There are so many more reasons to focus on your existing customers compared to acquiring new customers, statistics show:
- Increasing customer retention by just 5% can increase profits from 25-95%
- The succession rate of selling to an existing customer is 60-70% compared to a success rate of just 5-20% when trying to sell to a new customer.
- Loyal customers are 5x more likely to repurchase, 5x as likely to forgive, 4x as likely to refer and 7x as likely to try a new offering
The data shows us that retaining customers is just as important as, if not more important than, acquiring new ones. So why do so many businesses focus primarily on acquisition and neglect marketing that keeps customers loyal?
Given that most customers don’t buy all of your products or services (they probably don’t know the extent of them) and you have a compelling reason to focus on serving your existing customers better. Furthermore, all that’s needed is better education.
Better education on your products and services, the problems they solve, how your offering adds value, and why it’s different to your competitors’.
Better serving existing customers often results in new business referrals, especially if you ask for and encourage them. Not only will you increase the transaction value from your existing customers, but you can also reduce your marketing spend – as you’ll be getting new leads from those happy customers.
Here are 10 ideas to help increase transaction value and retain customers:
- Identify standard ‘up-sells’ – especially those that have a higher margin.
- Offer ‘four for the price of three’ options.
- Give limited time offers.
- Provide free delivery with a minimum spend.
- Drop cheaper product options.
- Create product or service checklists to increase sales outcomes.
- Run events for VIP customers with special event offers.
- Adjust your sales pitch to focus on quality and benefits instead of cost.
- Work in a niche market / specialisation (as there should be less competition).
- And the tenth way to increase average customer spending? Talk to us – we’ll help you identify more ideas specific to your business. Because, if you don’t ask, you don’t give them the opportunity to say yes.
At MKS Group we often say we are ‘More than just numbers’ because we truly believe that our service is more than just number crunching. We offer growth plans, strategic planning, mentoring and training services so you and your business have our team in your corner. Supporting you all the way as you kick your business goals.
Contact our team of experts today, (03) 9374 8400
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