Here’s a fact, acquiring new customers is beneficial to your business. However, successful businessmen know that it’s not the only way to boost profit. They’re more focused on customer retention. According to them, for their marketing strategy, it’s cost-effective and much more viable. Let’s dive deep into that. Let’s see if keeping existing customers really does increase profits than acquiring new ones. Let’s check each of these reasons.
We know how much it cost you to promote your products just to reach your target market. And after reaching them you had to convince them to purchase from you. It was essential to start your business in the first place. However, in the long run, if you focus on retaining these existing customers, the cost is much cheaper than acquiring new ones. Just imagine, to acquire new ones you have to go through the same routine again where you promote and convince. You might even go through more. But if you focus on retaining, no need to go extra mile to reach them, and to convince them. They already know you and they trust you. Retaining them is just a matter of being consistent with providing them the things they liked about your products or services.
Generates More Profit
Existing customers are likely to have trusted your products or services. That’s why they likely to buy more or keep on buying. Unlike new ones, they will try first and decide later if they want to buy again. Whatever you sell is still a stranger to them. So, retaining existing customers makes much more sense. In fact, and according to studies, existing ones generate six times of revenue than new ones.
Easier to Sell More Products
I know you’re a businessman and you understand numbers than words. Or rather you choose to look at statistics than hearsay. That’s wise. So here’s something to lean on about retention marketing. According to Marketing Metrics, converting a new prospect has a probability of only 5% to 20%. On the other hand, existing customers have 60% to 70%. Remember, existing ones already trust you. So it’s easier to sell more or new products to them that generate more profit and return of investment.
Positive Impact on New Customers Acquisition
If you focus on retaining existing customers, they will do the other marketing strategy for you. They can bring more people to your business. Yes, you read it right! Doing so will allow you to acquire new customers through word-of-mouth and referrals if done right. In fact, according to studies, a satisfied customer tells nine other people about it. And nowadays, with social media being the best source of word-of-mouth, imagine how many people will a satisfied customer tell about your products or services.
Don’t get this article wrong. It doesn’t mean that you have to forget about acquiring new customers, it’s still important. However, you have to put your focus on retaining existing ones as it has more benefits for your business. Also, keep in mind that the fruit on keeping existing customers might take time. But it’s definitely worth the wait if you try to imagine it.
See Also: HOW TO FIND YOUR TARGET MARKET